There are six common pitfalls radiology leaders should avoid when completing a merger or acquisition, according to a new opinion piece published Monday in JACR.
The specialty has seen a surge in such deals in recent years. One recent American College of Radiology survey found that half of its members had been impacted by M&A activity in the past three years, while 40% expected to be in the future.
Many of these marriages may fail, but two experts have advice to help providers avoid some of the most common mistakes.
“Mergers and acquisitions can work, but only if everyone involved truly knows what they are doing and commits to making it work,” Lindsey Well and Richard Gunderman, MD, PhD, both with the Indiana University School of Medicine’s Department of Radiology, wrote Feb. 21.
Here’s a quick look at some of their suggested pitfalls:
- Neglecting to envision how the two organizations will come together and what the combined entity will look like.
- Overstating the potential benefits of consolidation; oftentimes, those in charge of evaluating these partnerships are not the ones who will eventually have to make the merger work.
- Ignoring how the other organization stands to benefit from being acquired.
- Failing to “truly consolidate” by allowing staffs to continue competing with one another and ignoring necessary steps to unify culture.
- Disregarding the potential consequences of an unsuccessful merger, which can include layoffs, increased employee stress, and lost knowledge in the organization.
- Letting the scope of an M&A deal impact its success. Large organizations tend to be more bureaucratic, the authors noted, and may seek to impose “one-size-fits-all” arrangements on diverse organizations while overlooking important local considerations.
“This is not to say that mergers and acquisitions cannot succeed—sometimes economies of scale, enhanced bargaining power, and greater market share overcome such drawbacks. But a well-executed consolidation is difficult to effect,” Well and Gunderman concluded. “To avoid failure, radiologists need to be mindful of organizations’ people and cultures, make sure that the potential downsides of a union receive adequate attention, ensure the long-term commitment of key personnel to making it work, look at the union from the perspectives of both organizations, think through carefully what a failure would mean, and ensure that the combined organization will not be so large that its prospects for success are compromised.”
Read the rest in the Journal of the American College of Radiology here.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.