The pace of merger and acquisition (M&A) activity in healthcare is fast and accelerating, and radiology has been anything but exempt. Is your practice among those that are now involved in such discussions—or may be at some point in the not-distant future? If so, consider the following hypothetical.
Your practice has spent a great deal of time in the initial M&A assessment process, either self-guided or with a broker. Now your physician executive leadership, working alongside non-physician practice leadership, have selected a suitable partner. You are on your way.
You thought the initial due diligence was intense? The next step will be just as consuming and time-sensitive. And there may be potential casualties along the way: hard-working and well-liked members your staff.
After all, it really is true that all your people, taken together—your “human capital”—comprise your single most important asset.
Certain principles apply in effectively and efficiently conducting this next aspect of your merger journey. Whatever type of merger you end up deciding on—practice consolidation, acquisition, joint venture or a clinical affiliation—the first step you must take, before even developing or pursuing your overall plan, is writing a robust due-diligence and documentation checklist. Among other advantages, this will give you a way to map out the various modes of communication you’ll need to proceed.
This can’t be stressed enough: Working collaboratively with your physician board to strategize on the various ways to communicate is critical to ensuring a successful merger process and later practice integration.
Your merger checklist will have various key elements, ranging from legal matters to fi nancial information to categorization of assets, billing and coding audits—for starters—and you and/or your team will be actively collecting all the required documents.
It is essential to keep your major physician stakeholders apprised throughout this part of the process. Failing to provide checklist updates will make it much harder than it needs to be to glean the required info. Your physician stakeholders will simply not understand what you’re up to. They’ll be unnecessarily wary.
At the same time, you need to be in touch with your other stakeholders as well. Along with your employees, contracted hospitals and managed care partners, these other stakeholders might include outsourced accountants, general liability and managed care insurance representatives, IT people and so on.
A thoughtful well prescribed and phased-out communication is the roadmap to success. A top consideration is to involve HR early on.
As Mark Jensen, the CEO of Charlotte Radiology in North Carolina, shared with me:
“Charlotte Radiology used a strategically phased, multi-modal approach. It included in-person meetings and conference calls, emailed video announcements, town hall meetings, FAQs posted on our intranet and scripted talking points for the leadership team. On balance, our communication strategy resulted in a successful rollout.”
One payoff to this approach is that you’ll avoid overwhelming your constituents with too much information and, potentially, offering it more quickly than some can absorb it. Another upside is warding off “news leaks.” If confidential information gets out, it will travel fast. This effect is inevitable if sufficient care is not taken, and it doesn’t matter how many non-disclosure agreements are signed. Talking with co-workers about work is plain human nature. Be methodical as well as careful.
Of course, it’s not enough to simply announce the highlights of a transaction to employees. How an organization builds and maintains trust among key stakeholders from both organizations during a constantly changing, sometimes chaotic integration process is the primary challenge for practice leaders communicating on M&A activity.
Your fully thought-out and scripted message plays a critical and powerful role in ensuring the success of your M&A deal. Being aware of questions, concerns and fears that employees might have—and proactively communicating answers, with transparency—builds trust.
This also can reduce resistance that, if left unchecked, could lead to low morale and decreased productivity. It goes without saying that these are two major pitfalls to avoid at all costs during the due-diligence process.
Carrie Ransil, CPA, the chief financial officer at Scottsdale Medical Imaging, puts it this way:
“Our first process was not as successful due to lack of clarity by the potential partner, along with less internal communication opportunities, not lack of transparency. The second time around, we were very careful to provide many opportunities for engagement. This resulted in more transparency before selecting our ultimate partner, which proved to be good fit for our group.”
Employee Communications Plan
Your plan during M&A should include the four following elements:
- High frequency. Communications should be frequent to reduce uncertainty and maintains a trusting relationship with employees.
- Proactive communication. This can ease concerns about job security and retain valuable employees.
- Intentional and consistent messaging. If you want to cultivate a unified company culture, and you should, intentionality and consistency are key.
- Open communication. Nothing else better facilitates post-deal success and long-term profitability.
Regarding the continual communication between the administrative and medical leaders, Ricardo C. Cury, MD, the chief executive officer and chairman of Radiology Associates of South Florida, says:
“One of the keys to success during this rather rapid time of due diligence and data gathering was the ongoing interaction I had with my executive director. Moreover, the communication to the team highlighting the benefits of the merger and potential pitfalls is critical for transparency and ensuring future success.”
M&A Communications Team
Early on, it’s essential to organize an integration team consisting of representatives from every department and all vendor partners to develop a schedule for communication based on potential deal plan dates—due diligence, opening, closing—and assign particular duties to responsible parties.
If you do not have significant breadth and scope of personnel and stakeholders—operations and project managers, executives, HR, IT, PR, operations, business intelligence/development—your close leadership team can fulfill these functions and tasks.
Vital to-do’s include letters to employees, customers, vendors and subcontractors, along with a town-hall presentation. Not to be overlooked and exceedingly important for online presentation are employee FAQs, management FAQs and all relevant HR materials.
In summary, undergoing the M&A due-diligence process is your opportunity to gain the trust and buy-in of your major stakeholders and your most precious asset: your human capital.
If a company fails to communicate effectively during a merger or acquisition, the company risks employee loyalty and trust, employee retention, company culture and long-term success. Do not let this happen to your practice during this momentous time in your organization’s life cycle.
Barbara Perez Deppman is principal at Deppman Healthcare Consultancy in Miami, online at DeppmanHealthcareConsultancy.com.