Health facility mergers: some conceptualizations.
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P/SL Healthcare System, Denver, just completed a five-year ordeal of consolidating two hospitals, expanding tertiary services and building and moving into a new $120 million facility, Presbyterian-St. Luke's Medical Center. The process was interrupted by the sale of the hospitals, which forced a construction halt. In this interview with Donald E.L. Johnson, editor and publisher of Health Care Strategic Management, Donald W. Lenz, president of P/SL Medical Center, discusses planning the merger, constructing the facility, managing the move and positioning the hospital for the future. The hospital's design is innovative, with parts of the facility resembling a fine hotel. The curved building is attractive and improves productivity by concentrating central services in easily accessible areas.
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This study gives empirical documentation of physician support for a recent hospital merger. Results indicated that physicians from private practice, from the medical specialty of anesthesiology, and those least satisfied with hospital administration were also the least supportive of the merger. Formal involvement in the merger process, via task force membership, did relatively little to increase physician support for the merger. However, a significant correlation between perceived input into the merger process and support for the merger indicates positive aspects of involvement, even though this may not have occurred through the formal structure of task forces. Implications for managing physicians and hospital mergers is discussed.
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OBJECTIVES: To examine the relationship between the size and performance of primary care organisations, the effect of and the reasons for mergers. METHODS: Data on size, proxy measures of performance and merger intentions for 71 organisations were extracted from telephone and mail surveys of primary care groups and trusts (PCG/Ts). RESULTS: Of the 22 performance measures examined, only two were significantly associated with size, and over half were not associated with any of the potential explanatory variables. Most organisations (70%) were planning mergers. If all planned mergers take place, the mean size of primary care organisations will double to nearly 200000. The main reasons for mergers were to make better use of resources and for PCGs to become PCTs. CONCLUSIONS: There is little evidence that the performance or efficiency of a primary care organisation is associated with its size. Optimal size may differ for different functions. Mergers are seen as a way of increasing management capacity and may reflect the desire of managers to manage large organisations. There is a risk that larger primary care organisations will recreate hierarchies and lose local ownership and participation.
The healthcare industry is buying into the benefits of being big. Merger and acquisition deals hit a pace of 2.4 per day among all types of providers during the first half of the year. But critics believe the time has come to rein in the rampant consolidation.
OBJECTIVE: To study the processes involved in and impact of mergers between NHS trusts, including the effect on management costs. DESIGN: Cross sectional study involving in depth interviews and documentary analysis; case study to compare savings in management costs between case trusts and control trusts. SETTING: Nine trusts (cross sectional study) and four trusts (case study) in London. PARTICIPANTS: 96 interviews with trust board members, other senior managers, clinicians, service managers, and representatives of health authorities, regional office, community health councils, local authorities, other trusts in the area, and primary care groups and trusts. MAIN OUTCOME MEASURES: Stated and unstated drivers, and impact of merger on delivery and development of services, management structures, and staff recruitment, retention, and morale. Effects of difference in trust size before and after the merger. Savings in management costs two years after merger. RESULTS: Some important drivers for merger are not publicly stated. Mergers had a negative effect on delivery of services because of a loss of managerial focus on services. Planned developments in services were delayed by at least 18 months. Trusts' larger sizes after mergers had unintended negative consequences, as well as predicted advantages. The tendency for one trust's management team to dominate over the other resulted in tension. No improvement in recruitment or retention of clinical and managerial staff was reported. Perceived differences in organisational culture were an important barrier to bringing together two or more organisations. Two years after merger, merged trusts had not achieved the objective of saving pound 500 000 a year in management costs. CONCLUSIONS: Important unintended consequences need to be accounted for when mergers are planned. Mergers can cause considerable disruptions to services, and require greater management support than previously acknowledged. Other organisations undergoing restructuring, such as primary care groups developing into primary care trusts and health authorities merging into strategic health authorities, should take these findings into account.
The ongoing wave of consolidations among major health plans and insurers across the country is creating anxiety and challenges for integrated networks and for providers in general. The federal government's recent action in intervening in the Aetna U.S. Healthcare/Prudential Health Plans merger offers some hope, say provider executives, that some providers may see some policy relief in the future. But integrated providers in highly managed care-penetrated markets like those of the large urban markets on the West Coast are already operating in an environment of high tension and consolidation.
Hospital mergers, like Godzilla's comeback movie, promise that bulk means marketplace brawn. Yet as the dust settles, the payoff isn't always so clear. Promised efficiencies from merging duplicated programs--even shutting down entire hospitals--often fail to materialize. In fact, cutting the deal may turn out to be the easy part.
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This study was initiated to determine the extent of hospital capacity reduction in large U.S. cities. In addition, hospital bed and service additions were analyzed. Study data indicate that between 1976 and 1978 more than 5,000 beds were closed in the 36 cities surveyed. This constitutes 2.7% of total hospital beds in those cities. Nearly half of the cities had no bed reduction at all, while seven had their supply diminished by more than 5%. Thirty-one emergency rooms and 13 outpatient facilities were also closed during the 2-year period, potentially affecting patient access. Health system agencies (HSAs) expressed approval of 73.4% of hospital closures and 54.4% of expansions, therefore expressing greater support of system shrinkage. Data on expected hospital changes (for the next year) was limited. However, opening and expansions are expected to occur at a slightly higher rate than during the 1976-78 period with fewer closures.
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