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Keywords

communication, integration, merge, networks, structural change

 

Authors

  1. Dooley, Kevin J.
  2. Zimmerman, Brenda J.

Abstract

Many health care organizations have found themselves involved in mergers, acquisitions, alliances, networks, and other forms of structural change in order to reduce costs, improve utilization and service breadth, increase market leverage, and reduce variation in demand. This article examines three levels of communication issues that interact with one another and impact the likelihood of successful postmerger integration: affect, discursive frame, and negotiating position.

 

Structural change has become a popular and influential form of strategic repositioning in the health care industry. Health care organizations seek collaboration through mergers, acquisitions, strategic alliances, and networks in order to enhance profit or reduce costs. While these structural changes have reduced in number since their peak in 1997, there were 713 deals encompassing $21 billion in health care in 1999 in the U.S.1 In current business practice the basic purpose of a merger or acquisition is to improve the sustainability of the corresponding organizations by bringing together resources and knowledge. Practically, we find that health care organizations engage structural change in order to right-size capacity, increase utilization rates, produce economies of scale, increase market leverage, and reduce demand variation.

 

One form of structural change, mergers, has been both popular and yet difficult to implement. In a 2000 study2 of 467 multihospital systems in the U.S., 34 percent reported losses from operations compared to 21 percent in 1999. The study showed an increase of "disintegration" of some or all of the merged system. Forty-one percent of respondents reported they were considering or had recently experienced disintegration in their system.

 

In order to better understand some of the key issues involved in the success of mergers, we turn to metaphor. While there is some systematic research concerning mergers and acquisitions in health care, the theoretical base is small; therefore it is useful to use metaphors for the purposes of potentially novel insight.3 A good metaphor can provoke a wide range of analogies, and these analogies can be further developed and manipulated into specific questions and/or hypotheses about the issue in question.4 One of the most popular metaphors used to describe the merger of two organizations is marriage.5-8 For example, the Daimler-Benz and Chrysler merger was referred to as a "Marriage of equals."9 In discussing hospital mergers a recent New York Times headline reads "Hospital Mergers Stumbling as Marriages of Convenience."10Modern Health Care headlines its story about called-off mergers "Sidestepping the Altar."11 Why is a merger like a marriage?

 

A marriage is a coupling of two independent people for the purposes of creating something of value to both. The value created from the union, or synergy, may stem from their commonalities or differences, or both. Synergy in a marriage is the joy, companionship, and other benefits that improve the overall quality of life for both spouses. The couple makes a commitment to make the marriage work, despite the difficulties that might arise, and there are legal and normative constraints concerning how hard the parties must work toward reconciliation before a parting of ways is granted. Mergers and acquisitions also represent a coupling for the purpose of creating synergy. There are economic, legal, and normative bounds that force the adjoining organizations to work out their problems and get along, as opposed to dropping out of the relationship. Two middle-level managers from two different, merging organizations can't just call off the merger if things are not working out.

 

In this sense there is a gap in the literature on mergers. The question of whether two (or more) firms should engage one another is a good question for executives and board of directors, but not a relevant one for the majority of people involved in the merger. For them, a commitment is made and they have to try to make it work as best they can-in this way, the marriage metaphor is appropriate and insightful. The vast majority of people involved in mergers are not given a choice about getting married to another organization. Instead, like in an arranged marriage, they need to learn to live with a partner not completely of their choosing, but potentially to their liking. Their decisions revolve around how to be in the marriage.

 

In this article we shall focus on these postmerger integration issues: How do the participants engaged in the integration process succeed, or fail? We use the merger as marriage metaphor to examine the key element found to differentiate success from failure in marriage-the couple's ability to deal with habitual conflict through conversational processes. We propose that these conversational patterns are equally important in organizational settings, and this leads us to suggest specific ways in which (a) organizations might be able to predict the likelihood of success or failure in the postmerger integration process, based on conversational patterns, and (b) organizations could intervene to increase the likelihood of success in the change effort.