Thought Leadership

Healthcare Consolidation … with your hospital’s reputation intact

Kate Caverno
By Kate Caverno
posted Mar 9, 2021

Let’s face it, unless you’re Marie Kondo, “consolidation” is a daunting word. Yet, it’s a reality many health systems, hospitals, surgery centers, and physician practices are facing spurred by the COVID-19’s financial devastation.

Hospital independence gives way to healthcare consolidation

Between the decrease in patients seeking elective and non-elective care, the astronomical cost imposed on hospitals by COVID-19, and the pandemic’s indefinite ending, COVID-19 has tipped the scales to favor large organizations equipped to weather the storm.

Large health systems and health plans like United Healthcare and its subsidiary Optum are leveraging 2020’s financial strain on physician practice and surgery centers to expand their provider portfolios. Healthcare will likely see a significant uptick in healthcare consolidation via partnerships or even outright sales in 2021 as hospitals look to secure a long-term future.

Navigating healthcare consolidation reputation risks

Successful healthcare consolidation communication strategies should assuage the concerns of internal and external stakeholders.

Communicating with internal stakeholders: Importantly, internal employees should hear about the news first from the organization’s leadership. The announcement should clearly communicate how the transaction will impact clinicians’ and staff’s day-to-day routines, focusing on new opportunities and investments.

Following the announcement, maintain clear and consistent communication with staff regarding anticipated milestones from letter of intent through operational integration expectations. Establishing an open line of communication and a dedicated team to field internal questions also helps ensure consistent, accurate, timely, and transparent messaging.

Communicating with external stakeholders: Communicators should also engage third-party stakeholders like business and community leaders who can reinforce the merits of the consolidation message when the M&A activity is announced.

Garnering support from these stakeholders works twofold: 1) It verifies for internal employees the merits of the consolidation 2) It ensures the organization will have the backing of vocal supporters should criticism arise.

Third-party stakeholders who can credibly speak to cost and quality concerns, via letters to local newspaper editors, video testimonials for a merger microsite, or even

communications directly with the state’s Attorney General all give credence to the value of the M&A activity.

When healthcare M&A scrutiny comes knocking …

With high-profile healthcare consolidation, a new political administration, and rising social tensions, come scrutiny and hospital reputation risks. The media, statehouses, the Department of Justice (DOJ), and the FTC have expressed keen interest in cost and quality measures during healthcare mergers and acquisitions.

This scrutiny, particularly regarding anti-trust, already received a nudge this year with Senator Amy Klobuchar’s bill to reform competition policy. The bill ultimately seeks to expand the Federal Trade Commission and the DOJ oversight approval (or rejection) power over M&A activity across industries.

The bill primarily targets tech giants like Facebook and Google, but its implications reach beyond tech to healthcare. While there’s no real way to predict if a healthcare consolidation deal will draw authorities’ attention, hospitals should prepare communication strategies to account for this heightened federal scrutiny.

Before committing to a healthcare consolidation deal, examine it from the federal authorities’ lens and prepare to address their potential concerns. Proactively answer questions like:

  • How will this consolidation affect the quality of care?
  • What measures will be taken to control costs throughout consolidation?
  • Will the deal improve patient access?
  • What effect will this deal have on existing patients and untapped populations?

These complex business and legal dealings generally only impact the relatively small team responsible for the agreement. Successfully keeping these more nuanced conversations from gaining too much media attention can minimize the opportunity for public push-back and ultimately reduce strain on marketing and communication teams as they manage their internal organization’s (often emotional) reaction to the M&A activity.

In sum

Healthcare consolidation is not for the faint of heart, but it very well may be the best option to keep the heart of your organization beating for years to come. And while these best practices may not make you the next Marie Kondo, they certainly can help to keep your organization’s reputation intact throughout M&A activity.