The Merger of Two Competing Hospitals

        “The Merger of Two Competing Hospitals” is a case written by Mary Anne Franklin, Dale Mapes, Audrey McDow, and Karin Mithamo which focuses on a two fully accredited hospitals: Porter Regional Medical Center (hospital A) and Banner Regional Medical Center (hospital B). Both hospitals have a 24 hour physician-staffed emergency care centers, full cutting-edge diagnostic technology such as MRI and CAT scanners and specialized women’s centers. According to the authors, in order for the merging hospitals to success, it all depends on leadership, culture adaption, human resource management, staffing and benefit issues that the executive staff mutually enhanced.

Built in 1990, Porter Regional Medical Center (hospital A) is located on the east side of the town. It was a for-profit hospitals with 110 hospitals beds with 450 employees. It was a privately owned facility under Mountain Health Care, a large healthcare organization in the Rocky Mountain region. The hospital was designed to easily handle patient flow from the emergency room to the pharmacy. The services offered at hospital A were same day surgery, kidney dialysis center, a full-service rehabilitation and radiology departments. Other services comprised of 24 hour laboratory, home health, Infusion/Home IV, a regional Red Cross blood bank and a women’s center.  Hospital A operating budget was $34 million but in the same year, they experienced a $1 million loss and had decided to liquidate after three years of red ink.

Unlike hospital A, Banner Regional Medical Center (hospital B) was built in 1951. It was a county-owned hospital consisting of 154 inpatient beds and geriatric healthcare center which included 100-106 beds, 13 transitional care beds, and 7 rehabilitation beds. The facility resided on a 561,366 square feet of building space. Hospital B offered the Herman Cancer Center, Family Centered Care (Ob/Gyn), a women’s center, a newborn intensive care unit, Life Flight (mobile intensive care), a regional pediatric unit, a sports/industrial medicine clinic and a geriatric center. This facility had a larger employees base compare to hospital A with 914 personnel. Their operating budget was $79 million and they also had a reserve fund of $20 million for any major renovations to the existing facility’s emergency room and intensive care unit.

The consolidation was set for both hospitals: Porter Regional Medical Center, bankrupt with three years losses and Banner Regional Medical Center with aging facilities. It would take up to three years to complete the merger. The county would pay $25 million with interest free. After careful selection, the commissioners voted to hire CEO of hospital A, Pat Herman, MHA, FACHE based on her experienced of more than 20 years as an administrator for a Catholic institution and had been the chief communication officer for a military academy.

1. What specific steps should the board take to create an executive team to manage the newly created organization?

Some specific steps the board need to take in order to create a strong executive team to manage the newly created organization is to have the executive team intermingled with both hospitals employees, have some kind of team bonding activities and/or training, and reassuring employees in regard to keeping their positions. Since the merger will affect all employees, lower level managers should have some say in who should be a part of the executive team.

1. Given the diversity of cultures embedded in the merged organization, what should the management team do to facilitate a working culture in the new organization?

First and foremost, a new mission statement is needed. It should be the first step in establishing a new culture because it will allow a foundation and expectations to be set for all employees. The management team should also train the staffs in the unifying team building activities including personnel from both organizations; this training will let the staffs know that there is no “us versus them” attitudes. Since employees will be coming from two different management styles, it is best advice to explain the new organizational structure.