5 Overlooked Factors That Make or Break M&A Transitions in Healthcare
Healthcare mergers and acquisitions (M&A) are complex undertakings that require meticulous planning and execution. The industry often focuses on hard challenges—IT systems and infrastructure upgrades, equipment investments, HR and payroll integrations, revenue cycle optimization for financial stability, and clinical systems updates to ensure quality care. However, while these hard challenges are critical, the softer elements of integration often determine the success or failure of the new organization. Patient experience, care continuity, physician engagement and alignment, employee engagement and market reputation are frequently overlooked but have a profound impact on achieving long-term value from the acquisition.
In this article, we explore these four often-overlooked areas, detailing common challenges buying organizations often forget to address during the transition period.
1. Patient Experience: Ensuring a Seamless Transition for Patients
Patient experience is often compromised during M&A transitions due to operational disruptions and communication failures. Patients may encounter confusion around appointment scheduling, unfamiliar staff, or differing care protocols, leading to anxiety and dissatisfaction. Changes in branding, service lines, or hospital policies can further disrupt their sense of trust and loyalty.
Common Challenges:
- Confusion around changes in care locations or service availability
- Lack of clear communication to patients about what to expect during the transition
- Disruptions in patient scheduling, billing, or access to medical records
- Perception of declining quality of care due to new systems, procedures & policies
Real-World Example: During the integration of a newly acquired hospital, the acquiring health system faced a challenge with patient billing statements. The new owner initially wanted to place their corporate logo prominently on patient statements, but feedback from the integration team highlighted that patients might not recognize the new entity and could question the legitimacy of the bills. To address this, the team decided to keep the hospital’s original name alongside the new logo on all patient communications. This small but impactful decision reassured patients that the bills were legitimate and related to services they had received at the familiar hospital. As a result, patient confusion and billing inquiries decreased significantly, helping to maintain trust during the transition.
2. Care Continuity: Avoiding Gaps in Clinical Services
Care continuity is essential to maintaining patient outcomes and trust, but it is often compromised during M&A integration. Disruptions in clinical workflows, inconsistencies in care protocols, or gaps in specialty services can negatively affect patient care.
Common Challenges:
- Misalignment of care protocols and clinical workflows between merging entities
- Loss of specialty services or delays in referrals
- Disruptions in the supply chain, leading to delays in treatments or procedures
- Ineffective handoffs between care teams due to new systems or unfamiliar processes
Real-World Example: In one M&A integration involving two regional hospitals, maintaining specialty services was a top priority to ensure care continuity. The acquiring hospital system recognized that patients relied heavily on a particular oncology service line at the acquired facility. To prevent service gaps, the integration team prioritized mapping out care pathways and ensuring that all oncology protocols were aligned. They also scheduled joint training sessions for both care teams to ensure seamless handoffs. As a result, the oncology department maintained uninterrupted services, patient satisfaction scores remained steady, and there were no delays in critical treatments during the transition.
3. Physician Engagement and Alignment: Navigating Cultural and Operational Differences
Physicians are at the heart of patient care, yet their engagement is often overlooked during M&A integration. Disengaged or misaligned physicians can lead to reduced productivity, increased turnover, and a decline in patient satisfaction. Mergers often bring different organizational cultures and operational expectations that must be reconciled.
Common Challenges:
- Resistance to change due to perceived loss of autonomy or decision-making power
- Misalignment of incentives and compensation models
- Uncertainty about leadership roles and governance structures
Cultural differences between merging organizations leading to friction
Real-World Example: When a healthcare system acquires another, addressing physician engagement and alignment is critical to a successful integration. Challenges often include resistance to change, misaligned compensation models, and uncertainty about leadership roles, all of which can lead to disengagement and operational disruptions. One effective approach is to involve physicians in decision-making, implement transparent communication about changes, and provide clarity around leadership and governance. Aligning incentives and fostering cultural integration through shared goals, such as improving patient outcomes, can help bridge differences and ensure a smoother transition. By prioritizing physician engagement, organizations can minimize turnover, maintain productivity, and improve patient satisfaction during M&A integrations.
4. Employee Engagement: Fostering a Cohesive and Motivated Workforce
Employee engagement is critical for maintaining operational stability and morale during an M&A transition. Employees at all levels often experience uncertainty about their roles, future opportunities, and cultural fit within the new organization. Low engagement can lead to decreased productivity, higher turnover rates, and diminished organizational cohesion.
Common Challenges:
- Uncertainty about job security, role changes and leadership retention
- Lack of clear communication from leadership, leading to confusion and anxiety about the future culture and changes
- Cultural clashes between merging entities, resulting in a divided workforce and transitioning to new procedures and policies
- Perceived lack of opportunities for career growth and development within the new organization
Real-World Example: During a Northeast M&A engagement, Thrivence encountered a unique challenge involving an employee recognition program that allowed staff to earn points redeemable for gift cards, swag, and hospital gift shop items. As the transaction approached, the buyer expected the seller to handle point reimbursements, but it became clear that there weren’t enough funds in the program to cover all outstanding points. Without resolution, this issue risked damaging employee satisfaction, eroding trust with the new leadership, and tarnishing the buyer’s reputation in the local community. Thrivence stepped in to navigate negotiations between the buyer and seller, identifying the necessary funds to close the gap and crafting clear communication for impacted employees. This proactive approach ensured staff felt valued and respected, preventing retention issues and fostering goodwill toward the new ownership. In the end, the successful handling of this matter safeguarded both employee morale and the brand’s reputation during a critical transition.
5. Reputation in the Marketplace: Protecting and Enhancing Brand Equity
A healthcare organization’s reputation is one of its most valuable assets, yet it is often at-risk during M&A transitions. Negative perceptions from patients, staff, or the broader community can undermine the success of the integration and erode trust in the brand.
Common Challenges:
- Confusion or concern among patients and community members about the merger’s impact
- Negative press or public perception of the acquiring entity
- Disruption to referral networks or partnerships
- Difficulty retaining staff and patients due to brand loyalty concerns
Real-World Example: When a prominent regional hospital was acquired by a larger health system, there was significant concern in the community about potential changes to care quality and service availability. Initial media coverage painted the acquisition as a corporate takeover, leading to a decline in patient loyalty and a dip in referral rates. To counteract this, the acquiring organization launched a proactive communication strategy that included community town halls, direct engagement with local media, and a rebranding campaign focused on continuity of care and enhanced services. The strategy helped rebuild trust within the community and stabilize patient volumes. Within six months, the hospital saw a marked improvement in patient perception scores and regained its position as a trusted healthcare provider in the region
Addressing Hard vs. Soft Challenges: The Thrivence Approach
Thrivence understands that while IT, Clinical, Revenue Cycle, and HR are crucial to the success of an M&A transition, addressing softer challenges like patient experience, physician/employee engagement, and community trust is equally essential. Focusing solely on hard complications without addressing the human element can lead to long-term reputational damage, operational inefficiencies, and even revenue loss. Here’s how we approach these softer areas to ensure a smoother, more successful transition that maximizes your new asset.
Why Thrivence?
- We are efficient in how we manage your TSA’s (Transition Service Agreements). We focus on minimizing disruption of your current and new staff members – affording you time to maximizing growth of the new asset and strengthening relationships with the community, physicians and staff.
- We have deep subject matter experience in healthcare M&A transitions, with a track record of managing complex integrations across IT, Clinical, Revenue Cycle, and HR. This includes knowing 300+ applications and supporting 3rd party vendors supporting the facility.
- Our Change Management expertise ensures patients, physicians, and staff are engaged and aligned consistently throughout the transition. Gathering detailed feedback on a routine basis and ensuring leadership know which areas to address.
- We bring a holistic and customizable approach to M&A integrations, balancing technical execution with a focus on culture, reputation, and trust – unique to your acquisition.
Our Keys to Success
Our Keys to Success outline how we measure and achieve success during transitions, providing us with a clear framework for client outcomes.
- Patient Experience is a top priority, ensuring accurate documentation and smooth communication between patients and providers to maintain care continuity.
- Clinician Experience focuses on minimizing disruptions to workflows, ensuring clinicians remain satisfied and productive during the transition.
- Change Management & Communication emphasizes the importance of clear communication, stakeholder engagement, retention and adaptability, keeping all teams aligned and motivated.
- Cash Flow Management ensures financial stability through phased rollouts, resource optimization, and rigorous performance tracking to minimize disruptions and safeguard revenue streams.
By partnering with Thrivence, healthcare organizations can ensure that their M&A transitions are not only operationally successful but also culturally and reputationally sound. Addressing both hard and soft challenges is key to achieving sustainable success and delivering value to patients, physicians, and the broader community.
What’s Next: Read This Case Study & Connect with Our Team
Don Murray is a senior consultant at Thrivence and leader of mergers & acquisitions support services, with a robust track record in healthcare administration, IT, and revenue cycle management. Don’s expertise is marked by delivering results through innovation and effective execution. Committed to bettering his clients, he brings a strategic vision and skill set that align with Thrivence’s mission to transform leaders, teams, and organizations. His expertise in process improvement, strategy execution, and financial analysis, coupled with his background in revenue cycle and IT, provides a strong foundation to drive ROI and implement change across industries.
