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5 Tips for Leading a Hospital Through a Merger or Sale

Irwin Hurn, a partner at executive services firm Tatum who has served as CEO, COO, and CFO for several hospitals, shares five tips for leading a hospital through the uncertainties associated with a merger or sale.

1. Establish a communication plan.
Hospital leaders must develop a formal communication plan for sharing information about the potential transaction to its various stakeholders, including employees, physicians and community members. "You either lead the communication or it will end up leading you," says Mr. Hurn.

The communication plan should address how information will be distributed and should include messages that respect stakeholders' most pressing concerns. Employees are most concerned about whether or not they will keep their jobs, and like the new management, physicians are most concerned about how the change will affect the viability of their practices. Community members are most concerned about how it will impact access to care, says Mr. Hurn. Communication plans must honor confidentiality agreements with any potential partner, but they also should address stakeholders' key concerns to the greatest extent possible given the restrictions.

2. Explain reasons behind the potential merger or sale. The communication plan should pay special attention to explaining the 'why' behind the board's decision to consider a merger or sale. Hospital leaders might see that their hospital can't survive without an influx of capital and understand that a merger is the only way to ensure continued healthcare access to the community. However, employees and community members may not see this big picture. "You need to convince everyone in the hospital why it's the right thing to do," says Mr. Hurn. "Convince them them that it's the best option for the hospital, and the message will be repeated again and again in the community. You have to make sure you have the hearts and minds of the people working for you."

3. Display empathy. The hospital CEO, and ideally the entire C-suite, needs to be empathetic to the concerns of stakeholders and able to communicate that understanding to employees, physicians and staff. If a hospital CEO’s personality is not clearly able to show empathy, someone else should be appointed to lead communication about the deal to the hospital's stakeholders, says Mr. Hurn.

Leaders can display empathy by listening to employee concerns, conveying that they understand employee worries and allowing employees to share their own observations about the situation.

4. Keep managing the hospital. It may seem obvious, but leaders can become so focused on the impending transaction that they lose sight of their day-to-day management duties. "You need to keep managing the hospital and keep providing services with just as much if not more passion as always," says Mr. Hurn. If hospital leaders become lax on managing the facility, it could signal trouble ahead and further worry stakeholders. However, if employees and physicians see leadership acting as if everything is normal, employees and physicians will act similarly, which will suggest to patients that the community will not suffer from the deal, he says.

In order to ensure leaders are not distracted by day-to-day operations, additional support may need to be assigned to these tasks. For example, if the CEO and CFO will need to spend the bulk of their time managing the deal and performing due diligence, the COO could be charged with really stepping up and leading the organization on matters other than the merger or acquisition. "No CEO should think he or she can handle it all alone," says Mr. Hurn.

5. Prepare for resistance.
Because hospitals are a vital part of any community, hospital leaders need to be prepared for public scrutiny, even if it shows that a change is needed. "A for-profit to for-profit transaction is fairly straightforward, though there are still issues with the community connection [to the hospital], but it gets much more difficult when you have a non-profit owned by a community trust or a public hospital supported by tax dollars," says Mr. Hurn. "Hospitals are treasured entities in communities, so leaders to need to be prepared for political issues and scrutiny by local media and community members."

Responses to the media and other stakeholders should be included in the communication plan as should steps specific for crisis communications.

Learn more about Tatum.

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