Computer maker Dell’s announcement that they will merge with EMC, the makers of digital storage devices has been called the biggest technology merger ever – and is said to be worth $67 billion. The task of integrating the businesses will be a massive one and the record of corporate mergers isn’t encouraging. One survey has suggested that corporate mergers are more likely to fail than marriages (70 per cent vs 50 per cent!). Famously AOL ended up having to write down $99 billion of the $164 billion it paid for Time Warner.
While NHS mergers aren’t of the scale of Dell and EMC, running a hospital is hard enough let alone having to bring together the culture of different organisations some distance apart into a single unit. It’s hardly surprising then that mergers are a recurring theme that Verita come across when called in to investigate.
We have recently been working with a large acute trust formed through a merger a couple of years ago. It has been apparent from this how much the NHS as a whole underestimates the challenges posed by mergers – somehow seeming to believe that once you stick the bits together, the actual integration will take care of itself. We asked senior clinicians how long they thought it would take for the merger to be fully embedded. They said 3 – 5 years. When we asked if we could speak to someone with responsibility for the post-merger integration we were told that the merger team was disbanded within weeks of the merger taking place.
Similarly in another trust we have been working with massively underestimated the size of the task that the merger they were involved in. Three years later they are still dealing with the fall-out.
According to a recently published report by the Kings Fund (Foundation trust and NHS trust mergers 2010 – 2015) there have been 20 mergers involving trust and foundation trusts over the last five years. In a damning critique they say that NHS mergers are expensive, lack a clear rationale and are unlikely to address the root causes of the difficulties they target. The Kings Fund also take the view that very little in the way of resources are allocated to the merger process (as opposed to writing down debts and covering deficits).
Many of the same issues arise in setting up the complex new structures of Accountable Care Organisations and Accountable Care Systems that are next on the NHS’s agenda.
Bringing organisations together is difficult, takes resources and needs attention. If you are involved in one, be prepared!