Navigating a Merger…

Mergers offer powerful means to advance an organization and build reach into the market. Like many impactful decisions, any sought-after success is a function of execution.  Along with the excitement of a merger, comes the near-chaos and complexity of integration. Recently a large integrated organization, inclusive of a health plan and university, added to its ability to provide care to its extended market. The merger nearly doubled the size of clinical operations but brought with it complexity. At a time when a responsive financial strategy is most needed, management is often working with imperfect data and strategies.  Through it all, the organization focused on aligning its financial strategies with its core mission to navigate this meaningful transition.

Challenge

The merger brought plenty of new possibilities but also some serious challenges:

• Doubling in size meant they had to manage new operational pressures in an already tough clinical environment.

• Integrating two large health systems raised financial risks, especially for a diverse organization that includes a health plan and university.

• Their longstanding mission-first investment strategy needed a refresh to fit the organization’s new scale and complexity.

Solution

Leadership embraced the challenges head-on, with a clear focus on keeping things steady during the transition. Here’s how they did it:

• Revisiting Investments
  With two systems coming together, they recast its cash and investment strategy, ensuring it could meet the needs of the larger organization and striking an overall organizational risk balance.

• Making Smart Decisions with Limited Data
  With reasonable but imperfect information, the team conducted targeted studies to better understand proxies for operations, capital spending, and debt obligations.

• Safety Net 
  They decided to take a more conservative approach, prioritizing stability while they worked through the complexities of integration.  In time, they hope to earn back the risk capacity.

Impact

Through their careful planning and teamwork, the organization confidently and boldly  set the financial strategy in motion:

• De-Risking for Stability
  To reduce financial pressure, they shifted over $1 billion into safer investments to give them the breathing room they needed while operations stabilized.

• Unified Leadership
  With so many decisions to make, it was crucial for leadership to stay aligned. The team worked together seamlessly, ensuring everyone was on the same page about the de-risking strategy.

Their story is one of resilience and collaboration. By focusing on what mattered most—stability, alignment, and staying true to their mission—they successfully navigated the complexities of a major merger. It’s a testament to how thoughtful decisions and teamwork can capture opportunities for growth.