For potential suitors in the healthcare mergers craze that seems to reflect the idea that bigger is better, or at least safer, the important question at hand is how long will it take to turn around a 1,093-foot nuclear-powdered aircraft carrier in the Houston ship channel that is 45 feet deep and only 500 feet wide?
Meanwhile there are consultants, investment bankers and lawyers standing on the sidelines, much as they did during the 1990s merger phase, ready to reap big fees to unwind or litigate a difficult divorce before the creditors call the question.
For executives who must also worry about their own career path, the potential for layoffs in mergers is no laughing matter. As one CEO said of his merger with another regional system, “There are going to be a lot of people who lose their jobs through no fault of their own.”
If you are employed by an organization in serious merger talks, or waiting for the FTC or the courts to bless the consolidation, what should you do?
- Keep your options open. If a recruiter calls, and you can keep your interest strictly confidential, then exploratory talks are a prudent move. If it is not for you, volunteer to help the recruiter. Trust me, we appreciate and remember people who do that. That said, having a multiple of career options is essential.
- Don’t assume you are safe. We have already seen numerous top performers in our career transition practice, looking for another opportunity, the victims of consolidation layoffs. One of the grief issues we have to help them with is a sense of frustration that their years of service, consistent exceptional performance and devotion and loyalty, did not seem to count for much in the inevitable give and take of talent allocation — which side of the deal gets to keep which people.
- Do not delay, build your professional network. Even if the merger does not happen, or you land somewhere else, the fact is that the old business model and the methods and rates of reimbursement are changing. Hospitals today, overall, are receiving the most they will ever receive from Medicare. It is only going down, and the smart CEOs are already crafting expense reduction and process redesign strategies. To survive hospitals, merged or an independent, must figure out how to deliver services more effectively and more efficiently (at a lower cost) while improving with quality of care and patient safety. No small task. How will this happen? I am not certain, except to say there will be fewer people doing it. So, now is the time, not next week or next month, to begin building a robust network of healthcare professionals who can help you move your career forward. If you are not a member or not active in the American College of Healthcare Executives, Healthcare Finance Management Association or Medical Group Management Association, then what are you waiting for? You are already behind. There are some exceptional benefits these organizations can provide if you are a member, including access to their membership. If you do not think you need to focus on this, be advised that you are tempting the mythical gods of layoffs and they do not liked to be tempted.
- Build you rainy day fund. While many senior executives receive a severance agreement, typically a year, it will probably take longer to find your next good and challenging position. To avoid eating into retirement savings, it is a smart move to have additional cash in reserve. Like networking, this, too, requires advance planning. Start now.
- Have the conversation. Even if you live in a large metropolitan area, increasing consolidation and reductions in reimbursement are contributing to a fewer number of leadership jobs. In other words, there are no guarantees you will be able to remain in the same market. If you are laid off in a smaller secondary market, call the moving service and collect your estimates because the chances are greatly diminished you will find a similar job there. Then there is an obvious rub: family, especially when the family unit includes teenage girls or boys who are active in sports or extracurricular activities. I wish I had $20 for every time a recently dispossessed executive said he could not relocate for this very reason. “I need you to find me something in this market.” If you find yourself in the middle of a merger it is time to have that conversation, with your wife first and then the rest of your family. Most organizations are not keen on hiring executives who will have a prolonged, long-distance commute to work. That said, there is always the option of consulting or interim assignments but like the long-distance commuting, there will be more than a few family events that will missed. In short, there are probably no great options if a relocation is out of the question.