Mergers in the NHS are all the rage. Trust merging with trust, health authority with health authority, combining practices into primary care groups, and service rationalisation between sites all have similar effects. In this and the previous financial year, around 100 trusts in England alone have been or will be involved in mergers - more than one-fifth of the total - and there are similar developments in Wales and Scotland.
In supporting mergers the government might be hoping to:
reduce management costs;
improve the quality of service through, for example, better out-ofhours medical cover or better sited facilities;
improve the ability to deliver strategic service change by bringing different 'factions' under one organisational and management umbrella.
Despite the strong pressure behind these developments, the Department of Health has not made clear the rationale for specific mergers it appears to support, other than to claim substantial management cost savings and the benefits of service rationalisation. But it has not explained how in practice these might be achieved; nor has it paid proper attention to the risks of poorly conducted mergers, such as loss of staff morale and a lower level of organisational performance.
These risks are considerable. Much of the available evidence suggests that the anticipated benefits of merger are rarely achieved in practice, and the underlying rationale for seeking a merger is often both unclear and unlikely to succeed.
Researchers have concluded that the economic benefits of mergers are modest at best.
A summary of research on the impact of mergers on staff health found that organisational performance always suffers in the short term and that there can be severe impact on people's mental and physical health.
Cost savings from reductions in management overheads are small even in anticipation, typically estimated at£200,000-300,000 a year, or less than 1 per cent of the total budgets of the combined organisations.
And these savings are usually outweighed in reality by a combination of the unanticipated direct costs of supporting the merger process and the unmeasured, but often substantial, loss of morale and productivity for several years resulting from disrupted relationships and communication patterns, and increased stress from fear of job loss, forced change of location or role reassignment.
This latter loss is found even in the most successful mergers.
If NHS management costs must be reduced quickly, the savings are even more likely to be offset by these hidden, but nonetheless real, losses in the actual performance of the combined operation.
Given that the political pressure supporting mergers may be irresistible, or the path to merger may already have been embarked upon, what policy implications are there for central government? And what can the leaders of healthcare organisations do to minimise the damaging impact that is almost always felt in the short term? How can health service mergers improve on the likelihood of success from the typically reported 15-20 per cent of all private sector mergers?
How people are treated and how they respond to change matters at all stages, but the issues vary over time, between different staff groups, and in the different sites and organisations involved.
At least two years are needed following mergers for the benefits to be realised, and it can take longer, even when the merger is a 'success'.
One study of 100 major organisational changes - not mergers but on a similar scale - suggested that it took five years for the most important changes to be achieved.
If mergers are to produce benefits, they must be planned and implemented with this long-term horizon in mind.
In practice, most management attention is typically focused as follows: in pre-merger discussions on financial issues; at merger time on the local politics of the situation;
and post-merger on limiting the damage that is by then often apparent. The longer-term requirements of success tend to be ignored.
This is also true of central government, which has followed the typical pattern of focusing on the anticipated financial benefits of merger, or seeing them as the only way to secure strategic service delivery change.
The government has also emphasised meeting trade union concerns about job losses or worsening employment conditions through support for transfer of undertakings and protection of employment. Overall, there has been too much emphasis on stage one - premerger discussion - and the government has typically focused on the expected savings and other benefits, and has not paid real attention to the crucial issue of how people are handled and motivated throughout all the stages of merger over a long period.
Against this background it is not surprising that early results of NHS mergers are not encouraging. A recent report suggests that the savings of over£4m a year expected from merging Barnet and Edgware trusts (and their acute hospitals) in north London have not been achieved, and are unlikely to be achieved.
As part of a review of mergers, the Health Education Authority invited comment from the NHS about senior staff 's experiences. Only a few respondents indicated that they felt their local merger had been well executed (for example, Pinderfields and Pontefract), and even they felt - in common with researched experience from outside the NHS - that it would be some years before major benefits were realised.
Senior clinical staff, particularly consultants, are seriously disenchanted with the merger process.
A high proportion of NHS consultants attending King's Fund programmes are so thoroughly disillusioned by what they perceive, rightly or wrongly, as broken central government promises that they have almost opted out of engagement in service redesign following merger.
It is not that they do not support the policy intentions, but rather that they do not see how to make a constructive input in the face of so many contradictory central demands. They must reorganise the merged service, shorten waiting lists, reduce junior doctors' hours, provide a more consumer-responsive service, make better use of research evidence and protect time for teaching and research while still seeing more patients personally, keeping their technical skills up-to-date and making do with fewer supporting staff in the interests of increased 'efficiency'.
They are not even receiving much from the increase in consultant numbers promised by successive governments, and are mistrustful of past failures to anticipate training needs in key specialties such as obstetrics and gynaecology, anaesthetics and oncology.
It is easy to dismiss this as 'whinging' or looking for someone else to blame, but the reality of pressure in consultants' working lives as they describe it in confidential discussion groups cannot be denied.
They are key to making many of the proposed changes work, yet have felt forced to adopt a cynical attitude to centrally driven policy initiatives as a defence mechanism against perpetual work overload in what is, at best, an inherently stressful job. It does not help that a workaholic culture has become endemic among senior NHS managers.
It is not so much that the pace of change should slow, as that the practical consequences of the pressures to merge should be better recognised centrally.
Achieving change is not free of cost or effort, yet the expressed intention is usually that it should be done within existing and already tight 'envelopes' of money and time.
Some parts of the NHS Executive and its regional offices are offering practical help, training and development, or resources to support change - and this is welcomed by those involved in implementing it. But these efforts are perceived as too limited in the face of the massive change agenda facing senior and middle clinical and management staff, and not backed by government resources.
If mergers are going to succeed, the government should consider:
clarifying the real reasons underpinning the political thrust for merger, and tailoring the general argument to particular mergers;
resourcing adequate organisational development support for the organisations and individuals most involved in mergers;
matching actions more closely to intentions, to reduce cynicism among key staff groups whose support will be crucial in realising the intended benefits.
If these steps are taken, future mergers may have a reasonable chance of success.
Reducing the pain Pre-merger Clarify the reasons for merger at local level.
Explore the cultural and strategic fit of the organisations involved.
Merger Provide clear information on reasons for merger, likely timetable and effects on jobs and career prospects.
Use the expertise of human resources staff early on.
Remember that actions speak louder than words. Early actions will have great symbolic significance for anxious staff.
Post-merger Ensure actions are consistent with the declared aims of the merger.
Make key decisions, especially about top posts, quickly.
Give time, attention and resources to the merger process.
Support the most vulnerable groups - middle managers, clinical staff, staff in departments earmarked for cost savings and top managers whose jobs or roles are threatened.
Source: Healthy Ever After? Supporting staff through merger and beyond .
Key points
More than a fifth of trusts in England are involved in mergers.
The Department of Health has not revealed the rationale for its drive on mergers.
Small, potential cost savings are often outweighed by the expense of the merger process and loss of morale and productivity.
Many NHS consultants are not involving themselves in redesigning services following mergers because they cannot see a way forward in the face of so many contradictory central demands.
Support for this massive change programme is not adequate.
REFERENCES
1 Crail M. Bitter pill. HSJ 1999; 109 (5638): 10-11.
2 Cartwright S, Cooper C. The human effects of mergers and acquisitions. Trends in Organisational Behaviour . Cooper C, Rousseau D (eds ). Chichester: John Wiley and sons. 1994: vol 1.
3 Goddard M, Ferguson B. Mergers in the NHS: made in heaven or marriages of convenience? Nuffield occasional papers, Health Economics series. London: Nuffield Trust 1996: Paper No 1.
4 McClenahan J, Howard L, Macknight A. Health Ever After - supporting staff through merger and beyond . London: Health Education Authority, 1999.
5 Kotter J. Why transformation efforts fail. Harvard Business Rev iew 1995; 73: 2.
6 Whitfield L. Sorry is the hardest word. HSJ 1998; 108: 16.
John McClenahan is fellow in leadership development, the King's Fund.
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