by Thomas E. Serena MD, FACS, FACHM, FAPWCA
"Would you like that super-sized?" is a phrase made popular by the fast food giant McDonald’s. The McDonald’s marketing geniuses tapped into a sentiment that permeates the American psyche. We are convinced that bigger is better; that size can be equated with financial stability and better service. However, if there is a lesson to be learned from recent history it is bigger is not always better or even desirable.
At the end of 2011 the long suspected merger of two giants in the wound and hyperbaric world was announced. One does not have to be an expert in mergers and acquisitions to realize that the marriage of National Healing Corporation and Diversified Clinical Services will be a herculean feat. I wish them all the best. Like watching Sisyphus push the boulder up the hill, I am glad it is not me. The potential problems are mind bending. I am frequently asked to consult for failing centers. As such, I have faced many of the problems, on a much smaller scale, that will emerge from this merger. As a matter of transparency I run a number of wound and hyperbaric centers across the US. I consider our efforts a boutique service, offering highly specialized clinical and research programs to our hospitals. Like the flea and the elephant, I have never regarded the giants as competition.
The first and most obvious problem that I see resulting from this marriage of these two giants is the dreaded non-compete clause. In my experience, hospitals in a given region adamantly demand exclusivity. No amount of negotiation or outright begging has ever led to a hospital relinquishing a non-compete. Invariably the new as yet unnamed company will now find itself in competing hospitals in the same town and in some cases, literally across the street from one another. From the perspective of the hospital’s CEO, this will be a serious conflict of interest, one in which the only solution may be dissolution of the current contract.
We spend an enormous amount of time nurturing and developing relationships with practitioners and administrators, assessing their needs and assisting in all aspects of clinical practice and financial viability. A merger of this type will invariably lead to a reorganization of personnel. The program director at the center has to ask, “What will happen to the team that set up my center? Who will I call when there are problems? Will I like them?
The most difficult part of a merger of this magnitude has to be the documentation and quality assurance. What EMR will be used? What kind of retraining will be required? How long will it take for quality measures to be put in place? Will clinical outcomes suffer? Will the center lose its competitive edge during the inevitable transition period?
Finally, managing more than 500 combined centers cannot possibly lend itself to personalized individual attention. The service will by necessity become generic. As a clinician, I feel alienated by this one-size-fits-all approach. It was the impetus for me to start a company that offered an alternative to “generic hyperbaric.”
One possible advantage would be that cost savings resulting from the merger could be passed onto the hospitals.
I am sure that the managers at Metalmark Capital, a major fund-provide in this merger, have anticipated all of these concerns. I am looking forward to learning from their problem-solving expertise.
About The Author
Dr. Thomas Serena has published more than 75 peer-reviewed papers and has made in excess of 200 presentations worldwide. He has been elected to the Board of Directors of both The Wound Healing Society and the American College of Hyperbaric Medicine (ACHM), the leading academic society in the field of Hyperbaric Medicine. In 2013 Dr. Serena was elected vice president of the American Professional Wound Care Association (APWCA). Dr. Serena has opened and operates Wound Care and hyperbaric oxygen treatment clinics across the United States.
The views and opinions expressed in this blog are solely those of the author, and do not represent the views of WoundSource, Kestrel Health Information, Inc., its affiliates, or subsidiary companies.
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