Effect of Mergers and Acquisitions on Healthcare - Essay Example

Positive and Negative impacts on Mergers and acquisitions on Health care. Mergers and acquisitions have become common these days with more and more industries and sectors looking at expansion into different arenas. As more companies look at expansion as one of the best ways to increase their profits and deliver quality lifestyles to their stakeholders, Mergers and Acquisitions are always a common sight. As the human race evolved, the health care became increasingly complex finally becoming a multi-trillion dollar industry worldwide. Infact the use of the word "industry" to the term Healthcare itself suggest the kind of view one has these days towards the Healthcare services. This dissertation will discuss the impact of Mergers and Acquisitions on the Healthcare services using specific examples. It will also focus on the impact it has had on the workforce, patients and the organizations themselves. Mergers and acquisitions or M&A as it is popularly called, come to influence the organizations that undergo the process as there are numerous changes especially at the top levels such as in the ownership, in mode of operation, and also in the way the business is done. Of the three strategic assets that have been listed above, the degree of cultural cohesion is found to be the most important asset in the ultimate outcome of the deal. In fact, cultural cohesion also happens to be the one that impacts the extent to which qualitative talent retention can be achieved. It is a common practice for companies in the modern days to publish their cultural heritage and values. However, it has always been found that whatever is mentioned does not always mean that it exists there in the existing culture of the place. Anthropologists have always believed that the procedure for knowing about a particular group's culture does not necessarily begin by asking members to identify the specific traits. In fact, in most instances, the cultural traits of the surroundings are not easily identified by the members belonging to the social group. As such, gaining an insight into the nuances of cultural influences that are practiced over time within a specific group or organization involves a thorough process and means studying over prolonged periods of time and observation. This observation is used to form important questions about practices, disciplines and the techniques used to define and solve problem using well-formed strategies (K. Conner, 1991). Cultural Cohesion The amount of cohesion within a company's cultural domain is dependent on the proper identification of the organization's cultural components, which can be mapped directly to the structural components of the building such as the foundation, walls, beams etc. therefore, it is extremely necessary to carry out a thorough inspection of the whole area, identify and assess the walls of a building so as to be able to arrive at possible conclusions on the integrity of the space before the entire place can be restructured or renovated. Despite the fact that a company may have been acquired given the positive opinion on attributes such as brands, competencies, stocks and assets, the real success for a merged enterprise depends on whether the necessary steps have been initiated to identify and retain the organization's predominant cultural attributes that sustain and support the necessary inherent valuable resources (R Grant, 1991). Impact of Mergers and Acquisitions on the organizations involved To begin with, it should be understood that healthcare services has in itself become an industry due to several factors, the major one being the rapid rise in population over the last couple of decades. It's a well known fact that increase in population implies increasing demand for health care services. Changing environmental factors and the proliferation of new diseases arising out of them also has been a major factor towards commercialization of health care services. Also the improving lifestyles of the people seeking healthcare services is also an important factor which drives organizations towards Mergers and Acquisitions which clearly implies no place for small clinics and healthcare centers, so as to speak more about profit making and less about quality healthcare, patient relations and interest of the workers. Because heath care is a matter of life and death for the patients or customers, when care is compromised due to business decisions, and patients get injured and die as a result, and the organizations must face with lawsuits and negative public image, although in fairness, lawsuits have become a commonplace in all businesses due to the litigious nature of the society as a whole (R. Amit and P. Schoemaker, 1993). One other factor which might get effected will be the delivery of the health care services itself which will be discussed in the next section. Impact of Mergers and Acquisitions on the delivery of Health care services Services have rapidly changes, more specifically, the availability of those services in different places across the world. For example, when local hospitals and clinics are closed and regional centers are opened in an attempt to provide quality health services to a particular area, people living far off will definitely lose out and will not have any access to the hospital. When these services are downsized and the delivery of quality services is compromised, there also arises an ethical issue of the social responsibility of the health care services to make health care easily available and accessible. Health care organizations should also keep profits in mind, but the bottom line should always be delivery of better quality services to the patients and the needy. Profits and other investments coming in should always be used for further investment in the efforts towards improving the health care services (K. Conner, 1991). Hence, it should be clearly noted that there needs to be a clear line drawn between profits and the quality of health care services. Impact of Mergers and Acquisitions on the Healthcare workforce The Workforce in healthcare, due to be rapid conversion of the health care industry into a commercial work place, have been exposed to same kind of opportunities and problems that the workers face in the rest of the world. Because that certain type of workers are required and are in high demand, it is quite obvious that they'll shift jobs at a very rapid rate and this will effect organizations and the quality of health care services as it they're more prone of staffing shortages unexpectedly. Additionally, from the viewpoint of the workers, mergers and acquisitions result in huge lay-offs or pay cuts because of the fact that heath care is no more viewed as a public service, but as a profit making industry (E. Penrose, 1959). Also, it is important to consider that apart from all the affects on the healthcare workforce, the impact the health care has on patients also plays a crucial role in the healing of the diseases the patients have. Hence, work force definitely has a very crucial role to play in the health care organizations as much as the Doctors have. Impact of Mergers and Acquisitions on Patients Patients have been hit the most among the people affected due to Mergers and Acquisitions of the health care services. For example, reduction in staffing costs will directly result in less attention towards the patients. Mergers and Acquisitions done on a commercial motive, will, most of the times result in increased fares and prices making it inaccessible to most of the public. As already mentioned in the paper this, would, in effect have bad repercussions and would be irreversible affects of the nature of health care being provided to the patients. It is a well known fact that the nature of health care is something that holds the power to quite literally cure or kill a patient. As one expert aptly puts it, when discussing health care as a business, the desire for profits may be one of the most lethal diseases of all, very contagious and extremely hard to cure (E. Penrose, 1959). Conclusion Overall, research shows that when health care becomes a business rather a public service, there are some negative effects and in some fairness, a few positive ones. In closing, perhaps the most important point to take from this research is that, health care organizations, while being conscious of their profits, at the same time must not forget the human element of what they're doing to avoid catastrophe. REFERENCES 1. E. Penrose (1959), the Theory of the Growth of the Firm. New York: John Wiley. 2. K. Conner (1991), Historical Comparison of Resource-based Theory and Five Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm Journal of Management. 3. R Grant (1991), The Resource-based Theory of Competitive Advantage: Implications for Strategy Formulation, California Management Review. 4. R. Amit and P. Schoemaker (1993), Strategic Assets and Organizational Rent. StrategicManagement Journal. Read More