By Howard Breindel, co-founder, DeSantis Breindel
Across the country, healthcare is consolidating. But without careful attention to brand, many of these combinations will never deliver the hoped-for benefits.
During 2019 and 2020, the latest years for which complete data is available, hospitals acquired an additional 3,200 medical practices and 18,600 physicians. Hospitals themselves are merging with growing frequency. The motivation behind these combinations is clear: healthcare organizations seek to realize operational, strategic, and financial synergies and efficiencies, while also creating long-term value for everyone touched by their operations. Yet most mergers and acquisitions, including those in healthcare, are destined to fail. According to the Harvard Business Review, “study after study puts the failure rate of mergers and acquisitions at somewhere between 70-90%.”
There are of course myriad reasons for these failures, from the absence of hoped for synergies to poorly executed integration. But the lack of an effectively merged brand is a contributing factor to the failure of many of these combinations. According to a 2020 study by McKinsey,, marketing — driven by brand – “plays a vital role in integration and deal success and should not be an afterthought. Rather, marketing should lead the organization in developing fresh, compelling value propositions and setting the new organization’s brand strategy.” In short, marketing – and the brand that drives it – is key to merger success.
The importance of brand
A brand is the sum total of what an organization’s most important audiences think about it. Jeff Bezos famously observed that “a brand is what other people say about you when you’re not in the room.” Thus, every organization has a brand, whether it was deliberately created or arose organically; typically, it’s a combination of the two. This means that the merger of two healthcare entities is more than a combination of facilities and staff; it is a combination of brands.
Consider the example of two merging hospitals, one known for advanced therapeutic approaches, the other for the warmth of its community-centered care. To deliver both better patient care and achieve measurable synergies, the combined entity will need to create a new brand that reflects the combined strengths of both organizations while also addressing needs and expectations of patients and caregivers.
While it may be tempting to simply move forward identifying with the larger or better-known brand – or even doing nothing – these approaches can be costly in the long run. A study published in the Harvard Business Review found that companies that assimilated under a single legacy brand post-merger underperformed market expectations by 18 percent, while those that created a new brand outperformed market expectations by 3 percent (if you’re wondering, those that did nothing underperformed by 25 percent).
In healthcare, the perils of failing to consider brand unification are particularly severe. This is because healthcare touches people deeply: if patients, caregivers, and staff feel that a merger or acquisition imperils the quality of care they receive – or affects their ability to deliver quality care – the combination will be perceived as failing to deliver on its brand promise. Patients, caregivers, and staff will look elsewhere for what they want.
In contrast, an effective brand can help create a sense of shared purpose for caregivers and staff – vital if they are to deliver a consistently positive experience to patients. It can inform the ways in which the newly combined entity will provide better care, and strengthen its reputation during a time of uncertainty and change. A strong, unified brand can reassure patients that the combination will enhance their care, not diminish it.
Leveraging the power of brand to unlock M&A success involves several important steps, with many moving parts at each stage. Among these steps, four are imperative.
1Understand your audience
Successfully creating a new brand following a merger or acquisition requires answering several key questions. Should one brand take precedence over the other? Which elements of both brands should be carried forward into the new brand, and which should be jettisoned? What are the positive associations carried by each brand in the deal? Has the local, regional, or even national healthcare landscape shifted as a result of the combination, and how will decision drivers among patients, caregivers, and referral sources change in light this potential shift?
Addressing these and other questions cannot be done through guesswork. The stakes are too high to risk getting it wrong, and it is all but guaranteed that those leading the merger or acquisition will come to the table with biased opinions. Instead, it’s important to let research guide the way. Patients and caregivers associated with both entities will have established ideas of what each organization does best and may even have expectations for what the combination means for them.
Consider this example. Several years ago, we created a brand for a new entity formed by the merger of three community hospitals in a highly competitive healthcare market. The combination promised to bring more services, more specialties, and more choice to the region. The organization was considering going to market emphasizing the vastly expanded range of offerings brought about by the merger. But our research showed that patients’ top concern was becoming lost and confused in a sea of choice and complexity. Rather than trumpet the array of new services, the new brand was all about “360 degrees of coordinated care.”
2Find the connective tissue
Every healthcare organization – whether a physician practice, a hospital, or a chain of urgent care centers – has unique strengths that set it apart from other providers. To make a combination work, these strengths must be carried forward into the new brand. Often, the organization itself may not be aware of what truly distinguishes it. When we worked with a regional health center on a new brand, the leadership of the organization assured us that it was best known for its up-to-date technology and state-of-the-art treatments. Research revealed that while patients did indeed recognize the hospital’s advanced capabilities, the quality they most appreciated was its welcoming, caring culture. This led to a brand built around the concept of “belonging,” which became the foundation of a successful advertising campaign with the theme “You’ll feel it the moment you meet us.”
When two healthcare entities merge, each will have its own strengths. The branding imperative is to use research, qualitative and quantitative, to identify those strengths, and then build a new brand around what they have in common. Finding the “connective tissue” often involves focusing on the underlying benefit of disparate strengths – the “why” – rather than specific capabilities or offerings, the “what.” For example, when two healthcare payments technology companies merged, one brought advanced technology to the table, the other a strong reputation for customer service. The new brand that united both organizations was built around simplifying the payments process – the ultimate benefit of both technology and service.
3Build from the inside out.
A powerful new brand can help bring together different workforces, mindsets, and cultures, uniting employees around a common value proposition and purpose. Brands, and healthcare brands in particular, are built from the inside out, which means that transforming your employees into willing and enthusiastic ambassadors for the newly-combined brand from the outset will make it that much easier to engage caregivers in delivering compelling experiences that reflect the power and value of the new brand.
The process of uniting cultures often beings with the branding process itself. Engage as many people as possible from both combining entities in interviews, focus groups, and surveys. Not only does this result in important intelligence on employee perceptions and attitudes, it also gives everyone a sense of ownership, so that when the new brand is launched, they are more likely to support it. Brand training can also be invaluable in ensuring that everyone understands what the new entity stands for – and how they are expected to contribute to its success. For the merging healthcare payments companies mentioned above, employees were trained not only in what the brand stood for, but also in how to communicate in a way that exemplified the brand. In this case, simplification meant writing in clear, non-jargony language, streamlining reports, keeping pitch presentation short and to the point, and responding to customer queries with clearly articulated solutions, not more questions.
4Deliver an experience.
Healthcare brands come to life most powerfully through experiences. An experience can begin when someone visits a hospital website or encounters a brand on social media. It can happen when a patient enters a physician’s waiting room and is greeted by a receptionist. Brand experiences take place on phones calls, in one-to-one personal encounters, at meetings, and at events. Every touchpoint with every audience is part of a larger experience, and the success of that experience will determine the impact of your brand. At every interaction, in person or virtual, a patient or prospective employee or referring physician must come away feeling that there is something about the experience of engaging with you that sets you apart and delivers value. That’s the power of a compelling brand delivered through a consistent brand experience.
There are so many complexities involved in combining two organizations – integrating systems, locations, personnel – that it’s tempting to put off or even overlook branding. But a powerful, unified brand that engages patients and rallies staff is critical to ensuring the success of a combination.
About the author:
Howard Breindel is a co-founder of DeSantis Breindel. He works with visionary leaders across B2B industries whose companies are at critical inflection points, helping them harness the power of brand to grow their business.