fulop_et_al_(2005)_changing_organisations

8/3/2019 Fulop_et_al_(2005)_Changing_organisations

1/12

Social Science & Medicine 60 (2005) 119130

Changing organisations: a study of the context and processes

of mergers of health care providers in England

Naomi Fulopa,*, Gerasimos Protopsaltisb, Annette Kingc, Pauline Allena,Andrew Hutchingsa, Charles Normanda

aHealth Services Research Unit, London School of Hygiene and Tropical Medicine, Keppel Street, London WC1E 7HT, UKbPaparalessa 10, Moschato, T.K. 183-44, Athens, Greece

cGCSRO, Strategy Unit, Admiralty Arch, The Mall, London SW1 2WH, UK

Available online 19 June 2004

Abstract

This paper presents findings from a study of the context and processes of provider mergers in the NHS in England.

Mergers are an example of organisational restructuring, a key lever for change in the UK health care sector and

elsewhere, although it is only one strategy for organisational change. The framework for the study is key themes from

the organisational change literature: the complexity of the effects of change; the importance of context; and the role of

organisational culture. The drivers for health care mergers and the evidence for these are analysed.

Using documentary analysis and in-depth qualitative interviews with internal and external stakeholders, the first part

of the paper reports on stated and unstated drivers in nine mergers. This provides the context for four in-depth case

studies of the process of merger in the second and third years post-merger.

Our study shows that the contexts of mergers, including drivers of change, are important. Merger is a process withoutclear boundaries, and this study shows problems persisting into the third year post-merger. Loss of management control

and focus led to delays in service developments. Difficulties in the merger process included perceived differences in

organisational culture and perceptions of takeover which limited sharing of good practice across newly merged

organisations. Merger policy was based on simplistic assumptions about processes of organisational change that do not

take into account the dynamic relationship between the organisation and its context and between the organisation and

individuals within it. Understanding the process of merger better should lead to a more cautious approach to the likely

gains, provide understanding of the problems that are likely in the period of change, and anticipate and avoid harmful

consequences.

r 2004 Elsevier Ltd. All rights reserved.

Keywords: Mergers; Organisational change; Organisational restructuring; Organisational context; Organisational processes; UK

Introduction

Mergers have become increasingly common in both

North American and UK health care sectors in the past

20 years. Between 1996 and 2001 in the NHS in

England, 99 health care provider mergers were for-

malised among acute care, mental health, and commu-

nity health services providers (Department of Health,

2001).

Mergers illustrate the focus on organisational re-

structuring as the key lever for change in the UK health

care sector and elsewhere (Normand, 2004; Smith,

Walshe, & Hunter, 2001). This is just one method

of organisational change (Iles & Sutherland, 2001).

Others include individual-level incentives such as per-

formance-related pay (Arrowsmith, French, Gilman, &

ARTICLE IN PRESS

*Corresponding author. Tel.: +44-20-7927-2458; fax: +44-

20-7612-7843.

E-mail address:[email protected] (N. Fulop).

0277-9536/$- see front matter r 2004 Elsevier Ltd. All rights reserved.

doi:10.1016/j.socscimed.2004.04.017


2/12

Richardson, 2001), or organisational performance as-

sessments (Marshall, Shekelle, Davies, & Smith, 2003);

attempts to change organisational culture, for example,

using Total Quality Management (Joss & Kogan, 1995);

or attempts at radical organisational transformation,

such as Business Process Reengineering (McNulty &

Ferlie, 2002).Although not mutually exclusive, these approaches

are based on different and more or less sophisticated

theories of organisations, change, the relationships

between the organisation and its context, and between

the organisation and individuals within it (McNulty &

Ferlie, 2002). Arguably, mergers are based on simplistic

notions of organisational change that do not acknowl-

edge the dynamic relationship between the organisation

and its context and between the organisation and the

individuals within it (Child, 1997; Giddens, 1984).

Context is important. In private sector mergers

usually there is clear managerial authority, whereas inthe public sector they involve multiple stakeholders and

are easily politicised (Denis, Lamothe, & Langley, 1999).

This is particularly true in professionally dominated

organisations where professionals who traditionally had

considerable power and autonomy are expected to

change deeply rooted behaviour and often resist radical

change (Pettigrew, Ferlie, & McKee, 1992). Multiple,

sometimes conflicting public sector objectives probably

make the merger process more complex (Ferlie, 1997).

Large-scale organisational change has been conceptua-

lised as part of a wider political and administrative

management culture, characterised by periodic restruc-

turing and transformation of public sector institutions

(Ferlie, 1997), and mergers specifically have been viewed

as an example of the new public management

(Kitchener & Gask, 2003).

Organisational culture, although a disputed term, has

been identified as an important element of organisa-

tional change (Davies, Nutley, & Mannion, 2000;

Pettigrew et al., 1992). Organisations appear to be

attached to their general cultural patterns and these may

become obstacles to bringing different organisations

together (Denis et al., 1999; Greene, 1990). Cultural

differences are particularly pertinent in professionally

dominated organisations (McNulty & Ferlie, 2002).Aspects of organisational culture that are key to health

services include attitudes to innovation and risk; out-

come or process orientation; and patterns of commu-

nication (Davies et al., 2000).

Drivers for health care mergers, an important element

of their context, include anticipated economic, clinical

and political gains. Economic gains are expected from

economies of scale and scope, particularly regarding

management costs and improving efficiency through

rationalising provision (Ferguson & Goddard, 1997).

Evidence suggests scale economies become exhausted

in the 100200 bed range and diseconomies begin

between 300 and 600 beds (Ferguson, Sheldon, &

Posnett, 1997). Hospital mergers resulting in more

than 500 beds (common in the UK, US and Canada)

are unlikely to achieve economies of scale. Where

mergers have resulted in an increased range of services,

there is no evidence of scope economies (Lynk, 1995;

Treat, 1976).Improvements in clinical quality have been predicted

through higher volumes of activity; better medical

training (Dowie & Gravelle, 1997); and easier recruit-

ment and retention of staff (Ferguson et al., 1997).

Evidence shows higher volumes improve clinical out-

comes in some specialities, but gains are exhausted at

relatively low thresholds (NHS Centre for Reviews and

Dissemination, 1997). Political drivers include facilitat-

ing hospital or service closures and securing financial

viability of smaller organisations (Garside, 1999). For

mental health services in England, additional impetus

for merger has been the belief that single-focus mentalhealth trusts would provide better services (Department

of Health, 1997, 1998).

The cases presented for provider mergers emphasised

benefits but underplayed organisational aspects, unin-

tended consequences and potential drawbacks. These

include diseconomies of scale, problems in integrating

staff, services, systems and working practices, and equity

in access to services (Ferguson & Goddard, 1997). Most

studies focused on the impact on costs rather than

quality of services. There is little evidence on the

organisational impact of mergers. Some found that

mergers provide opportunities for shared learning and

collaborations (Leroy & Ramanantsoa, 1997). Disbe-

nefits discussed include lower morale, stress from fear of

loss of jobs (Greene, 1990; McClenahan & Howard,

1999); and clashes of corporate culture (Denis et al.,

1999; Greene, 1990). Evidence from other sectors

suggests that efficiency often declines post-merger due

to unforeseen problems in integrating firms (Buono &

Bowditch, 1989; Haspeslagh & Jemison, 1992).

The focus of this paper is on the context and processes

of organisational change, in this case, merger. It reports

results from a study of NHS provider mergers in

England. The organisational change literature suggests

the context for mergers is important and effects will bemulti-layered and complex. To address these complex-

ities, multiple levels of analysis have been utilised to

study process phenomena that are fluid in character and

spread out over both time and space (Langley, 1999). A

merger is a unit of analysis with ambiguous bound-

aries (Langley, 1999); when the process begins and

ends is not obvious. Previous research treated merger

as having clear boundaries and therefore underestimated

its complexity. As McNulty and Ferlie (2002) argue,

analysis of change needs to attend to the interplay

between processes, people, and events both internal and

external to the organisation. Context, complexity and

ARTICLE IN PRESS

N. Fulop et al. / Social Science & Medicine 60 (2005) 119130120


3/12

organisational culture are therefore key themes in this

study, which analyses rich, new empirical data to

contribute to our understanding of health care mergers.

We present findings on the drivers for and objectives

of these mergers, both stated and unstated, as part of the

context within which mergers take place. We also

explore the relationship between the organisation andits context and the relationship between the organisation

and the individuals within. The extent to which

objectives of these mergers were met is reported

elsewhere (Fulop et al., 2002; Hutchings et al., 2003).

Methods

This paper focuses on the context and processes of

mergers. The contexts are acute, community and mental

health providers, and the combination of stated and

unstated drivers of mergers. Process data were collected

in real organisational contexts and have the character-

istics described by Langley (1999): data are composed of

events which are rarely ordered incidents and work on

different levels (for example, the implementation of

service developments and policies); data are comprised

of multiple units and levels of analysis with unclearboundaries; and process data are usually eclectic and of

high volume (for example, combining documentary

analysis with data from 130 semi-structured interviews).

The study consists of two main elements:

(a) analysis of the drivers of merger, both stated and

unstated, in all nine trust mergers in London in 1998

and 1999 (see Table 1) and

(b) four in-depth case studies in the second and third

year following merger (key features of each case

study are summarised in Table 2).

ARTICLE IN PRESS

Table 1

Trust mergers in London, 1998 and 1999

Trust type Year of merger Merged trust Constituent trusts Health authorities

Acute 1999 Trust A Trust 1 HA 1

Trust 2 HA 8

1999 Trust B Trust 3 HA 4

Trust 4

Trust 5

Trust 6

Trust 71999 Trust C Trust 8 HA 7

Trust 9 HA 9

1999 Trust D Trust 10 HA 1

(Case study acute trust) Trust 11

1998 Trust E Trust 12 HA 5

Trust 13 HA 10

Community 1999 Trust F Trust 14 HA 6

(Case study community trust I) Trust 15

Trust 16

Trust G Trust 17

1999 Trust H Trust 18 HA 7

(Case study community trust II) Trust 19Trust 20

Mental health 1999 Trust I Trust 21 HA 2

(Case study mental health trust) Trust 22 HA 3

Trust 23 HA 5

Trust J Trust 24

Combined 1999 Trust K Trust 24 HA 2

Trust 25 HA 5

HA 11

Notes: nine mergers produced 11 merged trusts.

All merged trusts above were included in drivers study.

Trusts D, F, H, I were case studies.

N. Fulop et al. / Social Science & Medicine 60 (2005) 119130 121


4/12

Data collection methods

Study of stated and unstated drivers

Public consultation documents were collected for all

mergers in London that came into effect in 1998 and

1999 to obtain stated drivers. Fourteen representatives

in seven Health Authorities (HAs) involved in the

mergers were interviewed to elicit unstated drivers.

One HA refused to participate (relating to the commu-

nity trust I merger). Semi-structured interview topics

included the background, drivers and objectives of the

mergers.

In-depth case studies

Case studies of four mergers were conducted (one

acute, one mental health and two community providers).

These were selected purposively (Bowling, 1997) to

ensure the range of trust types and geographical spread

in London. The purpose was to explore in greater depththe process of merger, assess how far objectives had been

met, and their intended and unintended consequences.

This paper reports findings in the second and third

years following merger. During the first phase, 2226

interviews were conducted with internal and external

stakeholders during year two post-merger (Table 3).

Interviewees were asked about objectives and drivers for

merger, processes involved, and for their assessment of

its impact on service delivery. They were asked to reflect

on the period before merger and the first 2 years. In each

case study, during the second phase (3 years post-

merger), 810 stakeholder interviews were conducted

(see Table 3) and two service delivery or managerial

developments were followed through in detail over 2

years (see Table 2, focus services). During the third

year post-merger, the community providers were pre-

paring for further reconfiguration: the formation of

Primary Care Trusts (PCTs).

Data analysis

Data were analysed using a preliminary theoretical

framework (Miles, 1979), rather than purely grounded

theory (Glaser & Strauss, 1967), so that analysis is a

combination of induction (data-driven generalisation)

and deduction (theory-driven exploration of hypotheses)

(Langley, 1999). This framework draws on the concepts

of context, complexity and organisational culture as well

as themes emerging from the data.

In the drivers study, public consultation documents

were analysed for evidence of stated objectives. Theseform part of the statutory consultation process and set

out arguments for the favoured organisational structure.

The analysis identified commonly articulated reasons for

the proposed mergers and some of the differences.

Four researchers read transcriptions and notes from

interviews to ensure reliability of the analysis. Emergent

themes were discussed and agreed. Findings from each

stage were written up in separate documents, producing

analysis of consultation documents, the interviews in the

drivers study, and the first and second round of case

study interviews. Findings from the different stages of

analysis were then compared and synthesised.

ARTICLE IN PRESS

Table 2

Key features of case study trusts

Acute trust Mental health trust Community trust I Community trust II

Year of merger 1 April 1999 1 April 1999 1 April 1999 1 April 1999

Type of merger Two trusts merged

creating one new trust

Four trusts merged

creating two new trusts

Four trusts merged

creating two new trusts

Three trusts merged

creating one new trustType of organisations

merged

Teaching hospital and

DGH

Services from mental

health and mixed

trusts

Services from

community and mixed

trusts

Services from

community and mixed

trusts

Population served 475,000 590,000 750,000 700,000

Income d150 million d80 million d65 million d75 million

Staff 4000 2000 1600 1700

Health authorities

involved

2 3 1 3

Main drivers Optimise provision of

services

Single focus on mental

health service

Borough-based

community services

Develop and secure

local services

Financial viability Borough-

coterminosity

Primary care group

development

Financial and

organisational viability

Focus services Maternity Child and adolescent

mental health service

Human resources Intermediate care

Accident and

emergency

Transfer of patients Child health Learning disability



5/12

Results

Results are presented in two sections. The first

presents findings from the study of stated and unstated

drivers of the nine mergers. This provides the context for

the findings from the four case studies, as the balance

between stated and unstated drivers and the way the

merger decision was taken affected implementation. The

presence of stated and unstated drivers also underlines

the multiple, sometimes competing, objectives of public

sector organisations (Ferlie, 1997).

Stated and unstated drivers for merger

Stated drivers were obtained from the public con-

sultation documents and subsequently, interviewees

were asked to comment on their importance. Unstated

drivers do not appear in the consultation documents but

emerged through interviews.

Stated drivers

The consultation documents suggested mergers were

intended as management reorganisations. There were six

main stated drivers:

(i) Internal management cost savings:

This was emphasised in all consultation docu-

ments. They aimed to save at least d500,000

d750,000 through the merger of boards. Intervie-

wees confirmed that financial pressures represented

a significant driver. These included budget reduc-

tions to address previous overspends or in antici-

pation of future budget reductions.

(ii) Safeguarding specialist units and guaranteeing

service developments:

Merger was also seen as a framework to

safeguard specialist units and guarantee service

developments. For example, creating a larger

mental health organisation was expected to ensure

survival of the specialist forensic unit at mental

health trust 23.

For mental health mergers J and I, financial

pressures resulted from the need to develop

community mental health services. Mergers were

presented as a way of implementing service reviews

within tight financial constraints.

Acute trusts 12 and 13 presented the proposed

merger as a way of increasing investment and

service opportunities through combining manage-

ment and optimising income by increasing specia-

list tertiary work across two sites.

(iii) Ensuring the quality and level of service in light of

external policy drivers:

Common to all mergers was the need to maintainquality and level of service in the context of

external policy drivers. In the acute services, this

included recommendations to move acute services

closer to where people live (Department of Health,

1997), improving cancer services (Department of

Health, 1995); consultant cover and junior doctor

training; and local service reviews. A key driver in

mental health was Government policy to develop

single-focus mental health trusts (Department of

Health, 1997, 1998).

(iv) Improve conditions and career prospects for staff,

and address recruitment and retention problems:

ARTICLE IN PRESS

Table 3

Details of case study interviewees

Case study trusts Senior trust managers (chief

executive, medical director,

human resources director, etc.)

Service managers External stakeholders

(CHC, PCG/T, LA,

HA)

Total

Years post-merger 1 and 2 3 1 and 2 3 1 and 2 3

Acute trust 7 4 10 5 8 2 36

Mental health trust 9 5 9 3 5 0 31

Community trust I 9 5 6 2 11 1 34

Community trust II 6 4 6 3 10 1 30

Total 31 18 31 13 34 4 131

Note: Community Health Council (CHC)independent statutory bodies representing the interests of the public in the health service in

their area.

Health Authority (HA)provides local strategic leadership, leading the development of local health improvement programmes, and

work closely with other local stakeholders for the planning and delivery of health care.

Trusts public bodies providing NHS hospital, mental health and community care.

Local Authority (LA)locally elected bodies with responsibility for the provision of a range of services including social care, education,

environmental health, and leisure.Primary Care Group/Trust (PCG/T)NHS organisations providing primary care and commissioning secondary care.



6/12

All merged trusts aimed to improve conditions

and careers for staff. These issues were cited as

important drivers of acute and mental health

mergers. HA representatives argued that a larger

staff and expertise base would help maintain and

develop services. This was viewed as essential for

supervision of service delivery, and for training,education, and clinical governance, given con-

straints of junior doctors hours and senior staff

time.

(v) For community and mental health trusts: closer co-

operation with local government through greater

co-terminosity:

For community and mental health trusts, the

reconfigurations were informed by pressures for

improvements to services and closer co-operation

with local government and partnership agencies.

The national policy shift towards community

mental health services was seen as requiring closercollaboration with local partners.

(vi) For community trusts: support for primary care

development.

A driver for community trusts was the need to

support primary care development. Mergers could

secure survival of community trusts, ensuring their

strategic role in primary and community health

developments.

Unstated drivers

These were mainly local issues in one or more

constituent trust. It is hard to estimate their significance.

They might have affected the type of reconfiguration in

specific cases, or in addressing a specific local problem.

Three main unstated drivers reported were:

(i) Addressing managerial deficits:

Some mergers imposed new management on

trusts seen by HAs or the NHS regional office as

under-managed or lacking control. Merger intro-

duced better management from another merging

trust or outside. Similarly, trust 17 was seen as

having under-performing community services that

raised concern about future service quality.

I was concerned that [trust 17] was wellorganised here while [trust 15] had a reputation

for being less well organised. I was worried

we would be diluted. Actually, with trust 17

taking over as its been described, it remained

the same (PCG representative, community trust

merger I).

(ii) Addressing financial deficits:

Some debts of constituent trusts were expected to

be written off to give the new trust a better start.

While not stated in writing some HA representa-

tives reported that deficits had been part of the

merger negotiations. In trust K, it was argued that

the merged organisation could not be expected to

assume a large debt from one constituent trust.

In the community trust merger II, one trust had a

large deficit. When this became apparent after the

merger, the new trust was allowed to write it off.

(iii) Local and national political context:

In three of the nine mergers, lobbying fromcentral government, influential institutions and

individuals, and from public pressure groups

played a role in driving the merger process. The

local HA representative interviewed saw the con-

figuration adopted by merged acute trust B as a

compromise over an inefficient, outdated but

much-loved hospital (trust 4). The merger of acute

trusts A and B was politically sensitive due to a

high-profile public campaign to avoid the closure of

trust 4.

The organisational merger was mixed up with

the future of the [trust 4] site, although this wentthrough a separate consultation process. In the

context of this decision, the health authority

commissioned an options analysis, which came

out in clear favour of a single site option. This in

turn galvanised the opposition to the merger

and produced the high profile Save [trust 4]

Hospital campaign (HA1 representative).

The high-profile, flagship character of acute trust

11, and its high esteem with local and national

politicians, provided an added incentive to secure

its future in a new organisational setting.The merger basically bought trust 11 five years.

If [current developments] are approved, it will

probably buy them another 20 yearsy (Com-

munity Health Council [CHC] representative).

The four case studies

A summary of the key features of each case is shown

in Table 2.

Acute trust

A teaching hospital merged with a district general

hospital (DGH). The teaching hospital serves a rela-

tively affluent outer London community, whereas the

DGH serves a very deprived, ethnically diverse popula-

tion. The main stated drivers for the merger were to

optimise service provision and secure financial viability

of the two organisations. An important (unstated) driver

was to address the perceived management deficit in the

teaching hospital. The DGH management took over

the teaching hospital. This had implications for the

merger process.

ARTICLE IN PRESS



7/12


8/12

acute trust merger was driven heavily by unstated

drivers, particularly the perceived managerial deficits

in one hospital. The decision, effectively made at

regional level, was top down and had little buy in

from staff within the two hospitals. The decision

regarding the mental health merger was also top down,

but it was mainly driven by the stated driver to createsingle-focus mental health providers. This made sense

to staff and there was more buy in. The Community

trust 1 merger was also top down but was driven by a

combination of stated and unstated drivers, including a

perceived management deficit in one trust. This con-

tributed to factionalism during the merger process. In

the Community Trust II merger, although the decision

was ultimately top down, it followed local discussion

amongst the relevant organisations each of which

recognised the advantages of merger.

These differences did not affect the disruptive impact

of merger implementation, but did influence certainmerger processes such as the sharing of good practice

(see below).

Perceived differences in organisational culture

Respondents used the term culture to highlight

differences between the organisations and explain

conflicts of values and priorities. Where a major driver

of merger is the perceived failure of one or more

provider, some clash of culture is inevitable and

probably desirable

There might be four miles difference between us butthere is two decades in terms of culture and practice

(Executive board member, acute trust).

Differences in culture included attitudes to innovation

and risk taking and an outcome or process orientation,

for example:

[Community trust I] seems very process oriented, and

thats a culture thats come from [trust C]. You need

processes, but you also need creativity. [Trust E] was

low on processes, which was a weakness, but high on

innovation and creativity, it had a flat management

structure. It was an organisation prepared to supportrisk, and to support failure when things go wrong.

[Trust C] tend to blame the individual. I championed

an innovative nurse-led service, which is not cham-

pioned now, and its falling apart. [Trust C] culture

dominates and is more negative about innovation

(Borough Director, community trust I).

So you have one part of the trust being about staff

development but not getting anything done, and

another part quite decisive and accountable but with

a bit of a spirit of cultural deprivation (Executive

board member, mental health trust).

Perception of takeover

This was a key theme that emerged from the data.

Two years post-merger, staff in all case studies reported

feeling taken over by another trusts management.

Although appointment to management posts was

competitive, senior management tended to be dominatedby one former trust. In all four case studies, the Chief

Executive came from a constituent trust and most senior

managers followed their former Chief Executive in post.

In the mental health merger (involving four trusts), some

outside senior appointments were made. Nevertheless,

most senior managers came from one of the trusts (trust

21). This was seen by staff from other parts of the new

trust as a takeover and was resented by some

respondents.

It felt like a takeover. It felt that the new Chief

Executive would surround himself with his people.

They did not put their cards on the table, and there

was no thought about the impact on staff. It felt like

a death every time you went to trust 15 and someone

hadnt got a job (Manager, community trust I).

Takeover was considered particularly harmful if

management structures and approaches of one trust

were imposed in the other(s). In community trust I, there

were contrasting views. Trust 15 described Trust 17 as

boring, process driven. Trust 17 saw itself as managed.

Conversely, Trust 15 saw itself as innovative and

developmental, while Trust 17 viewed it as chaotic.

Harmful effects of takeover were also reported in thewinning trust. Staff in organisations whose manage-

ment now ran the merged trust complained that

managements attention had shifted from its home to

another part of the trust.

Three years into the mergers, perceptions of takeover

had greatly diminished:

People dont really talk about takeover, they have

resigned themselves to the fact that this management

style is the one that presides (Middle manager,

mental health trust).

However, anxiety caused by perceived takeoverreappeared in community trust II with the advent of

yet another change in management structures, especially

for trust 15. Some feeling of being taken over seems

inevitable, and lasts for up to 3 years.

Opportunities for learning and sharing good practice

The opportunity to share clinical practice and learn

from the fellow merging organisation(s) was a stated

driver in all mergers. This was achieved to varying

degrees. In the first 2 years post-merger, the mental

health and two community trusts benefited most from

ARTICLE IN PRESS



9/12

sharing clinical practice. Three years post-merger, the

acute trust had had limited success in sharing good

practice, although there was progress in unifying

medical record systems and the introduction of new

orthopaedic protocols.

Initially [we] tried to adopt a new way of organisingmedical records, which was used at [trust 11] for a

long time, but it was rejected. They have now

accepted it and agreed it was a great idea. It was

rejected in the first place because it was from [trust

11]! It took two years for them to see its advantages.

Thats real progress! The introduction of new

orthopaedic protocols has also worked well. Its just

like moving a big boulder, its damn hard to move,

but once you get it moving, it keeps on moving

(Senior manager, acute trust).

Some interviewees warned against high expectationsof immediate improvementthey regard benefits of

managerial and clinical expertise as long-term. One

respondent argued that sharing good practice is

difficult and takes a long time to become visible. He

suggests that reconfiguration helped expose differences

in services, funding and staffing levels between trusts,

but examples of adopting good practice are not

obvious.

In the acute trust, the merger decision process and

perceived differences in organisational culture contrib-

uted to difficulties in sharing good practice. An

external stakeholder suggested a difference remains

between the previously separate providers for some

period following the merger:

It is difficult to transfer good practice because of the

underlying distrust and prejudice toward the other,

and because people havent themselves changed.

There persists a difference between specialties and

services. Clinicians talk of other clinicians (from the

other trust) as if they are part of a different

organisation and a unified organisational identity

varies from service to service (PCG representative).

In contrast, in community trust II, several respon-dents thought sharing of good practice was successful.

A contributory factor was the more consensual

approach to the merger decision process. An external

stakeholder stated:

The merger was positive in cross-fertilisation between

services. The practices and protocols in providing

services were quite different in the constituent trusts

and the services learned from each other. This

positive aspect is only now coming through because

of the transition period (PCT representative, com-

munity trust II).

Impact on service delivery and development

Despite clinical service improvements being a stated

driver of mergers, there was agreement across the four

case studies that the merger had made services worse.

Respondents, both within and outside trusts, reported

that the loss of managerial focus on services during themerger had harmed patient care. Service developments

were delayed by 1830 months. However, some positive

effects of mergers on service developments were also

reported, for example, the creation of a critical mass of

clinicians in smaller services and some sharing of good

practice.

Delays in service development

All merged providers experienced delays in service

development, mainly due to delays in middle manage-

ment appointments. This affected the more outlyingcommunity trust services in particular, which remained

under-managed for several months, and could not

participate in local service development discussions. In

community trust II this delayed development of inter-

mediate care services.

Particularly frustrating for external stakeholders was

that providers lacked representatives with authority to

take action and participate in discussions. Planned or

anticipated service developments could not go ahead,

opportunities were missed, and service improvement was

delayed. For front-line staff the lack of management

during the merger period was disconcerting and resultedin a holding attitude towards services.

We did not see a [senior] manager for nine months

after the merger (Service manager, community trust

II).

The acute trust merger experienced similar delays.

Proposed changes to pathology, emergency and mater-

nity services had not been implemented by the second

year following merger.

In the third year post-merger, delays were experienced

due to lack of managerial control and little focus on

services during the transition.

Loss of managerial control

In all mergers, external representatives, trust staff and

management reported that senior management lost

control over strategic direction and day-to-day opera-

tions at some early point in the merger. This was often

due to unforeseen circumstances and delayed plans

for reorganising services. These in turn were caused

by delays in management appointments, financial short-

falls and IT delays. Overall, trusts underestimated the

ARTICLE IN PRESS



10/12

time-scale involved in the merger. Commenting on the

mental health merger, the LA representative noted:

It takes a lot of time and energy to reconfigure. There

were reports of people in some parts of the service

being unhappy about some of the appointments.

There was a lot of rivalry between [trust 21] and [trust23]. For six months, a lot of energy went into sorting

out management and staffing. And that must have an

effect on how people can both manage and develop a

service.

Delays in senior and middle management appoint-

ments led to a loss of momentum, increased workloads,

and a reduction in middle managements ability to cope.

It took even longer than anticipated to fill the second

and third tier posts, which created difficulties for

public communication at [trust 18] and elsewhere.

People who would have gone to the community trustwent to the PCGs. (CHC representative).

Some vacancies remained into the third year of the

merger, diverting management from operational duties

and delaying service developments.

The increased workload of senior managers following

merger was an issue in all case studies and delayed

developments. The increased scale and complexity was

not met by an adequate strengthening of senior manage-

ment, at least in the early stages. As workloads of senior

managers increased, their capacity for developmental

work decreased. Reduced management cost was a stated

driver in all mergers, but the consequential under-management was not anticipated. The issue of under-

managed services continued into the third year of the

merger.

At operational level, things did not change much. At

strategic level, attention was pulled from the local

area. Management is stretchedy (Service manager,

community trust II)

In the third year post-merger, management capacity

in the community trusts was affected by the transition to

PCTs. Some senior managers left in the last 18 months

of the trusts life. Some posts were filled internally, butothers remained vacant, so managers had to take on

extra roles.

Impact on staffthe emotional cost of merger

Benefits to staff of the merger included improved

clinical supervision, more coherent professional manage-

ment, better appraisal, training, and career develop-

ment. However, both clinical and managerial staff

emphasised the stress caused by uncertainties and

changes, and the increase in workload associated with

the process of merger. Managers failed to anticipate

adequately the disruptive effects of integrating manage-

ment and services across the merged organisations.

Individual staff responded in different ways to the

merger. Stress from uncertainties, changes, and higher

workloads were emphasised. Alongside these mainly

negative responses, interviewees reported increased

autonomy in their roles, and gaining a voice in plansfor innovation and change.

The pre-merger consultation processes and the

months leading to merger produced anxieties and fears

for individual staff. Many sought alternative employ-

ment. Others felt anxious about having to work along-

side staff groups from another organisation, which they

previously considered rivals. The following is typical

across all four case studies:

We are short staffed as people move on and we have

learned to live with whats left. Their leaving is

undoubtedly caused by the merger. They feel nosecurity, and no career pathway. Basically, no one

wanted to move to [trust 10] (A&E Registrar, acute

trust).

Staff at all levels reported being overworked since

the merger, which adversely affected their home lives. A

CHC representative relating to community trust II

commented that the merger applied

Huge pressure on existing staff, people I respect

almost went under, they were reduced to their knees,

taking on the extra workload and adjusting to the

new organisation.

The process of appointing managers was difficult for

staff teams and groups. Those who gained new manage-

ment found it difficult to relate to them, particularly

those from previously rival organisations. Even at

middle management levels, people found this process

difficult:

The manager I worked with was made redundant. Its

difficult to cope with that and I found it difficult not

to allow resentment to spill over. Its a difficult

period having to adjust to new styles of management

when you knew that there were casualties. It wasnt apainless exercise (Middle manager, mental health

trust).

At 3 years post-merger, fewer references were made to

the emotional costs of the merging process. Although

some reported higher workloads, there was no mention

of the stress and anxiety they reported earlier. The early

tensions decreased and staff morale increased. Refer-

ences to anxiety and uncertainty related to the further

proposed reconfiguration, for example, in pathology and

maternity services and the transition to PCT status in

the community trusts.

ARTICLE IN PRESS



11/12

Discussion and conclusions

Our themes of context, complexity and organisational

culture provided a framework for analysing the drivers

for mergers and, in the context of these, the processes

and consequences of merging health care organisations

in the first 3 years. Changes in structures were used as alever for change, but, drawing on Giddens (1984)

concept of structuration and its focus on the interplay

between structure and human agency, this study shows

that mergers are based on simplistic notions of

organisational change that do not take into account

the dynamic relationship between the organisation and

its context and between the organisation and the

individuals within it (see for example Child, 1997). For

example, perceived differences in cultures seem to form a

barrier to bringing organisations together. Differences

were reported more strongly where there was less buy

in from staff. This is important when part of the aim ofthe merger is to change the organisational culture of at

least one provider. The amount of staff buy in for the

merger in turn relates to those data indicating staff

perceptions of takeover rather than merger and those

showing the emotional cost of the merger process into

the second year. This illustrates the two-way relation-

ship between individuals and their environment: the

process of merger created perceptions of takeover and

had a negative effect on staff; these in turn affected the

merger process itself. As McNulty and Ferlie (2002)

found in their study of an attempt to radically transform

an organisation, it is an example of where management

action is mediated by very same cognitive and relational

structures that the management action is meant to

address.

None of the mergers avoided the negative process

effects: while the context and decision process differed,

in all cases it brought a period of organisational

restructuring and intense introspection, setting back

organisation and service developments by at least 18

months. A major factor was delays in appointing middle

managers. This highlights the importance of the merger

process within public sector organisations with multiple

objectives. These have to demonstrate due process in

appointments, which takes longer than in private sectororganisations.

From this study it is evident that merger is an

evolutionary process with ambiguous boundaries

(Langley, 1999). This was not appreciated either by

those who made the decisions to merge nor those who

implemented the change. There is little evidence that the

economic and clinical objectives that formed the drivers

for mergers are achievable. Policies underplay the

importance of the context within which mergers take

place, of which the drivers are themselves a part, and

ignore the processes of implementing mergers which

includes the relationship between the organisation and

the people within it. The relationship between context

and process is also apparent in the differing ways

sharing good practice played out in the four cases.

Respondents explain difficulties and delays in imple-

menting good practice between merged organisations

in terms of perceived organisational differences.

This study raises important methodological issuesconcerning the study of complex organisational phe-

nomena such as mergers. The research was funded after

the mergers had formally taken place. Ideally, research

on mergers and reconfigurations would begin earlier, but

it is unlikely to be feasible to start before there have been

significant influences from the proposal for merger.

Findings presented in this paper provide a picture of the

impact of mergers at a relatively early stage in the life of

the new organisation. It could be argued that, it is too

soon to judge whether or not the mergers in this study

have met their objectives. However, the longer the

timeframe, the more difficult it is to attribute impacts onservice developments, especially in a turbulent environ-

ment such as the UK health system.

Studying the processes of organisational change

provides important insights. It appears difficult to avoid

the negative effects of merger, but some can be mitigated

by anticipating certain issues, such as staff appointments

in the new organisation. Negative effects persist into the

third year post-merger, delaying any benefits of im-

proved performance of health care organisations (Denis

et al., 1999; Weil, 2000). Some negative effects were

found even when there was support for the change.

The context for these changes is key to understanding

the processes and their impact. Merger policy was based

on simplistic assumptions about organisational change

processes. It assumes that the effect of changing

structures are independent of the context within which

the changes take place, and will affect (positively) the

organisation internally but ignores the relationship

between these. As Child (1997) argues in relation to

strategic choices, there is interplay between structure

and action. In practical terms, this means better under-

standing of timescales and potential barriers to effective

mergers might improve the planning of such changes,

preparation for the process and, possibly, the balance of

harm and benefits.

Acknowledgements

This study was funded by the NHS Executive London

Region Organisation and Management Research and

Development Programme. The authors wish to thank all

those staff in NHS and allied organisations who took

part in this study, and Rhiannon Walters contribution

to data collection. We also wish to thank Peter Davis,

Morris Barer, and two anonymous reviewers for their

very helpful comments on earlier versions of this paper.

ARTICLE IN PRESS



12/12

References

Arrowsmith, J., French, S., Gilman, M., & Richardson, R.

(2001). Performance-related pay in health care. Journal of

Health Services Research and Policy, 6(2), 114119.

Bowling, A. (1997). Research methods in health: Investigating

health and health services. Buckingham: Open UniversityPress.

Buono, A., & Bowditch, J. (1989). The human side of mergers

and acquisitions: Managing collisions between people, cul-

tures, and organizations. London: Jossey-Bass.

Child, J. (1997). Strategic choice in the analysis of action,

structure, organisations and environment: Retrospect and

prospect. Organization Studies, 18(1), 4376.

Davies, H. T., Nutley, S. M., & Mannion, R. (2000).

Organisational culture and quality of health care. Quality

in Health Care, 9(2), 111119.

Denis, J. L., Lamothe, L., & Langley, A. (1999). The struggle to

implement teaching-hospital mergers. Canadian Public

Administration, 42(3), 285311.

Department of Health. (1995). A policy framework forcommissioning cancer services. A report by the expert

advisory group on cancer to the chief medical officers of

England and Wales. Department of Health.

Department of Health. (1997). Strategic review of London s

health services, report of the independent advisory panel

(Chairman: L. Turnberg). London: Department of Health.

Department of Health. (1998). Review of Londons health

servicesGovernment response to London review report.

London: Department of Health.

Department of Health. (2001). Organisational Codes Service.

Personal communication. London: Department of Health.

Dowie, R., & Gravelle, H. (1997). Changes in medical training

and sub-specialisation: Implications for service delivery. In

B. Ferguson, T. Sheldon, & J. Posnett (Eds.), Concentration

and choice in healthcare (pp. 5166). London: Royal Society

of Medicine Chapter 5.

Ferguson, B., & Goddard, M. (1997). The case for and against

mergers. In B. Ferguson, T. Sheldon, & J. Posnett (Eds.),

Concentration and choice in healthcare (pp. 6782). London:

Royal Society of Medicine Chapter 6.

Ferguson, B., Sheldon, T., & Posnett, J. (1997). Concentration

and choice in healthcare. London: Royal Society of Medicine.

Ferlie, E. (1997). Large-scale organizational and managerial

change in health care: A review of the literature. Journal of

Health Services Research & Policy, 2(3), 180189.

Fulop, N., Protopsaltis, G., Hutchings, A., King, A., Allen, P.,

Normand, C., & Walters, R., et al. (2002). Process andimpact of mergers of NHS trusts: Multicentre case study

and management cost analysis. British Medical Journal, 325,

246249.

Garside, P. (1999). Evidence based mergers. British Medical

Journal, 318, 345346.

Giddens, A. (1984). The constitution of society. Cambridge:

Polity Press.

Glaser, B., & Strauss, A. (1967). The discovery of grounded

theory. Chicago: Aldine.

Greene, J. (1990). Do mergers work? Modern Healthcare,

20(11), 2425.

Haspeslagh, P., & Jemison, D. (1992). Making acquisitions

work. Institut Europe en dAdministration des Affaires

(INSEAD), 77-Fontainebleau (FR).

Hutchings, A., Allen, P., Fulop, N., King, A., Protopsaltis, G.,

Normand, C., & Walters, R., et al. (2003). The process andimpact of trust mergers in the National Health Service: A

financial perspective. Public Money and Management, 23(2),

103112.

Iles, V., & Sutherland, K. (2001). Organisational change: A

review for health care managers, professionals and research-

ers. London: National Co-ordinating Centre for Service

Delivery and Organisation, url: www.sdo.lshtm.ac.uk.

Joss, R., & Kogan, M. (1995). Advancing quality: TQM in the

NHS. Buckingham: Open University Press.

Kitchener, M., & Gask, L. (2003). NPM merger mania: Lessons

from an early case. Public Management Review, 5(1),

2044.

Langley, A. (1999). Strategies for theorizing from process data.

Academy of Management Review, 24(4), 691710.Leroy, F., & Ramanantsoa, B. (1997). The cognitive and

behavioural dimensions of organisational learning in a

merger: An empirical study. Journal of Management Studies,

34(6), 871894.

Lynk, W. (1995). The creation of economic efficiencies in

hospital mergers. Journal of Health Economics, 14(5),

507530.

Marshall, M., Shekelle, P., Davies, H., & Smith, P. (2003).

Public reporting on quality in the United States and the

United Kingdom. Health Affairs, 22(3), 134148.

McClenahan, J., & Howard, L. (1999). Healthy ever after

Supporting staff through merger and beyond (pp. 125).

London: Health Education Authority.

McNulty, T., & Ferlie, E. (2002). Re-engineering health care:

The complexities of organisational transformation. Oxford:

Oxford University Press.

Miles, M. D. (1979). Qualitative data as an attractive

nuisanceThe problem of analysis. Administrative Science

Quarterly, 24(4), 590601.

NHS Centre for Reviews and Dissemination. (1997). Concen-

tration and choice in the provision of hospital services. The

relationship between hospital volume and quality of health

outcomes. CRD Report no. 8, part I. University of York:

Centre for Reviews and Dissemination.

Normand, C. (2004). In place of root and branch reform.

Journal of Health Services Research and Policy, in press.

Pettigrew, A., Ferlie, E., & McKee, L. (1992). Shaping strategicchange. London: Sage.

Smith, J., Walshe, K., & Hunter, D. J. (2001). The redis-

organisation of the NHS. British Medical Journal, 323,

12621263.

Treat, T. F. (1976). The performance of merging hospitals.

Medical Care, 14(3), 199209.

Weil, T. P. (2000). Horizontal mergers in the United States

health field: Some practical realities. Health Services

Management Research, 13(3), 137151.

ARTICLE IN PRESS

http://www.sdo.lshtm.ac.uk/http://www.sdo.lshtm.ac.uk/http://www.sdo.lshtm.ac.uk/

fulop_et_al_(2005)_changing_organisations

Documents