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Mergers Involving Academic MedicalInstitutions: Impact on Academic

Radiology DepartmentsMervyn D. Cohen, MB, ChB, MD, Gregory Jennings, MD

During the past 10 years, there have been a number of large health care mergers in which at least one partner hasbeen an academic medical center. This review summarizes the definitions, attributes needed for success, andreasons for failure of mergers. It then describes the various mergers and their outcomes and discusses the impactof the mergers on the involved radiology departments.

Key Words: Academic medical center, merger, radiology department, academic radiology, medical schoolfinances

J Am Coll Radiol 2005;2:174-182. Copyright © 2005 American College of Radiology

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NTRODUCTION

n the United States, a spate of mergers and acquisitionsrst affected banking in the early 1980s and then swepthrough other industries [1]. By 1999, the value of USerger activity equaled 16% of the gross domestic prod-

ct [2]. In the health care industry, a flurry of defensiveergers occurred during the 1990s, as leaders of many

ealth care organizations began to feel real challenges toheir long-term survival. They perceived that monetaryressure from managed care and Medicare cuts wouldhallenge their very economic survival. In short, theyame to believe that changing market forces would maket impossible for smaller health care organizations toompete effectively and survive.

A small, but very significant, number of recent mergersn the health care industry have involved an academic

edical organization as at least one of the partners. Theseergers threaten academic medicine, because they may

eparate medical schools from teaching hospitals; de-rease financial support to medical schools as hospitalsocus on the “bottom line,” and projected savings fromhe mergers are not realized; erode the authority of deansnd faculty members in hospital affairs; and place neworporations in a position to decide staffing levels andmployment terms for clinicians [3]. Unlike mergers ofrivate physician practices, which are quite common,irtually no significant mergers that involve academic

epartment of Radiology, Riley Hospital for Children, Indiana Universitychool of Medicine, Indianapolis, Indiana.

Corresponding author and reprints: Mervyn D. Cohen, MB, ChB, MD,epartment of Radiology, Riley Hospital for Children, 702 Barnhill Drive,

foom 1053, Indianapolis, IN 46202; e-mail: [email protected].

74

epartments occur independently of an overarchingerger of the parent organizations.The intent of this review is to help the reader under-

tand how mergers involving predominately not-for-rofit health care organizations differ from those occur-ing in the rest of the business world. We review theomplex definitions of mergers, the reasons drivingergers, the reasons for their failure, and the critical

actors for their success. These principles apply to allergers. We then describe in detail over a dozen mergers

n which at least one partner was an academic medicalenter. For each merger, we describe both the globaltructure of the merger and the specific impact on thenvolved radiology departments.

EFINITIONS

n the world of business, including health care, there areany situations in which two organizations choose to

ome together rather than compete. This “coming to-ether” can take many forms. At its simplest, it may be noore than sharing a piece of equipment, a piece of infor-ation, or a human resource for a short period of time. It

ould be a longer term agreement to share space, build-ngs, marketing, payroll administration, technology, orther resources. More complex interactions include thenvolved organizations taking a legal part ownership ofach other. At the other end of the spectrum, one orga-ization may completely take over ownership of anothers part of a friendly, or even hostile, takeover.

The term merger is most frequently used to describe aituation in which two organizations come together in a
riendly manner, combining their resources into a new
© 2005 American College of Radiology0091-2182/05/$30.00 ● DOI 10.1016/j.jacr.2004.08.006

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Cohen, Jennings/Mergers Involving Academic Medical Institutions 175

rganization. However, there are many different nuanceso its meaning. In some situations, the coming together is

true combining of every asset and resource of botharent organizations to blend into a new organization. Inther situations, the merger results in the creation of anverarching holding company, under which both of thereexisting organizations continue to exist and operate.lthough mergers are meant to be the coming together ofquals, with equal sharing of power, they often result inne of the organizations becoming dominant.

Besides merger, a wide variety of terms are used toescribe all of the above scenarios. None of these termsas any specific meaning, and they are used differently byifferent people. These terms include working together,ollaboration, affiliation, partnership, symbiosis, alliance,arriage, and takeover [4]. For the purposes of this arti-

le, we define the term merger to represent a significant,riendly, legal coming together of two organizations.

HY MERGE?

n the 1980s and 1990s, new economic challenges toealth care delivery surfaced. These included the consol-

dation of local markets, significant reductions in pay-ents from managed care plans and insurers, and signif-

cant declines in the use of hospitals (with a resultantversupply of hospital beds). The initiation of the Medi-are prospective payment system and decreased Medicareayments from the federal Balanced Budget Act of 1997ere other significant factors causing concern [5-7].This changing environment in health care delivery and

eimbursement caused a massive overhaul in the structure ofealth care institutions. This included hospital mergers, theurchase and sale of physician practices, and the develop-ent of integrated delivery systems [1]. Large health plans

ecame reluctant to enter into contracts with academicedical centers because of their higher costs (generally at-

ributed to their teaching function). The clinical revenues ofcademic medical centers began to drop, and funds availableo subsidize teaching and research from clinical revenueseclined [1]. The result was that escalating economic pres-ures on the clinical enterprise threatened the missions ofducation and research in many academic medical centers8]. For these centers, three options evolved:

creating a self-contained, integrated delivery systemfor academic medical centers;separating medical schools from teaching hospitals byselling the hospitals [1]; andforming alliances or mergers with community hospi-tals or other academic medical centers.

The principal rationale for merging is “to accomplish aoal that cannot be accomplished alone” [4]. Such goals
nclude: s
overcoming money problems: financial pressure is themajor motivator in most mergers [6];achieving economies of scale by reducing excess capac-ity, increasing efficiency, and decreasing costs [6];developing an organizational synergy that is greaterthan the sum of the individual parts [9];creating market power and increasing market share,thus increasing bargaining power [2,6];improving clinical reputation;diversifying by increasing the range of products andservices offered [2];gaining access to new technology; andreducing the need to duplicate expensive investmentsin people or technology [10].

EYS FOR THE SUCCESS OF MERGERS

iterature from both health care and non-health careusinesses provides very similar guidelines to direct auccessful merger.

First, basic business principles must not be ignored.hen the leadership of an organization feels threatened,

ll too often, they see a merger as a solution and thenubsequently build a business case to justify their decisiono merge. This is a potential disaster. There must be clearnd compelling reasons for merging, with the early de-elopment of a clear mission, vision, and statement ofalues for the new organization [11].

Complete due diligence must be performed early inhe negotiation process. In their enthusiasm for a merger,eadership may choose to sign the merger deal before theyave completed due diligence. Subsequent surprises mayhreaten or destroy the deal.

Although there are many ways to structure a merger,oore [12] suggested that it is desirable to merge all

ssets and operate as a single organization (i.e., one Medi-are number, one legal institution, one medical staff), toake subsequent divorce and separation difficult. He

uggested a no-exit strategy from the beginning [12].Clear plans for integrating physicians into the new

ystems must be in place [11]. Some mergers have failedecause they occurred before solving issues between thehysicians of the parent organizations.Communication with all key stakeholders is impor-

ant. Everyone must understand the purpose and logic ofhe deal and buy into it, and thus there must be constant,onest communication [11]. Although the leadershipay perceive a need for secrecy, this should be avoided.A perception of fairness is needed and can be helped by

he creation of a new, neutral name and corporate iden-ity [11] and a neutral location of the headquarters. Lo-ation in one of the preexisting organizations can cause
ignificant jealousy and perceptions of unfairness. This

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176 Journal of the American College of Radiology/Vol. 2 No. 2 February 2005

ust be balanced against the costs of creating a new,eutral headquarters.Once a merger has been agreed to, significant energyust be devoted to implementation. Successful imple-entation depends on the management of culture [11].here must be a clear understanding of the culture andalues of the people of each organization. Implementa-ion is helped by a clear transition plan, celebrations ofeeting merger milestones, the identification of a core of

ersonnel with strong project management skills to keeprack of multiple projects, and clear accountability.

ETRICS OF SUCCESS

ow do we measure the success of a merger? This isifficult. It is amazing how many different perceptionsxist among different stakeholders. For some of thesetakeholders, success may even be defined as merger fail-re and separation.Among for-profit corporations, the metrics for merger

valuation are short-term stock performance, 3-year to-year stock performance, and profitability [2]. Althoughnancial success is important in not-for-profit mergersetween health care organizations, it does not have theame importance as in the rest of the for-profit businessorld. However, there are some other good metrics for

he success of the clinical operational component ofealth care mergers. Commonly used measures are oper-ting income, cost savings, revenue, staff reduction, mar-et share, the speed of integration, customer retention,nformation technology systems integration, productortfolio, and employee retention [9]. Other metrics in-lude organizational learning, innovative capability, andhe development of aligned, unified strategic plans [11].lthough the subjective feelings of the staff are also a keyomponent of merger success, they are difficult to mea-ure. The impact of academic hospital mergers on thecademic mission is even more difficult to evaluate, and itay require many more years of observing the mergers

hat survive before this aspect can be adequately evalu-ted.

EASONS FOR FAILURE OF A MERGER

ome mergers of academic medical centers are ending indivorce.” These include mergers between Penn Stateniversity and Geisinger Health System; the University

f California, San Francisco (UCSF), Hospital andtanford University Hospital; and New York Universityedical Center and Mt. Sinai Hospital [12,13]. Otherergers are continuing but are failing to achieve their

oals. There are many reasons why mergers fail or do notive up to their expectations. Perhaps the dominant rea-on for merger failure is cultural incompatibility between
he two organizations [6]. The importance of under- m
tanding and managing cultural change is frequently un-erestimated, because organizations rarely perceive cul-ure as a potential deal breaker [9]. Cultural friction isifficult to analyze and control. People cling to old be-aviors, because changes are often felt as losses [14].ultural clashes result in deteriorating communication,

educed productivity, less team play, power struggles,educed commitment to goals, and ultimately departuresrom the organization [9,15].

Another critical cause for the failure of mergers is thenability to unify the existing boards and senior leader-hip. The parent organizations may retain their identitiesnd even operate somewhat autonomously. This is mostikely if the parent organizations retain their existingoards. The retention of existing boards may result in aervasive perception that one entity is taking over thether; each entity holds this perception [11]. Yet even ifhe preexisting boards are eliminated, the new board mayail. This is likely to occur when the new board is com-osed of equal members of the old boards who still rep-esent their original constituents and retain direct loyaltyoward the old hospitals [7]. To counteract these tenden-ies, a significant infusion of new management leadershipho can be perceived as neutral is needed at the genesis of

he new organization. If too many old leaders are re-ained, the allocation of top jobs can then easily be per-eived as unacceptable, with each side believing that thether has been given too much power.

Physician resistance has derailed many mergers [7].ospital administrators may find it difficult to make

ecisions that can alienate physicians, because they areeenly aware that physicians are extremely mobile. Theyould leave in large numbers and even join competingospitals [7,12]. Physicians typically resist proposals forergers [7]. This resistance is a product of loyalty and

ackground. For example, academic faculty members doot want to surrender control to nonacademic physi-ians, and these private physicians may fear the academicodel. The inability of physician leadership to prioritize,

ownsize, and consolidate clinical programs can com-romise mergers [8]. Physicians may also feel resistanceo service integration from their patients, who may resenthe consolidation of services if this involves increasedravel or threatens access to their favorite doctors.

Failure to understand and manage the fears of employ-es can also damage a merger. This can manifest in manyifferent ways. Any attempt to decrease salary or benefitsauses resentment. Poor communication and secrecyauses fear and resentment [16]. However, if manage-ent is overly reassuring in the initial transition stages,

his can lead to a loss of credibility [11].Finally, economic difficulty can derail a merger. Pro-

ections for cost savings may have been too optimistic;
any potential savings may exist only on paper or in the

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inds of consultants [7]. Some costs may actually in-rease, because the consolidation of clinical services maympose travel and scheduling difficulties. The harmoni-ation of information technology systems between orga-izations may be extremely expensive [7].

ATIONALES AND ACADEMICHALLENGES

ver a dozen academic medical centers have participatedn mergers in the past 10 years. The decisions to mergeave been made despite the knowledge that most mergersre not successful, and mergers involving academic med-cal centers seem to have a low probability of success [12].roponents argue that the strong clinical entity resulting

rom a merger is better able to support the academicission by providing, for example, a critical mass of

atients for education and more specialty programs [10].hey also believe that a larger merged clinical programermits the better transfer of basic research to new clini-al programs and better positions the new organization toe the provider of choice for complex care for their com-unity [10].Nonetheless, mergers bring with them big challenges.ergers can jeopardize the functions of medical schools

3]. The subsidy of teaching and research can come undertress [3]. Academic leaders can become marginalized as aource of their power, their control of dollars, decreases8]. Mergers of academic medical centers create dividedovernance, resulting from a structure under which aca-emic and clinical affairs no longer follow the same path-ay of authority or accountability. One individual no

onger has authority to balance the competing interests ofducation, research, and clinical service, even though theissions of clinical care and academics should be insep-

rably linked [8]. Mergers often leave academic consid-rations with the dean and departmental chairpersonsnd economic concerns with a new clinical organization8]. The concept of a clinical board being responsible forhe behavior of an academic faculty clearly represents aew paradigm in academic medicine [8]. Mergers be-ween academic and community hospitals are particu-arly difficult, because community physicians believe thathey are subsidizing research and education [7]. If resi-ency programs are in place, it is important to completely

ntegrate curriculum and conferences and resident rota-ions and call schedules and to ensure the consistency ofhe educational product delivered by the parent organi-ations [14]. Even if this is done, another challenge is thathe Accreditation Council for Graduate Medical Educa-ion considers merged residency programs as new, even ifhey derive from two preexisting fully accredited pro-rams [14].

The academic challenges after mergers of academic h

ealth care organizations have an impact on every aca-emic department. Radiology is no different in this re-ard. In all mergers, departments are relatively powerlessnd may be forced to accept merger conditions imposedy their parent organizations.

ASE STUDIES

e now describe over a dozen mergers that occurred inhe United States during the past decade or so, in whicht least one partner was an academic medical center. Fiveergers involved two such centers: UCSF Hospital and

tanford University Hospital, Massachusetts Generalospital and Brigham and Women’s Hospital, Nework Hospital and Presbyterian Hospital, North Shoreealth System and Long Island Jewish Medical Center,

nd Beth Israel Hospital and New England Deaconessospital. The mergers cover the full spectrum of types ofergers. This overlapping spectrum includes five fairly

istinct models that are described below. We also de-cribe three failed mergers.

imple Collaboration with No Sharedinancial Risk

he alliance between Meharry Medical College andanderbilt University Medical Center in Nashville,ennessee, is much closer to a commitment to cooperate

ather than a true merger. Under the agreement, eachnstitution remains separate [16]. Vanderbilt gained ac-ess to a relocated general hospital for student training,nd Meharry received management assistance. Althoughimited in scope, the merger has been successful [16].

airly Autonomous Operation of Eachospital Is Retained, Although Eachltimately Answers to a Common Higheruthority

wo mergers fall into this category. In 1994, Massachusettseneral Hospital and Brigham and Women’s Hospital inoston merged (J. Thrall, personal communication, 2004;. Seltzer, personal communication, 2004). They formed aolding company called Partners that preserved the namesnd identities of the founding hospitals [6]. Merged admin-strative functions included finance, budget, informationystems, legal, investments, marketing, purchasing, and newentures [6]. However, each hospital retained strong auton-my [17], which has been important to the long-term suc-essful outcome of the merger, and Partners has a strongarket presence. The radiology departments of the two

ospitals remain totally independent professional practices,ith only minimal interaction. They have created common

tandards of care for mammography, a technologist devel-pment program, and a joint operations committee which
as done some joint contracting (J. Thrall, personal com-

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unication, 2004; S. Seltzer, personal communication,004). The merger has not had any significant impact oncademic activities (J. Thrall, personal communication,004) and may have been slightly beneficial (S. Seltzer,ersonal communication, 2004).

In 1997, North Shore Health System and Longsland Jewish Medical Center merged to create theorth Shore–Long Island Jewish Health System

17,18] (M. Goldman, personal communication,004). Although the hospitals are legally separate, theperational mind-set is of a single collaborative systemith two campuses. This merger is unusual in that theospitals remain separate legal entities and provideuplicate services, yet the physician clinical practicesre all fully merged. After the merger, there was rapidonsolidation of all of the nonclinical departmentse.g., purchasing, finance, human resources) with sin-le leadership appointments. At the time of theerger, both Long Island Jewish Medical Center andorth Shore Health System were academic health cen-

ers with medical school affiliations. All of the full-ime physicians were salaried and had university ap-ointments. In 1998, administration mandated thatll clinical departments consolidate from a two-chair-erson to a single-chairperson leadership within 3ears. This has now been accomplished. For each clin-cal department, the chairperson determines in whichospital each faculty member will work. A separateesearch institute was also created, with its own boardnd director who report back to the parent health careystem [18]. The merger is considered a very strong,uccessful merger.

The two academic radiology departments from Longsland Jewish Medical Center and North Shore Healthystem were brought together under a single leadership.he single chairperson is responsible for recruiting fac-lty members, setting salaries, and deciding on whichampus each radiologist will work. In reality, most of theadiologists work in only one of the hospitals. Althoughome of the subspecialty divisions within radiology haveeen completely merged, others have retained separateivision leaders. Each hospital continues to have its ownadiology residency program, but the department chair-an has the authority to merge these programs in the

uture if desired. Radiologists have been allowed to retainheir original medical school (Albert Einstein Medicalenter or New York University Medical School) ap-ointments. New radiologists are given faculty status inne of the schools. Before the merger, both radiologyepartments had a strong emphasis on teaching and clin-

cal work, with some commitment to research. No neg-tive effects on the academic mission have been noted as
result of the merger, and the resulting stronger health H
are system may have made it easier to retain facultyembers.

ospitals Become Legally One Entity withingle National Accreditation but Continue

o Operate Fairly Independently

his is the most common merger structure that we havedentified; five mergers are of this type. Clinical opera-ions remain predominantly separate, with few or nontegrated clinical programs. All of these mergers may betable but could face future transitional challenges.

In 1998, Columbia University/Presbyterian andornell University/New York Hospitals in New Yorkity merged to form the New York and Presbyterianospital [5,6]. It has a single board and operates as a

ingle hospital organization with two separate geographicacilities [6]. It was a complete asset merger, makingubsequent divorce difficult. The merger has been gener-lly been successful (P. Alderson, personal communica-ion, 2004). Radiology has changed little as a result of theerger, with the two departments continuing to operate

eparately. Collaborative research projects or conferencesave been infrequent, and the merger has had no impactn academic radiology (P. Alderson, personal communi-ation, 2004). However, clinical volume has increased.

The University of Cincinnati Hospital and Christospital merged during 1994 and 1995. This was a fullerger, incorporating all assets (R. Lukin, personal com-unication, 2004). At the time of the merger, each hos-

ital had its own excellent radiology group. The tworoups initially agreed to merge as well and reevaluate theerger after 2 years. By this time, Jewish Hospital had

oined the alliance. About halfway through this timeeriod, the radiology merger began to unravel. The radi-logists at Jewish Hospital and Christ Hospital stayedogether and separated from the University of Cincinnatiroup. The private and university groups now functionompletely independently. The merger of the Universityf Cincinnati Hospital and Christ Hospital had a definitempact on radiology. Initially, there were huge recruit-

ent problems, but these have lessened recently. Theerger is believed to have had a definite negative impact

n academics (R. Lukin, personal communication,004). The current situation is stable, with each radiol-gy group operating independently in its own hospital.n the future, they may face real challenges if furtherignificant consolidation of clinical services between theospitals occurs.In Minneapolis, the University of Minnesota Hospital

nd Riverside Hospital merged to create the Fairviewniversity Medical Center in 1997 (W. M. Thompson,ersonal communication, 2004; C. A. Dietz, personalommunication, 2004). The University of Minnesota
ospital continues to be served by a moderately-sized

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cademic radiology group, whereas Riverside Hospital iserved by a private-practice group that assigns approxi-ately one full-time equivalent radiologist (from a pool

f four radiologists) to Riverside Hospital at any oneime. The radiology groups function almost indepen-ently of each other, with minimal contact. The mergeras generally had a strong negative impact on academicadiology (W. M. Thompson, personal communication,004; C. A. Dietz, personal communication, 2004).

Methodist Hospital and Indiana University Hospitaln Indianapolis merged in 1997, forming a new corpora-ion, Clarian Health Partners. All of the assets of theseospitals were placed into the new organization, and aingle new operational board was created. Although clin-cal care remains heavily duplicated, with the integrationf very few clinical services, the hospitals have remainedrofitable throughout the merger. In 2003, a decisionas made to merge all of the radiologists into a newly

reated not-for-profit clinical radiology corporation,ith Clarian as the single member and owner. This new

orporation is responsible for the delivery of all clinicaladiology services and employs both academic and non-cademic radiologists. In addition, the academic radiol-gists are separately employed by Indiana Universityospital for academic work. A single department chair-

erson retains absolute authority for all teaching andesearch affairs. However, the chairperson has relin-uished absolute control of clinical radiology, sitting as 1f the 10 board members of the clinical radiology corpo-ation. Full-time clinical radiologists constitute approxi-ately 20% of all the radiologists in the new group. They

ave, however, equal board representation as the aca-emic radiologists who have university appointments.ince the formation of Clarian, the research and educa-ional efforts of the radiology department have under-one significant growth, but the long-term impact of theew clinical radiology corporation on academics remainsnknown and uncertain.The University of Nebraska Hospital and Clarksonospital merged in 1997 to form the Nebraska Medicalenter (C. W. Walker, personal communication, 2004).larkson Hospital was under economic pressure, with its

urvival threatened; the University of Nebraska Hospitaleeded significant additional space, and Clarkson Hos-ital had excess capacity. The merger was comprehen-ive, with all of the assets (but not foundation endow-ents) placed into the new merged organization. The

xisting boards of the two hospitals ceased to exist, and aew single operational board was created. The mergergreement was originally for 5 years, but this was laterxtended to 40 years. The university and Clarkson radi-logy groups continued to function independently forbout 3 years and could not make any progress toward
ntegration. Several leadership changes at that time re- H
ulted in a mandate from the Nebraska Medical Centeroard that all radiology services would become unifiednto a single organization under control of the Universityf Nebraska Hospital department chairperson. By thatime, the Clarkson group had lost nearly half of its radi-logists, and there had also been a significant loss ofadiologists from the university group. The hospitalgreed to provide salary subsidies (for approximately 3ears) to the private radiologists who joined the newroup. Many of the Clarkson radiologists joined the newrganization, but some left. Overall, the merger activityver the past 7 years is believed to have had a negativempact on the academic mission of the university radiol-gy department. The current stability, with all radiologynified under control of the university chairperson, isxpected to result in significant future improvements incademic radiology.

ull Integration of Two Hospitals withignificant Integration of Clinical Services

arnes Hospital and Jewish Hospital in St. Louis mergedn 1993 [11] (G. R. Jost, personal communication,004) to form a single entity, Barnes-Jewish Hospital.he merger was a complete merger of all assets under aew single board. Each entity came into the partnerships an equal partner with equal board representation [11].arnes-Jewish Hospital is now one of many hospitalselonging to the BJC HealthCare group, which nowonsists of about 15 hospitals. Barnes-Jewish Hospitalunctions as a single hospital unit within the system.urrently, all of the clinical services at Barnes-Jewishospital are fully integrated, with no duplication, and all

re academic. All radiology services at Barnes-Jewishospital are now completely under the control of the

niversity department of radiology chairperson. Jewishospital originally had eight or nine radiologists and one

r two residents. The residency programs were veryuickly and completely merged under the university. In994, the Jewish Hospital radiologists were offered fac-lty positions at Barnes Hospital, with enhanced salaries,xed for 5 years. Four joined and four left. By the end ofyears, the academic salaries had become almost equal to

hat of the original Jewish Hospital radiologists. Thempact on academics has been fairly neutral. Having

ore sites has resulted in some expansion of opportunitye.g., for teaching). However, purchasing is now slowernd more bureaucratic, and this negatively affects aca-emics. Some also believe that because Barnes-Jewishospital is the only academic hospital in the entire BJCealthCare system, the BJC HealthCare board has a

ocus on the bottom line that is detrimental to the aca-emic hospital.New England Deaconess Hospital and Beth Israel
ospital in Boston merged in 1996 [7] (M. E. Clouse,

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ersonal communication, 2004; H. Y. Kressel, personalommunication, 2004). This was a true merger of twoeaching hospitals; all assets were put into the merger,alled Beth Israel–Deaconess Hospital [14]. Both exist-ng boards were disbanded, and a new board was created.here were several impetuses for the merger. Beth Israelad a strong primary care base and wanted access toeaconess’s strong tertiary care business. Deaconess had

trong tertiary care and no primary care base and felt thatt was being squeezed out of managed care. One largensurance company was threatening to withdraw fromhem, and they were thus under significant financialtrain. Beth Israel was being pressured with a purchaserom Columbia and saw the merger as a way out of this.ll clinical departments and all residency programs haveerged [14]. All clinical services are now fully integrated,

nd there is no duplication of clinical services within thewo hospitals. The physicians are all in a single practicelan with a practice plan CEO. The medical services werentegrated very early on, and for any service, the mostenior director with the “best curriculum vitae” was ap-ointed as chief. The integration of clinical services didot occur without some trauma, and there were largeepartures from the organization. Failure to bring to-ether the two anesthesiology departments resulted in aass walkout of a large number of anesthesiologists [7].

n the first few years, many Deaconess physicians left,utting entire programs, including a very prestigiousransplant program. The final outcome of the merger isot known. There was huge conflict for about the first 3r 4 years, because some initially perceived the structures a takeover of New England Deaconess Hospital byeth Israel Hospital. The system is now being rebuilt and

ast year was profitable for the first time. Integration isomplete.

The merging of the two radiology departments wasandated. It took several years for this to be fully accom-

lished, but there was a single chief from the beginning.he two residency programs were fully integrated very

arly on. The impact of the hospital merger on academicadiology is mixed. Certainly, in the first few years, thempact was negative because of low morale, staff depar-ures, and difficulty in recruitment. However, the re-aining faculty members continued to provide a solid

eaching program, and conditions for academic radiol-gy are now improving. Overall, the merger has resultedn improved equipment resources, which has an indirectenefit on academics. Grant income is also starting toncrease.

cademic Institution Has Effectively Takenver Private Hospital

wo mergers of this type have occurred in Pennsylvania. In
hiladelphia, the University of Pennsylvania has virtually d
aken over Phoenixville Hospital. Although this was meanto be a merger of equals, the Phoenixville physicians felt thathey lost control over spending and resource allocation andhat the University of Pennsylvania was the dominant part-er [7]. In reality, they perceive this merger as a “takeover”f a smaller hospital by a larger organization. In 1997, theniversity of Pittsburgh created a merger with Passavantospital. Passavant believed that the university failed toake promised investments and had interfered in its affairs

7]. Passavant retained its own board from 1997 to 2002ut then lost it [7].

omplete Failure and Legal Separation

hree mergers have ended in failure. These are the merg-rs between Penn State University and Geisinger Healthystem, UCSF Hospital and Stanford University Hospi-al, and New York University Medical Center and Mt.inai Hospital.

The merger between Penn State University andeisinger Health System involved a large academic med-

cal center, the Hershey Medical Center of Penn Stateniversity, and a successful community health care or-

anization, Geisinger Health System [1,8,12,13]. Thiserger was driven by economic considerations. The roles

f the new board and of the university medical schoolith regard to clinical control and academic control wereoorly defined, and the merger terms were ambiguous.he new board was thus unable to function. The merger

lso failed to realize the projected cost savings.UCSF Hospital and Stanford University Hospital in

alifornia merged in 1997 [6,10]. This merger wasriven by economic factors as well and failed mainlyecause of cultural differences between the organizations.In 1996, New York University Medical Center andt. Sinai Hospital announced that they would merge

heir hospitals and medical schools [19,20] (J. C.einreb, personal communication, 2004; B. P. Drayer,

ersonal communication, 2004). The combined facili-ies formed the largest medical center in the New Yorketropolitan area [20]. The merger was one of severalergers occurring in New York at that time. Both orga-

izations felt threatened by growth in managed care.fter the merger, each hospital continued to function asseparate legal entity, answerable to the board of the

ewly formed Mt. Sinai–New York University Healthystem. There were many problems with the merger.he initial merger talks were done secretly, and this

aused distrust. Physicians at New York University wereoncerned that the CEO of the newly merged organiza-ion was the original Mt. Sinai CEO. A large debt per-isted after the merger. Finally, it proved difficult toovern the organization with a board of over 100 mem-ers. In 1999, there was an overall net loss of $23 million
espite donations of $30 million to each medical school.

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ONCLUSION

espite the known strong risks of mergers, a mania swepthrough the leadership of academic medical centers dur-ng a 6-year period in the mid-1990s, with almost 20cademic medical centers entering into legal mergers.lmost all gave similar reasons for pursuing their merg-rs, which all perceived as “essential for survival.” Whyid this occur? Why did so many mergers occur in a veryhort time period? One must conclude that a “kind ofysteria” must have swept through the communities,riven by the analyses of the same consultants. Once theonclusion “evolved” that academic medical centerseeded to merge to survive, merger mania spread rapidlyhrough the leadership community of the academic med-cal centers.

In the business world in general, only about one-sixthf mergers seem to be successful [7]. Hospitals typicallyustify mergers by claiming increased efficiencies and costavings, which are often not realized [7]. Some mergersave failed, at great cost to the parent organizations7,12]. The outcome of the mergers involving academicedical centers is very variable. Of the 16 mergers we

escribe, 3 are clearly either loose affiliations or completeakeovers. Of the remaining 13, 3 have failed completely.he remaining 10 all seem to be clinically stable and

olvent, but some did not reach this endpoint without areat deal of turmoil and staff turnover.

Outcome is not related to the initial status of theerging organizations. Three mergers have dissolved,

wo of which involved two academic medical centers andhe other one academic and one private organization.ailures have a variety of reasons. The merger betweenenn State University and Geisinger Health System

ailed because of the inability of leadership to come to-ether, the merger between UCSF Hospital and Stanfordospital failed because of large cultural differences, and

hat between New York University Medical Center andt. Sinai Hospital failed mainly because of physician

ifferences. In two of these failures, the merging organi-ations were separated by a relatively large distance (over0 miles). This physical separation may have been aactor in the failure.

Moreover, outcome does not seem to be related to thenal structure of a merger. Three of the least traumaticergers were all very different in structure. Brigham andomen’s Hospital and Massachusetts General Hospital

unction independently, North Shore Health Systemnd Long Island Jewish Medical Center have fully
erged physician practices but duplicate clinical services, m
nd Barnes Hospital and Jewish Hospital have integratedhysician and clinical services.In all the mergers, there has been rapid integration of

ey administrative functions, such as CEO, nursing, andurchasing. The operations of clinical services variesidely and does not seem to be a determinant of success.hen there have been problems, they have often evolved

rom friction between physician groups. Stability haseen achieved quickly when there have been clear in-tructions. Brigham and Women’s Hospital and

assachusetts General Hospital function separately.orth Shore Health System and Long Island Jewishedical Center mandated physician group integration.

his was made easier because all were salaried.Physician groups are fully integrated in only the merg-

rs between North Shore Health System and Long Islandewish Medical Center, Beth Israel Hospital and Newngland Deaconess Hospital, and Barnes Hospital andewish Hospital. This has been achieved either easily orith trauma. Final success does not seem to require theerger of all physician groups. Aggressive board action toandate mergers has a variable outcome. In Nebraska,

he board successfully mandated the full merger of thewo radiology groups. In the merger between Beth Israelospital and New England Deaconess Hospital, the

oard requirement for complete integration of every phy-ician service caused great trauma, but a similar mandateorked easily for North Shore Health System and Long

sland Jewish Medical Center.The long-term outcomes of the mergers of the aca-

emic medical centers on the medical schools and theiresearch and training programs are not truly known.

ith the exception of Nebraska Medical Center andeth Israel–Deaconess Hospital, all of the merged aca-emic medical centers are now part of much larger, mul-ihospital organizations. Many medical schools reportnancial difficulty, and affiliation with large, strong, sta-le clinical organizations may increase cash flow to med-cal schools and provide expanded opportunities foreaching and the clinical application of research. On thether hand, because the teaching hospitals are now onlyne of many hospitals in many of the new organizations,heir boards may focus even more on the financial bot-om line than on the needs of medical schools.

With a few exceptions, the impact of the organiza-ional mergers on the academic productivity of their ra-iology departments is generally perceived as negative toeutral, but generally improving. The advent of central-

zed purchasing and a greater emphasis on cost haveignificantly and adversely affected relationships betweencademic department leaders and major equipment ven-ors. Some academic programs have done well, but thisuccess seems to be in spite of, not as a result of, the
ergers. In all but one of the mergers that originally

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ontained two residency training programs, the residencyrograms merged quickly and completely with apparentase; a single chairperson controls both of the two Northhore–Long Island Jewish Health System residency pro-rams. Massachusetts General Hospital and Brighamnd Women’s Hospital retained separate programs.

The current status of the two radiology groups is quitearied among the merged organizations and is somewhatependent on the status of the merger of the parentrganizations. The radiology groups at Vanderbilt Uni-ersity Medical Center and Meharry Medical College aretable and completely autonomous, with simple collabo-ation and no shared financial risk. The radiology groupst Massachusetts General Hospital and Brigham and

omen’s Hospital and at Presbyterian Hospital andew York Hospital operate independently in stable sit-

ations in which the parent hospitals are likely to con-inue to operate relatively independently. In two situa-ions (the University of Minnesota Hospital andiverside Hospital and the University of Cincinnatiospital and Christ Hospital), the radiology groups op-

rate relatively independently but could be pressured toome together if there is significant future consolidationf clinical services between their two parent hospitals. Inndiana, the two radiology groups are merged for theelivery of clinical radiology services as a new not-for-rofit corporation owned by the merged hospitals; theres a separate corporation for academic affairs. In threeituations, there has been full integration of the two ra-iology groups under full control of the original aca-emic organization: Beth Israel Hospital and New En-land Deaconess Hospital, Barnes Hospital and Jewishospital, and the University of Nebraska Hospital andlarkson Hospital. The radiology groups of Penn Stateniversity and Geisinger Health System, UCSF Hospi-

al and Stanford Hospital, and New York Universityedical Center and Mt. Sinai Hospital are completely

utonomous as a result of the failure of the mergers of thearent organizations.The stories will continue to unfold. It is not possible to

now the longer term economic outcome of these merg-rs. It is also very unclear what the long-term impact on
he academic missions of the organizations will be.
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