The Politics of a Deal: A Primer for Getting a Hospital Deal Done in the New Era

Not every hospital or health system deal makes it to the finish line.

Not all the ones before the pandemic and not all that will be attempted in its wake. And the rationale for that? A HealthLeaders survey in 2019 found that the top three operational reasons for deals failing are:

  • Mistrust between parties (30 percent)
  • Concern about governance (27 percent)
  • Incompatible cultures (21 percent)

When you add to the mix “concern about fate of organization’s mission” (13 percent) and “lack of community support” (6 percent), you glean a pretty clear picture that the politics of people requires a tremendous amount of attention – and the right communications strategy and execution – to get a deal done.

Experts across the industry are anticipating (and in some cases already seeing) an uptick in M&A activity. There’s every reason to believe the risk points above will hold true in a COVID-19-influenced M&A world. In fact, those challenges will be even more pronounced while new ones are being added to the mix for hospitals and health systems looking to join forces.

Union activity, for example, is on the rise. Physicians and nurses will be looking for security and will demand a seat at the table, making their now-even-more-powerful voices heard. At the same time, the general public has never been more protective of “their” hospital and community savior.

Sure, the benefits of size and scale are compelling – especially when it comes to supply chain and financial stability, among other things. But the strength and efficiencies inherent to the “bigger is better” argument may not trump concerns raised by influential people.

The reality is that hospitals and health systems, especially in our COVID-19 world, have an enormous number of stakeholders who need to be managed: physicians, employees, patients, regulators, elected officials, the media, business leaders and so many others.

These stakeholders all bring to a potential deal their unique perspective – fully intwined in emotion and personal experience. The result: a politically-charged environment.

After months of healthcare issues dominating every facet of our lives, emotions will be running even higher than normal when it comes to questions about what the future of healthcare in a community looks like. Politics will be even more in play: not necessarily just Big “P” politics with elections in sight, but little “p” politics: the politics of people.

Strategic communications as a political campaign

The response of internal audiences and the community can have a significant impact on the immediate and even long-term success of a transaction. A good strategic communications plan will generate excitement and understanding of what a deal could mean for the future of healthcare, as well as allay the fears that people have about losing care or jobs. It’s about keeping the waters calm and the noise manageable.

When it comes to hospitals and health systems, a few tried-and-true organizing principles are consistently effective in driving the work forward toward the win of a successful deal. A compelling message is:

  • Delivered via multiple channels
  • Delivered by credible messengers
  • Reflective of issues that matter to stakeholders
  • Tightly coordinated against a timeline

Note that these apply for internal and external audiences. Hospital staff, leadership and board members are being asked what’s happening and what it all means when they are at church, the grocery, the PTA meeting. In this closed-loop system, carefully defining the message and picking the right messenger(s) to deliver it, and then repeating it consistently and empathetically, can be the difference between rallying support or causing confusion and even outrage.

Ground rules for successful deal communications

As with any campaign, there are table stakes ground rules to know and embrace. These will be even more critical in a post-COVID-19 world when the spotlight is on the healthcare industry:

Own the Message. Make it personal.

Tie it to emotion and coordinate who delivers it using a steady drumbeat that always begins internally and speaks to people in their context – not yours. It’s hard to get anything done if you’re not able to clearly, and in a compelling way, explain the “why” of what you’re setting out to do. Yes, you have facts and should use them. But ultimately, you must connect with people on an emotional level. Healthcare is personal after all.

Be Responsibly Transparent.

Responsible transparency requires you to be smart and thoughtful about the specific information you’re sharing, how it’s shared, when it’s shared and who’s sharing it. Certainly, don’t share information for the sake of sharing it. Have a purpose behind everything you provide to your stakeholders. Similarly, don’t withhold information just because it’s uncomfortable. Some details are not for public consumption. That’s fine. But don’t confuse those for information that simply leads to hard conversations.

Expect Opposition.

You will have opposition.  Plan for it. Work to mitigate it where possible, keeping people neutral and even using smart engagement strategies to turn opposition into support. We’ve long known physicians, for instance, can kill deals faster than anyone, and COVID-19 has increased the power of and trust in the physician voice. As mentioned above, the pandemic has elevated the visibility and importance of local hospitals in the minds of the public. Communities were paying attention to deals before, but the public scrutiny will be even greater moving forward.

Change will happen – in healthcare as in every other aspect of life. The questions are “How will things change?” and “Who will drive the change?”

In our experience, using a campaign approach to communications helps providers lead in high-stakes moments, rather than be pulled along. Whether a transaction is borne out of deep distress and necessity or out of strategic opportunity, using the principles above will allow you to take events over which you have no control (consider, for example, a global pandemic) and leverage them to an outcome that creates value and maintains your mission.

Illustrations by Shannon Threadgill

About the Author /

isquyres@jarrardinc.com

A seasoned strategic communications and public affairs advisor, Isaac Squyres brings to our clients more than 20 years of experience guiding senior executives and organizations through high-stakes challenges, periods of dynamic change and significant moments of opportunity. Squyres began serving healthcare providers during the challenging M&A environment of the mid- and late-1990s. Since then he’s worked with hospitals and health systems of virtually every size to achieve some of their most important objectives, including the formation of Idaho’s first health system (St. Luke’s Health System), and the largest provider system in South Carolina. His experience also includes lead campaign advisor roles for a state hospital association on a successful ballot measure initiative and a winning congressional campaign, for which he subsequently guided the transition to office as chief of staff to the congressman. He founded and managed Squyres Strategic Communications before joining Jarrard Inc. Prior to that, he was a partner at DaviesMoore and Gallatin Public Affairs in Boise, Idaho where he worked with clients to improve their internal infrastructures and grow their business. He began his career at McNeely Pigott & Fox Public Relations in Nashville. Squyres holds a Bachelor of Arts in political science from Davidson College in Davidson, North Carolina.