Running head: VIA CHRISTI HOSPITAL MANHATTAN 1
Via Christi Hospital Manhattan
Liberty University
BMAL 504
Via Christi Hospital Manhattan
Part 1
Via Christi Hospital Manhattan (VCHM) is a hospital in the not for profit healthcare industry.
VCHM is a 150-bed hospital located in Manhattan, Kansas, yet serving many of the rural
communities in the surrounding areas. Through the beginning of 2016, VCHM ran a budget of
12 million dollars and was comprised of 788 clinical and nonclinical staff.
In any organization, change is inevitable. Although change can have an eventual positive
impact on the organization, the initial impact can be less than positive. Previously known as
Mercy Regional Health Care (MRHC), Via Christi Hospital Manhattan (VCHM) has been a part
of the Manhattan, Kansas community for about 150 years. During that time, it has moved
through several changes as it grew to meet the needs of the expanding community. MRHC has
been an autonomous healthcare organization relying on the community and local Catholic
ministries for financial support. In 2015, MRHC was purchased by Via Christi Health, a fully
Catholic not for profit healthcare organization.
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During this merge, many mistakes were made due to a lack of communication and a
misunderstanding of the particular region the hospital served. Once acquired by Via Christi
Health, MRHC changed its name to Via Christi Hospital Manhattan (VCHM). As this merger
was taking place, Via Christi Health was being acquired by Ascension. Ascension is the largest
not for profit healthcare organization in the United States and is deeply rooted in Catholic
tradition. In 2016, VCHM became a part of the Ascension ministry. Through one year, this local
health care ministry experienced two major mergers. The hospital, staff, and local community
experienced several issues during this time; however, this project will only focus on the
following five: Communication, Personnel, Leadership, Public Relations, and Finance/Budget.
Change can be positive; however, the changes that this hospital is currently
experiencing have been anything but positive for the staff and surrounding communities.
Communication
Experiencing a merger and acquisition rather from an employee perspective or that of the
CEO, requires one to understand that the vision must include: customer orientation, employee
focus, organizational competencies, and standards of excellence. One would argue that
successfully communicating a vision would require one to incorporate the above concepts to
guide behavior, grab internal and external customer attention, and to provide direction and focus
for the organization. This was not so much the case regarding the merger of Via Christi Health
and Mercy Regional Health Care (MRHC). In the wake of the merger between the two non-profit
organizations, the vision of unifying two health related Catholic rooted organizations would have
been ideal to emphasize upon and would have captured much support from personnel. According
to Carton, Murphy, and Clark (2014):
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Indeed, some scholars have suggested that communicating purpose is the most central of
all leader behaviors, because it imbues work with meaning and direction. One of the
primary ways leaders impart purpose is via rhetoric—messages in verbal or written form.
In particular, researchers have focused on two complementary message types that leaders
use to illuminate purpose: visions and values. A vision is defined as a vibrant, idealized,
“verbal portrait” of what the organization aspires to one day achieve (p. 1544).
The failure to address their staff successfully resulted from poor communication measures
such as a brief regarding the merger that lasted for 20 minutes and poorly dispersed emails that
only reached a few employees. It is imperative for any organization to not only construct a
vision and a purpose but to communicate it as well.
Personnel
The geographic location of VCHM to Kansas State University and Fort Riley made the
hospital the organization where many students received their start in the healthcare industry.
About 40 percent of clinical and non-clinical staff have been on the MRHC/VCHM payroll for
over 15 years; however, 60 percent of the hospital staff remains for approximately three to four
years. This is partly due to the high permanent change of station at Fort Riley and the natural
progression of newly graduated nurses.
In the past two years, VCHM has seen a dramatic increase in the turnover percentages.
More importantly, there has been an increase in the number of tenured associates who have
resigned within the past year. This high turnover is due, in part, to the leadership’s failure to
plan. In what was called a “strategic plan” the shift from MRHC to VCHM and then to
Ascension was moved forward in almost complete disregard for the associates at this institution.
There was a plan for nearly everything except on how to retain employees before, during and
VIA CHRISTI HOSPITAL MANHATTAN 4
after the merger. Donahue (2001), states, “Companies are most vulnerable to talent poaching
during the period immediately following a merger announcement. Competitors will waste little
time approaching your best people, hoping to leverage their uncertainty about their own
company’s future to lure them away” (p.1). VCHM experienced just that. Leadership
discovered that the employees that had been with the organization the longest were the ones
experiencing the greatest amount of stress. It was this group of associates that moved to other
hospitals outside the area for better hours and better pay.
Leadership
The situation at Via Christi Hospital Manhattan presents an example of leadership
personnel that were unprepared for the merger and acquisition of their hospital. Leaders who
have not previously been through a change process are likely to underestimate the impact that
change creates on people and resources (Dotlich, Noel, & Walker, 2005). The leadership from
Via Christi failed to communicate to Mercy Regional health Center that they would need to align
their policies with Ascension Health, which created more work for Mercy employees once the
merger was complete. The merger of Via Christi with Ascension Health also created pushback
from the community. Leadership failed in this area to evaluate the entire situation and did not
anticipate the impact of the merger on the community nor did they foresee the impact on
employees. Many issues arose from these leadership failures such as loss of jobs, high turnover
rate, loss of money, loss of time, loss of patients, and a hiring freeze. Additionally, once the
merger was complete the CEO’s both resigned leaving the hospital to deal with the issues that
they helped to create.
Public Relations
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Public Relations had never been a problem for MRHC. In the past 20 years, MRHC had
a wonderful relationship with the surrounding community, the city of Manhattan, and the Army
post. However, as talks began in 2012 of merging MRHC with Via Christi Health Care, very
little information was given to the community. Slowly, negative information began to seep out
from disgruntled associates within the organization, yet MRHC and VCH did not try to stop or
get ahead of the negative press. By late 2014, MRHC and VCH began a public relations
campaign to help the communities understand the changes that were coming. Much of the
information was met with skepticism since the negative information had been out in the
community for much longer. So, VCH and MRHC began to try and fix the negative image that
had been created.
Unfortunately, the public relations operation focused so much on the public that the
hospital failed to maintain a good relationship with its employees. There was a point during the
merger, that if an employee wanted information they could read about it in the newspaper or
listen to the radio. The employees felt unvalued and left out, and because of that feeling they
began to leave.
Because MRHC and VCH waited so long to address the rumors that were coming out of
the hospital, the communities began to disregard the other pertinent information. MRHC/VCHM
is a not for profit ministry relying on the donations of business and churches to help support the
needs of the hospital. Because of the rumors and lack of response early into the merge, VCHM
began to lose support both through donations and patients. In order to try to recover from the
negative publicity, the public relations department should have run a pertinent “question and
answer” newspaper ad for the community to explain the benefits of the merger (Lewis, 2001)
Budget/Finance
VIA CHRISTI HOSPITAL MANHATTAN 6
VCHM and Via Christi Health write off millions of dollars in medical bills to assist those
who are unable to pay for their medical care. This is a part of the mission of VCHM. However,
this generous spirit has some negative issues on the annual budget and monthly workings of the
hospital. Mergers for hospitals are almost a necessity. It is hard for a single hospital to stand
alone. Often they need to merge or die (David, 2012). In this world, Continuum’s collection of
hospitals can be trapped in a no man’s land between the medical centers and smaller community
hospitals (David, 2012). It is hard for a hospital to marshal the financial or managerial resources
to thrive.
With MRHC becoming VCHM, the hospital received a $5 million grant for building and
renovations; however, the hospital was put on a hiring freeze due to budget restrictions. As
MRHC became VCHM, there was a restructuring of budget priorities, and much of the monies
allocated to other areas earlier were moved to acquiring new equipment. Many of the employee
programs through human resources were cut, to include grants and tuition reimbursement.
Within a year, Via Christi Health was purchased by Ascension Health Group. Ascension
is the largest not for profit healthcare organization in the United States. Although the name
stayed the same, the authoritative structure changed. Ascension began requiring massive budget
cuts across the ministry, and VCHM was not exempt. VCHM had a budget of over $12 million;
however, the budget was cut by five percent. With this cut, VCHM had to realign job
descriptions and titles, begin a hiring freeze, and suspend other employee perks.
Conclusion
Mercy Regional Health Center had a wonderful reputation of a hometown hospital. It
was a great place to work and begin a career in the healthcare system. However, due to several
missteps, the merger between the larger healthcare organizations became a disruption in the
VIA CHRISTI HOSPITAL MANHATTAN 7
hospital’s ability to effectively function. With a loss of money in the budget, a loss of key
personnel and leadership and a failure in the public relations department, VCHM has taken
several steps backward. It will take years for the hospital to regain the glory it once had if at all.
Part Two
The merger between Mercy Regional Health Center (MRHC), Via Christi Health, (VCH)
and Ascension had both positive and negative effects, not only for the hospital staff but also for
the surrounding community. During this two year process, there were several missteps in the
merging process that led to fear, mistrust, and insecurity. Although there are several steps that
were involved in the issue, only five will be considered: Communication, Personnel, Leadership,
Public Relations, and Budget/Finance.
Communication
The commonality of acquisitioning and merging in organizations today are portrayed as
successful business ventures; yet with the merger between VCH and MRHC and the acquisition
of the not-for-profit organization Ascension, the process of communicating a secure vision for
change created a difficult process for the organizations involved. The leaders and members of
MRHC felt completely alienated. There was minimum communication regarding the
transformative effects associated with the merger and acquisition. These effects resulted in a loss
of jobs and security for many executives, employees, and local college students who attended the
once welcoming not-for-profit healthcare organization.
A vision that expressed the upcoming changes and informed the members of the
organization of what to expect and how they could contribute would have been a great approach
to this situation. The common goal of VCH, MRHC, and Ascension is to serve the community by
providing affordable healthcare to people in need. To successfully maintain the new vision and
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presence of the newly merged and acquired Via Christi Hospital Manhattan (VCHM), a strategic
plan that requires a reorganization and renewal involving customer orientation, employee focus,
organizational competencies, and standards of excellence is imminent.
Creating an organizational culture that is prepared to handle change requires affective
communication which enables a positive response among the recipients of change. Although the
merge and acquisition would create grounds for the hospital to continue operating despite
healthcare regulation changes, the process in which the merge was carried out seemed
underhanded with a disregard for the members of the organization. According to Zhu, May and
Rosenfeld (2004), “information adequacy is not always positively related to employee job
satisfaction and that information should be communicated to employees only when it is carefully
designed and delivered purposefully” (p. 243). Although the merge of the organizations were
unforeseen, the leaders of the organization should have gained as much knowledge as possible to
construct a vision to keep their employees motivated throughout the change process. According
to Zhu, May & Rosenfeld, (2004):
Communication during a merger needs to vary in its openness, depending on the nature of
the information to be communicated, the goals of the organization, the specific needs and
concerns of the employees, and the different needs and expectations of acquiring and
acquired company employees (p. 243).
Personnel
In scenarios such as this, it is easy to blame the leadership. However, in this particular
case and in dealing with personnel, that is exactly the problem. If there was a plan, it was not
communicated properly to the associates. It became obvious that the senior leaders expected 100
VIA CHRISTI HOSPITAL MANHATTAN 9
percent loyalty, regardless of what was going on around them, because there was not a plan for
helping the associates handle all the changes that were taking place.
One of the major pitfalls between the leadership and the associates was the reorganization
of the personnel. As one merger moved into a second merger, the well-known structure of the
hospital organizational chart began to change. Not only was there a shift in the structure, but
there also was a considerable number of layoffs and terminations. Because Ascension had the
hierarchy, the regional ministry of VCHM had to reorganize its personnel to meet the
requirements of Ascension. The issue became that Ascension’s reorganization was based on
what worked in St. Louis and Michigan, not on what was needed for a hospital in rural Kansas.
Galpin and Herndon (2000) warn, “If you intend to fold the company you’re acquiring into your
existing organization, resist the temptation to characterize it as a merger of equals. This will only
breed confusion, resentment and mistrust on the part of the acquired company” (p. 47).
Another area of change that affected VCHM was the lack of focus given to the needs of
the employee. Because of the assumed insecurity by the associates, many sought employment
elsewhere. Donahue (2001) states, “A successful retention strategy during a merger should
include both financial remuneration and assurances about the future” (p.1). The lack of
communication from management and the restructuring of the departments led the associates to
believe that their work environment was unstable.
Leadership had the opportunity to make the merger a positive experience; however, their
lack of planning and the shortsighted vision of the hierarchy led to distrust. Instead of the
mergers happening so quickly, the leadership should have taken the time to allow associates to
move slowly into it. Bobbe (1967) suggests, “Initial steps had to be modest, but had to produce
concrete results. They had to encourage and provide stepping stones toward more ambitious and
VIA CHRISTI HOSPITAL MANHATTAN 10
far-reaching projects” (p.26). Leadership failed the associates and suffered the loss of good
employees to other organizations.
Leadership
The leadership of the now merged Via Christi Hospital Manhattan: A Ministry of
Ascension (VCMH) made many errors in their attempt to merge. The main issues pertaining to
leadership include the now lack of a CEO due to the current CEO’s resignation, lack of
communication to their employees regarding the alignment processes and new vision, and the
inability to plan for the reaction from the community. Leadership failed to evaluate the entire
situation before proceeding with the merger which has led to these issues.
The first thing that Ascension needs to do is to find a skilled and experienced change
agent. This needs attention first as the interim CEO lives in a different area and can only go to
the hospital three times a week. An effective CEO should be available at all times, especially
during a merger & acquisition. The skills required include confidence in one’s abilities to
produce effective change, the capacity to evaluate situations and adapt to change accordingly; for
example; they must have the ability to exercise control over an environment (Nikolaou, Gouras,
Vakola, & Bourantis, 2007). Change agents should clearly specify goals, creating a coherent
vision for the organization. An effective change agent will also create team building activities;
and possess communication and influencing skills to induce employee commitment (Nikolaou et
al., 2007, p. 298).
Lastly, according to Bennis (1993), a successful change agent should “intervene at
different levels of an organization, at different times, while working with people and building
relationships within the target organization” (as cited in Nikolaou et al., 2007, p. 298). Jick and
Peiperl (2011) highlight the importance of change master skill and include the following as
VIA CHRISTI HOSPITAL MANHATTAN 11
necessary for a successful change process: sensing needs & opportunities, stimulating
innovation, communicating inspiring visions, building coalitions, nurturing the team, persistence,
and celebrating accomplishments.
Creating the vision for VCHM is vital for its future success. When creating the vision
leadership must consider the power and meaning behind it as it will be fundamental to building a
sense of purpose (Kantabutra & Avery, 2010). A meaningful and compelling vision should
include the following factors: conciseness, clarity, future orientation, stability, challenge,
abstractness, and the ability to inspire (p. 39). Improving customer service is also a large part of a
successful merger. Customer service in this situation would include dealing with the pushback
from members of the community who refuse to get treatment at the new VCHM. VCHM needs
to consider the “long-term and create relationships] by providing good service” and by knowing
their customers’ needs (Acharyulu, 2012, p. 73). By applying the suggested actions, leadership
should be able to improve in all areas concerned.
Public Relations
Too often during M&A’s a variety of misdeeds occur and according to Galpin and
Whittington (2010), if these issues are not addressed, there will be a severe and potentially
permanent damage to the relationship between the organization and its employees as seemed to
be occurring before. The level of communication that should have existed between the current
employees of MRHC and the acquiring organization of Via Christi Health was less than
professional or considerate of the employees of both organizations. The surrounding community
of the City of Manhattan was not given much information about this merger and when
management did not communicate early and frequently enough the trust was breached again
(Galpin & Whittington, 2010).
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Instead of MRHC and VCH creating a proactive public relations campaign, they chose
instead to create a public relations plan for damage control due to poor planning in the onset of
the merger. Since the rumor mill had grown and become gospel within the community and the
communication efforts with the employees were less than desirable, the public relations team had
trouble putting out fires within and outside the hospital because the trust between leadership and
employees had now been broken. Galpin and Whittington (2010) further state that the success or
failure of a merger depends on the level of trust that employees extend toward their leaders
Budget and Finance
It was the assumption of leadership that these mergers would have a positive impact on
the hospital’s finances. There were many renovation and building projects needing to be done,
and MRHC’s merger with Via Christi made that possible. The day the merger took place, a 15
million dollar project began to renovate an entire wing of the hospital. It was also during this
time that Via Christi Health was being acquired by Ascension Health. As certain money was
being diverted to building projects, other money was being taken away from the main budget.
These mergers were an attempt to strengthen the image and finances of the local hospital;
however, due to poor leadership, a lack of communication with the community, and a cut in the
personnel, the hospital began to suffer one of its worst financial crisis in many years. Hospital
acquisitions are not new. According to Noles, Reiter, Boortz-Marx and Pink (2015), “In 2010, 77
hospital transactions worth $10.793 billion took place, and in 2011, 86 hospital transactions
worth an estimated $7.868 billion occurred” (p. 396). Unfortunately, the effect of these mergers
resulted in lower patient involvement, and an increase in costs. This should not come as a
VIA CHRISTI HOSPITAL MANHATTAN 13
surprise. Noles et al. (2015) identify that they “found evidence of significant price increases after
the merger of two hospitals in the San Francisco Bay Area. Similarly, post merger price increases
of between 11% and 17% after the merger of two Chicago-area hospitals” (p. 396).
Due to poor communication, the senior leadership of MRHC did not express its desire to
merge with VCH to the community. In rural Kansas, company mergers are synonymous with
financial failure. Once the information was distributed to the public, the surrounding community
decided that the donated money was not necessary for the hospital since it had received $15
million dollars in the merge.
The merger and acquisition of MHRC and VCH with Ascension went too quickly.
MRHC had been an active part of the community for many years; however, due to, what was
considered, a sudden change, the community became wary and patients began to go elsewhere.
Unfortunately, VCHM has felt minor effects of the merger and acquisition; however, studies
show that the worst is yet to come. According to Noles et al.(2015), “A sensitivity analysis
examining outcomes 1, 2, and 3 years post merger suggests that reductions in salary expense did
not occur at the time of the merger but at least 1 year afterward” (p. 405). Steps have been taken
to help the hospital through the first year, however, more needs to be done. A five year merger
plan should be considered, and an intense program dedicated to reestablishing the donation base
the hospital enjoyed pre-merger.
Conclusion
As the leadership of the different healthcare systems move forward, they should evaluate
their current situation, identify failures, and strive to increase the communication, leadership and
public relations with Manhattan, Kansas and the surrounding community.
References
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