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Published in Health Care

Reporter's Notebook: Merging cultures will be key to Spectrum-Beaumont deal

BY Sunday, July 04, 2021 04:15pm

If culture truly does trump strategy, then add one more complexity to the proposed merger between Spectrum Health and Beaumont Health.

M&A professionals will tell you that pulling off a successful merger — no matter the size of the deal and the players involved — often hinges on a good cultural fit between the organizations.

And anyone who’s spent time living, working or doing business on both sides of the state knows very well the social and cultural divide between West Michigan and Metro Detroit. While business and political leaders over the years have fostered far better relations and have built a bridge across the mitten, the cultural and social differences shouldn’t be easily dismissed.

The issue came up in a couple of conversations I’ve had to gauge reactions to the blockbuster Spectrum-Beaumont deal.

That east-west divide was an issue to overcome a few years back when Trinity Health sought to combine Mercy Health in West Michigan and Saint Joseph Mercy Health in Southeast Michigan into a single system.

“We have hospitals in West and East Michigan, and we figured out over time how to work together across the state, and that’s what they’re going to have to learn to do with each other,” Rob Casalou, CEO of Trinity Health in Michigan, said of the proposed merger. “The thing that we all know is that we may be in the same state, but West Michigan and East Michigan are culturally very different. The way people live and access care may be very different, but the one thing we all strive for is standardization because it leads to better quality and it leads to lower costs, and those two are not incompatible.”

In West Michigan, Mercy Health had to overcome a similar divide on a small level years ago when it sought to operate as a single system between Grand Rapids and Muskegon. Much like the east-west divide across the state, cultural and social differences also persist between Grand Rapids and the lakeshore.

In that instance, Mercy Health had to get doctors in both markets who had always viewed each other as competitors to work together under a single banner, as a former executive there once told me.

Bringing together two large health systems to create what would become the largest in-state system requires particular attention to addressing cultural differences within the medical staff of both companies, Casalou said.

“You really need to pay attention to your medical staff. You need to listen to them and you need to let them drive a lot of the integration,” he said. “Medical communities all train together, they often run into each other, so there’s going to be familiarity between the Beaumont and Spectrum medical staff already. It is a challenge, but it’s also a tremendous opportunity. If they can get their clinicians to agree to work together ... and really, really try to up their game, I think they have tremendous potential.”

Uniting executives and medical personnel from two different markets and corporate cultures could pose a challenge in creating the new health system between Spectrum and Beaumont, said Bret Jackson, the president of the Economic Alliance for Michigan, a business-labor organization that has members on both sides of the state.

Jackson wonders how well Spectrum and Beaumont will blend together. He describes Spectrum’s executive leadership as “very community focused” who “feel an accountability to West Michigan for doing the right thing and being a good actor.” Beaumont, “while not anti- those things … very clearly is just a business,” he said.

As well, cultural differences exist within the two health systems’ medical personnel, Jackson said.

“I really find it hard to believe that the culture of these two entities can work together in harmony,” Jackson said. “It’s really hard for me to believe there could be a middle ground, just because they’re so different.”

As for merging these cultures, Spectrum Health President and CEO Tina Freese Decker has cited a focus on the overriding vision to transform care by creating a new health system that unites Spectrum and Beaumont toward a single goal.

“What we need to recognize is that our cultures make us who we are, but we also want to have similar values and mission and vision, and will continue to go there,” Freese Decker said. “I think the key point here is that we need to connect. We need to listen to each other, we need to collaborate, and we are all focused on: How do we transform health in Michigan? We want the same thing. We want to deliver greater value, exceptional clinical care and coverage that is equitable, accessible and affordable. As we’re aligned on that, that should be our focus.”

Casalou believes one key element of the proposed merger is the health systems’ plan to maintain local boards under the 16-member corporate board of the directors of what would be BHSH System. In West Michigan, that would include oversight boards for Spectrum Health West Michigan, Spectrum Health Lakeland, and Priority Health.

Retaining local boards is a “very, very wise move on their part,” Casalou said. That helped in Grand Rapids, Muskegon, Ann Arbor and Southeast Michigan when Trinity moved to bring operations in West and Southeast Michigan under the same umbrella organization.

“If I were ever going to give anyone advice, don’t ever disconnect from the local voices of your community,” Casalou said. “That way you adapt to the cultures, you listen to the local community, and you get the benefits of integration.”

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