Competing logics in hospital mergers - The case of the Karolinska University Hospital

Introduction. Today there is no doubt that mergers have permeated all sectors of society, including health care. Starting in the US, extensive waves of hospital mergers occurred at a record pace in the 1980’s typically justified by prom ising dramatic financial and operational improvements. In the 1990’s, the merger trend reached Europe and by the turn of the century “merger mania” had taken a strong hold within the U K. By the end of the 1990s, there had been a number of hospital mergers in Sweden. In 2004, Ka rolinska University Hospital was formed through the flagship merger between the Karolinska Hospital and the Huddinge University Hospital. In 2010, yet another prestigious merger o f tw university hospitals was announced with the formation of Skåne University Hospital. Ho wever, there has been almost no research on hospital mergers in Sweden. The aim of this thes is is to increase our understanding of the pitfalls and possibilities in merger processes by e xploring the Karolinska University Hospital merger. The merger in brief. On 1 January 2004, the Karolinska Hospital and the Huddinge University Hospital merged to form the Karolinska University H ospital. Although the merger was controversial and far from obvious, the merger decision p assed by a single vote in the Stockholm County Council on 9 December 2003. To achieve a bal nced budget by the next political election in 2006, the new director of the merged hospit al was told to reduce expenditures by €70 million over the next three years. The top manageme nt d legated identical assignments to all clinical managers: to reduce costs and to consolida te 125 clinical departments into 74 new departments each with a common management. Over the t hre -year period (2004 to 2006), the predicted cost savings for the merger were not achi eved. Eventually the original implementation plan was withdrawn and the hospital director l eft the organization. Methodology and research questions. An embedded case study design was used to explore preand post-merger processes, in which data was c ollected by interviews, non-participant observation and extensive documents (allowing triangu lation). Three studies addressing different organisational levels examined the following issues : how and why a merger decision that was considered “impossible” became possible (Study I); how and why top management’s radical ambitions resulted in an unintended convergent proc ess and dysfunctional outcomes (Study II); how and why considerably different outcomes in term s of clinical integration occurred at the clinical department level (Study III). Results. Spanning from the years 1995 to 2007, the three s tudies show that the merger processes evolved through a non-linear, undirected and complex interplay between external and internal actors. The process was mainly driven by the competing institutional logics of managerialism in a political and administrative arena, and professionalism in a scientific and professional arena. Means convergence and a politico-economic cr isis led to the merger decision. The top management was overwhelmed by the “vertical clash” between managerialism and professionalism. On the clinical department level, managerial factors that hindered integration were a sole attention on the formal mandate from the top manage ment, leadership based on one formal actor, and the use of a planned top-down approach to ange. Managerial factors that facilitated integration were a dual attention to two majors sta keholders (top management and clinical staff), shared leadership between multiple actors, including an informal leader, and the use of an emergent, bottom-up management approach to change w ithin the planned assignment. Discussion. The key finding is that the competing institution al logics between managerialism and professionalism seems to be the main driver of merger processes. This vertical conflict is probably the main explanation why intended outcomes w re not achieved. While top management followed the merger literature’s classic recom mendation to focus on the horizontal tension and to take a planned linear top-down approach to c hange, the unanticipated challenge stemming from the competing institutional logics made i t difficult for the management to handle the post-merger process. A true understanding of the in traand inter dynamics inherent in a context with multiple layers of competing institutional log ics, such as public sector health care, seems essential to produce functional organizational outc mes. LIST OF PUBLICATIONS I. Choi, S. , & Brommels, M. (2009). Logics of Pre-mer g r Decision-making Processes The case of Karolinska University Hospital, Journal of Health Organization and Management (JHOM) , 23 (2), 240-254. II. Choi, S. , Holmberg, I. , Löwstedt, J., & Brommels, M . (2010). Executive Management in Radical Change – The Case of the Karolinska Univ ers ty Hospital merger, Scandinavian Journal of Management , DOI:10.1016/j.scaman. 2010.08. 002. III. Choi, S. , Holmberg, I. , Löwstedt, J., & Brommels, M . (2010). Managing Clinical Integration – A Comparative Case Study in a Merged Un iversity Hospital, Submitted to JHOM. Publication recommended by revie wers.