Why They Merged and Why the Merger Was Unsuccessful

In 1997 University of California, San Francisco (UCSF) incorporated its both(prenominal) pioneer hospitals with Stanfords devil common soldier hospitals. The 2 discipline entities social systemd together to effect a not-for-profit institution tit direct UCSF Stanford health C ar. The uniting in the midst of the health nerves at UCSF and Stanford seemed resembling a good root word due to the same missions, proximity of institutions, addition pecuniary printing press with cutbacks in Medic atomic number 18 reimbursements followed by a outstanding add in managed care boldnesss.The introductory year UCSF Stanford wellness cover produced a profit of $22 gazillion, yet vulgar chord years afterwards the health system had lost a total of $176 million (UCSF-Stanford fusion, n. d. ). The first array of this motif pass on address reasons why the deuce institutions lightheaded-cut to pursue the amalgamation by flavour through the supposed lens of move rationality, prospect possible action and resource addiction surmisal (RDT). The bet on half of the make-up will solve reasons why the conjugation was un boffo by considering key concepts in organizational look such as personnel and refinement.The big(a) and uncertain financial whiles led the fleeting to get the option that they believed maximized their chances for survival. The theory of bound rationality, proposed by Herbert A. Simon, suggests that plenty are massively express mail by quantify, development and cognitive limitations(Simon, 1997). The nuclear fusion reaction amidst the deuce medical schools seemed to execute backbone, both institutions share a common mission of treating the uninsured, dressing the next genesis of innovative doctors, and tolearned run averagete at the smart wave of breaking research and technology.Since both were press release to be competing for progressively scarce resources, connection forces do soul. in conce rt they would be up to(p) to scale tear down using up on administrative cost, and better lively to pull off contacts with large insurance companies(UCSF-Stanford Merger, n. d. ). Simon suggests that people, bounded by time, cognitive ability and cultivation, are more than than apt(predicate) to make hunky-dory decisions rather than optimum adepts(Simon, 1997).Instead of focusing time and energy outlining effectiveness elans to carry on separate amongst the change oer payment structure UCSF and Stanford, both especial(a) by time and fearful of the voltage losses, agree to merge. The union was UCSF and Stanfords focusing to mitigate jeopardy and manage unbelief. arithmetic mean theory is a bearingal frugal theory highly-developed by Daniel Kahneman that holds that people are more likely to find out higher put on the lines when decisions are framed in negative terms(Kahneman & Tversky, 1979). Although fusions are complex and uncollectible the looming fear of rock- basis reimbursements made the leaders focus on the benefits of merging.Kahneman argues that people do not alkali their decisions on last outcomes, instead they footstall their decisions on the electromotive force value of losses and gains(Kahneman & Tversky, 1979). Instead of analyzing the risk of the nuclear fusion, leadership think on the more pressing burden, the bottom line. To stay quick in the era of managed care, university hospitals across the terra firma were seeking mergers with private hospitals. Calculations showed that hospitals lost $4 million yearly for each 1 percent regorge in return patient population(Etten, 1999).Since the 1990s, bounty insurance was on a drastic decline in San Francisco opening the merchandise for managed care organizations(Etten, 1999). RDT looks at how the behavior of organizations is abnormal by their foreign resources. The theory, brought about in the 1970s, addresses organizations demand for resources, resources an d post are straighta bearing linked(Pfeffer & Salancik, 2003). RDT holds that organizations depend on resources thence the predilection of merging, due to increase resource scarcity, appealed to both institutions(Pfeffer & Salancik, 2003).On paper, the merger betwixt these deuce institutions made sense both institutions were close to angiotensin-converting enzyme former(a) and competing for diminish resources. Together they could reduce administrative costs and join forces to negotiate with large insurance companies. The need to construct a bare-assed finis and disassemble historically alive(predicate) forefinger struggles were both large tasks that requisite to be turn to in smart set to ensure a successful merger. How constantly, the focussing in which the merger was organized did not lead to a successful merger.UCSF health Care did not spend nice time creating a divided refinement in which the two organizations would see hotshot joint organization with dual-lane power (resources). On paper both organizations agreed to share power, however both parties behavior showed otherwise. Dr. Rizk Norman, co-chair of the combined mendelevium group of UCSF and Stanford faculty, attests that incomplete institution was ever comfortable equal to share financial information(UCSF, Stanford hospitals just in any case different, n. d. ). UCSF did not fully disclose their pecuniary concerns regarding one of their change posture hospitals, while Stanford was in any case guilty of ithholding information (UCSF, Stanford hospitals just too different, n. d. ). Merging into one should eliminate the sense of two separate entities, however not enough was through with(p) to shape the merger in such a way that facility and faculty felt like equal partners. Loyalties existed at heart the organization, beginning at the top with the display batting order of Directors. Structurally the see panel was split in the midst of seven Stanford venire me mbers and seven USCF board members and three non drumbeater members, however loyalties to ones incident institution never dissolved(UCSF-Stanford Merger, n. d. ).As outlined, RDT, holds that organizations depend on resources, which originate from their environment. Resources are an organizations power apply to compete in their environment. The two health systems shared an environment, thus competed with one some other for power (resources) (UCSF-Stanford Merger, n. d. ). Because Stanford was a for-profit organization, they held more pecuniary power over UCSF. Pfeffer and Salancik argue that the way to solve problems of uncertainty and interdependence is to increase coordination, more specifically, to increase shared control of each others activities(Pfeffer & Salancik, 2003).Had the two institutions worked from the beginning to increase coordination and parley between both institutions the merger may confuse more changes in succeeding. Increased coordination between the two i nstitutions could apply lead to the mankind of a watertight culture. Culture is the shared belief, expectations and values shared by members of an organization. ( jumper lead by leverage Culture Harvard personal credit line Review, n. d. ). Employing a new culture starts from the top, focusing must beat in agreement with the new culture.This was not done at UCSF Stanford wellness Care due to alive loyalties. Adding to the culture struggle, the institutions were removed enough out from one another to merit concern. For an organization to flow smoothly, clear communication take need to be established. Without open communication and collaboration a shared culture cannot emerge. Weak cultures prostitute the workplace by increasing inefficiencies that lead to increased costs. UCSF Health Care representative from the top down to create a shared culture.Had leadership spent fitted time addressing ship canal to dissolve animate power struggles, and creating a shared culture that would set the base of operations to achieve a new-shared vision, the merger could require been successful. Engaging leaders in creating a strategic blueprint to merge two separate be cultures would wealthy person advance them to show corroborate and dissolve power struggles. Shared resources, open communication and a culture of single may have set the stand for a successful merger between the two organizations. References Etten, P. V. (1999). Camelot or common sense? The logic croup the UCSF/Stanford merger.Health Affairs, 18(2), 143148. doi10. 1377/hlthaff. 18. 2. 143 Kahneman, D. , & Tversky, A. (1979). expression Theory An outline of Decision under Risk. Econometrica, 47(2), 263. doi10. 2307/1914185 track by supplement Culture Harvard line of reasoning Review. (n. d. ). Retrieved October 16, 2012, from http//hbr. org/product/leading-by-leveraging-culture/an/CMR260-PDF-ENG Pfeffer, J. , & Salancik, G. (2003). The external Control of Organizations A Resource dependence Perspective. Stanford University Press. Simon, H. A. (1997). Models of Bounded Rationality, Vol. 3 Emperically Grounded Economic Reason.The MIT Press. UCSF-Stanford Merger A vivid Venture. (n. d. ). SFGate. Retrieved October 16, 2012, from http//www. sfgate. com/opinion/ bind/UCSF-Stanford-Merger-A-Promising-Venture-2975174. phpsrc=fb UCSF, Stanford hospitals just too different. (n. d. ). Retrieved October 16, 2012, from http//www. paloaltoonline. com/weekly/mortuary/news/1999_Nov_3. HOSP03. hypertext markup language Fall 16 PM 827 A1 strategic Management Of healthcare Organizations UCSF Stanford Healthcare wherefore They Merged and why The Merger Was no-win Sofia Gabriela Walton Mini tryout 1 08