Brand authenticity comes when you align what you say with what you do.

Consolidation and Integration Require New Brand Strategies for Healthcare Companies

Brand authenticity comes when you align what you say with what you do.As healthcare industry leaders look to increase efficiency, grow market share, improve outcomes, and meet consumer expectations for health and life services, many are finding solutions through consolidation and integration.

Predictably, when organizations join forces, they experience a cultural transformation that affects all aspects of the company, including its brand. At a pivotal time like this, it is essential that leaders skillfully align company culture with the business strategy and brand strategy. Of the three, the latter is the most often undervalued or overlooked by companies that fall short of their full potential post-merger. Those who address all three with equal importance are the ones who succeed…the ones who lead.

Case in point: CVS Health. Once a traditional pharmaceutical retail chain, the company now owns 50 percent of market share in the retail clinic space. Cited as “arguably the country’s biggest health care company” by The New York Times, CVS Health’s business model has positioned the company to deliver on its publicized promise of “helping people on their path to better health.” A series of consolidation moves over the last decade set the stage for the organization’s transformation, including the 2006 acquisition of MinuteClinic, the 2007 merger with pharmacy benefits provider Caremark, and the 2013 purchase of Coram, a home infusion services company.

Incidentally, CVS Health further bolstered its brand promise in 2014 when it announced the discontinuation of tobacco sales. In doing so, the company forfeited $2 billion in annual revenue but moved the dial on something priceless: brand authenticity.

And that’s where the rubber meets the road, so to speak—brand authenticity is the much-coveted marriage between what you say you do (e.g., helping people on their path to better health) and what you actually do (e.g., providing highly convenient access to healthy products and services). Aligning words with actions across an entire enterprise is no small feat, especially post-merger, but it is as possible as it is imperative. The most important ingredients are skills, experience and a unified commitment to the new brand promise.

Increasing Capabilities through Consolidation

According to a report from the law firm of Paul, Weiss, Rifkind, Wharton & Garrison, healthcare is currently the third most active industry in mergers and acquisitions (behind only computers/electronics and professional services). The healthcare industry announced more than 1,000 deals valued at $176 billion in 2016, and more than 1,200 deals valued at $417 billion in 2015. This trend is expected to continue. According to Kaufman, Hall & Associates, 63 percent of hospital and health system leaders surveyed for Futurescan 2017-2022 predicted their organizations will consolidate with another hospital or system within the next five years.

It’s not just health systems. Companies all across the healthcare industry are consolidating, often bringing together unexpected partners to create a platform of products and services that engage consumers in innovative ways. As healthcare organizations expand their footprints, diversify into new business segments, and bring innovative products and solutions to market through consolidation, they will likely find it challenging to integrate cultures from two companies into one. Is it a big undertaking? Yes. Does that mean it should be bypassed for efficiency sake? Definitely not. While difficult, transforming the culture to align with the new promise is essential for delivering an authentic brand experience, which is, in its own right, essential for customer satisfaction, loyalty and trust.

Just look at how others are broadening their capabilities through consolidation:

  • Nonprofit entities Dignity Health and Catholic Health Initiatives announced last year they were exploring a merger that could be one of the most sizeable deals of 2017, creating the largest not-for-profit hospital system with revenues of $27.6 billion.
  • Roche, the world’s largest biotech company, made six acquisitions and investments in genomics companies in just over a year to boost its standing in the drug discovery arena. By acquiring organizations with operations that complement its own, Roche is positioned to accelerate its understanding of genetic causes of disease and further establish itself as a leader in the field.
  • UnitedHealth Group, a leading managed care company, announced in 2015 it was combining OptumRx, its freestanding pharmacy care services business, with Catamaran Corporation, a provider of pharmacy benefit management and technology solutions. The combined company links data typically found in disparate systems—including demographic, lab, pharmaceutical, behavioral and medical treatment data—enabling clients and consumers to make better decisions regarding care effectiveness and pharmaceutical compliance.
  • In January 2017, Optum and Surgical Care Affiliates (SCA) announced a merger to create a comprehensive ambulatory care platform that will operate in 75 markets, representing about two-thirds of the U.S. population. Together, Optum and SCA will serve millions of consumers each year through 20,000 affiliated physicians and hundreds of care facilities.

The Power of Brand

What do all these examples have in common? Through mergers and acquisitions, they are creating new opportunities to broaden their scope of capabilities, and as a result, extend their promise. They are thinking outside their own enterprises and finding innovative ways to make a deeper impact on health and healthcare. However, even the most experienced leaders and smartest strategies can only take the promise so far. In the end, the authenticity of the actual experience becomes the most critical success factor.

Creating a brand strategy—in preparation for consolidation or anytime—involves defining how the brand resonates both internally and beyond: what should the customer experience look like post-consolidation, and how will the new brand promise be communicated—and kept—for customers? Finding the right answers takes a significant investment in time and resources, but it is well worth it. A newly consolidated company has much to communicate and even more to do, and success depends on doing everything well.

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About the Authors

Carol Dobies, CEO and Founder of Dobies Healthcare GroupJulie Amor, Chief Strategy OfficerCarol Dobies, CEO and Founder of Dobies Healthcare Group, has been bringing healthcare brands to life for 25 years. Carol co-authored this blog with Julie Amor, Chief Strategy Officer for Dobies Healthcare Group, who brings more than 20 years of experience elevating healthcare brands to our firm and our clients. 

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