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Social Science & Medicine 60 (2005) 119130

Changing organisations: a study of the context and processes of mergers of health care providers in England
Naomi Fulopa,*, Gerasimos Protopsaltisb, Annette Kingc, Pauline Allena, Andrew Hutchingsa, Charles Normanda
a

Health Services Research Unit, London School of Hygiene and Tropical Medicine, Keppel Street, London WC1E 7HT, UK b Paparalessa 10, Moschato, T.K. 183-44, Athens, Greece c GCSRO, Strategy Unit, Admiralty Arch, The Mall, London SW1 2WH, UK Available online 19 June 2004

Abstract This paper presents ndings from a study of the context and processes of provider mergers in the NHS in England. Mergers are an example of organisational restructuring, a key lever for change in the UK health care sector and elsewhere, although it is only one strategy for organisational change. The framework for the study is key themes from the organisational change literature: the complexity of the effects of change; the importance of context; and the role of organisational culture. The drivers for health care mergers and the evidence for these are analysed. Using documentary analysis and in-depth qualitative interviews with internal and external stakeholders, the rst part of the paper reports on stated and unstated drivers in nine mergers. This provides the context for four in-depth case studies of the process of merger in the second and third years post-merger. Our study shows that the contexts of mergers, including drivers of change, are important. Merger is a process without clear boundaries, and this study shows problems persisting into the third year post-merger. Loss of management control and focus led to delays in service developments. Difculties in the merger process included perceived differences in organisational culture and perceptions of takeover which limited sharing of good practice across newly merged organisations. Merger policy was based on simplistic assumptions about processes of organisational change that do not take into account the dynamic relationship between the organisation and its context and between the organisation and individuals within it. Understanding the process of merger better should lead to a more cautious approach to the likely gains, provide understanding of the problems that are likely in the period of change, and anticipate and avoid harmful consequences. r 2004 Elsevier Ltd. All rights reserved.
Keywords: Mergers; Organisational change; Organisational restructuring; Organisational context; Organisational processes; UK

Introduction Mergers have become increasingly common in both North American and UK health care sectors in the past 20 years. Between 1996 and 2001 in the NHS in England, 99 health care provider mergers were for*Corresponding author. Tel.: +44-20-7927-2458; fax: +4420-7612-7843. E-mail address: naomi.fulop@lshtm.ac.uk (N. Fulop).

malised among acute care, mental health, and community health services providers (Department of Health, 2001). Mergers illustrate the focus on organisational restructuring as the key lever for change in the UK health care sector and elsewhere (Normand, 2004; Smith, Walshe, & Hunter, 2001). This is just one method of organisational change (Iles & Sutherland, 2001). Others include individual-level incentives such as performance-related pay (Arrowsmith, French, Gilman, &

0277-9536/$ - see front matter r 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.socscimed.2004.04.017

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Richardson, 2001), or organisational performance assessments (Marshall, Shekelle, Davies, & Smith, 2003); attempts to change organisational culture, for example, using Total Quality Management (Joss & Kogan, 1995); or attempts at radical organisational transformation, such as Business Process Reengineering (McNulty & Ferlie, 2002). Although not mutually exclusive, these approaches are based on different and more or less sophisticated theories of organisations, change, the relationships between the organisation and its context, and between the organisation and individuals within it (McNulty & Ferlie, 2002). Arguably, mergers are based on simplistic notions of organisational change that do not acknowledge the dynamic relationship between the organisation and its context and between the organisation and the individuals within it (Child, 1997; Giddens, 1984). Context is important. In private sector mergers usually there is clear managerial authority, whereas in the public sector they involve multiple stakeholders and are easily politicised (Denis, Lamothe, & Langley, 1999). This is particularly true in professionally dominated organisations where professionals who traditionally had considerable power and autonomy are expected to change deeply rooted behaviour and often resist radical change (Pettigrew, Ferlie, & McKee, 1992). Multiple, sometimes conicting public sector objectives probably make the merger process more complex (Ferlie, 1997). Large-scale organisational change has been conceptualised as part of a wider political and administrative management culture, characterised by periodic restructuring and transformation of public sector institutions (Ferlie, 1997), and mergers specically have been viewed as an example of the new public management (Kitchener & Gask, 2003). Organisational culture, although a disputed term, has been identied as an important element of organisational change (Davies, Nutley, & Mannion, 2000; Pettigrew et al., 1992). Organisations appear to be attached to their general cultural patterns and these may become obstacles to bringing different organisations together (Denis et al., 1999; Greene, 1990). Cultural differences are particularly pertinent in professionally dominated organisations (McNulty & Ferlie, 2002). Aspects of organisational culture that are key to health services include attitudes to innovation and risk; outcome or process orientation; and patterns of communication (Davies et al., 2000). Drivers for health care mergers, an important element of their context, include anticipated economic, clinical and political gains. Economic gains are expected from economies of scale and scope, particularly regarding management costs and improving efciency through rationalising provision (Ferguson & Goddard, 1997). Evidence suggests scale economies become exhausted in the 100200 bed range and diseconomies begin

between 300 and 600 beds (Ferguson, Sheldon, & Posnett, 1997). Hospital mergers resulting in more than 500 beds (common in the UK, US and Canada) are unlikely to achieve economies of scale. Where mergers have resulted in an increased range of services, there is no evidence of scope economies (Lynk, 1995; Treat, 1976). Improvements in clinical quality have been predicted through higher volumes of activity; better medical training (Dowie & Gravelle, 1997); and easier recruitment and retention of staff (Ferguson et al., 1997). Evidence shows higher volumes improve clinical outcomes in some specialities, but gains are exhausted at relatively low thresholds (NHS Centre for Reviews and Dissemination, 1997). Political drivers include facilitating hospital or service closures and securing nancial viability of smaller organisations (Garside, 1999). For mental health services in England, additional impetus for merger has been the belief that single-focus mental health trusts would provide better services (Department of Health, 1997, 1998). The cases presented for provider mergers emphasised benets but underplayed organisational aspects, unintended consequences and potential drawbacks. These include diseconomies of scale, problems in integrating staff, services, systems and working practices, and equity in access to services (Ferguson & Goddard, 1997). Most studies focused on the impact on costs rather than quality of services. There is little evidence on the organisational impact of mergers. Some found that mergers provide opportunities for shared learning and collaborations (Leroy & Ramanantsoa, 1997). Disbenets discussed include lower morale, stress from fear of loss of jobs (Greene, 1990; McClenahan & Howard, 1999); and clashes of corporate culture (Denis et al., 1999; Greene, 1990). Evidence from other sectors suggests that efciency often declines post-merger due to unforeseen problems in integrating rms (Buono & Bowditch, 1989; Haspeslagh & Jemison, 1992). The focus of this paper is on the context and processes of organisational change, in this case, merger. It reports results from a study of NHS provider mergers in England. The organisational change literature suggests the context for mergers is important and effects will be multi-layered and complex. To address these complexities, multiple levels of analysis have been utilised to study process phenomena that are uid in character and spread out over both time and space (Langley, 1999). A merger is a unit of analysis with ambiguous boundaries (Langley, 1999); when the process begins and ends is not obvious. Previous research treated merger as having clear boundaries and therefore underestimated its complexity. As McNulty and Ferlie (2002) argue, analysis of change needs to attend to the interplay between processes, people, and events both internal and external to the organisation. Context, complexity and

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organisational culture are therefore key themes in this study, which analyses rich, new empirical data to contribute to our understanding of health care mergers. We present ndings on the drivers for and objectives of these mergers, both stated and unstated, as part of the context within which mergers take place. We also explore the relationship between the organisation and its context and the relationship between the organisation and the individuals within. The extent to which objectives of these mergers were met is reported elsewhere (Fulop et al., 2002; Hutchings et al., 2003).

unstated drivers of mergers. Process data were collected in real organisational contexts and have the characteristics described by Langley (1999): data are composed of events which are rarely ordered incidents and work on different levels (for example, the implementation of service developments and policies); data are comprised of multiple units and levels of analysis with unclear boundaries; and process data are usually eclectic and of high volume (for example, combining documentary analysis with data from 130 semi-structured interviews). The study consists of two main elements: (a) analysis of the drivers of merger, both stated and unstated, in all nine trust mergers in London in 1998 and 1999 (see Table 1) and (b) four in-depth case studies in the second and third year following merger (key features of each case study are summarised in Table 2).

Methods This paper focuses on the context and processes of mergers. The contexts are acute, community and mental health providers, and the combination of stated and

Table 1 Trust mergers in London, 1998 and 1999 Trust type Acute Year of merger 1999 1999 Merged trust Trust A Trust B Constituent trusts Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust Trust 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Health authorities HA 1 HA 8 HA 4

1999 1999 1998

Trust C Trust D (Case study acute trust) Trust E

HA 7 HA 9 HA 1 HA 5 HA 10 HA 6

Community

1999

Trust F (Case study community trust I) Trust G Trust H (Case study community trust II)

1999

HA 7

Mental health

1999

Trust I (Case study mental health trust) Trust J

HA 2 HA 3 HA 5

Combined

1999

Trust K

Trust 24 Trust 25

HA 2 HA 5 HA 11

Notes: nine mergers produced 11 merged trusts. All merged trusts above were included in drivers study. Trusts D, F, H, I were case studies.

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122 Table 2 Key features of case study trusts Acute trust Year of merger Type of merger Type of organisations merged Population served Income Staff Health authorities involved Main drivers 1 April 1999 Two trusts merged creating one new trust Teaching hospital and DGH 475,000 d150 million 4000 2 Optimise provision of services Financial viability Maternity Accident and emergency Mental health trust 1 April 1999 Four trusts merged creating two new trusts Services from mental health and mixed trusts 590,000 d80 million 2000 3 Single focus on mental health service Boroughcoterminosity Child and adolescent mental health service Transfer of patients Community trust I 1 April 1999 Four trusts merged creating two new trusts Services from community and mixed trusts 750,000 d65 million 1600 1 Borough-based community services Primary care group development Human resources Child health Community trust II 1 April 1999 Three trusts merged creating one new trust Services from community and mixed trusts 700,000 d75 million 1700 3 Develop and secure local services Financial and organisational viability Intermediate care Learning disability N. Fulop et al. / Social Science & Medicine 60 (2005) 119130

Focus services

Data collection methods Study of stated and unstated drivers Public consultation documents were collected for all mergers in London that came into effect in 1998 and 1999 to obtain stated drivers. Fourteen representatives in seven Health Authorities (HAs) involved in the mergers were interviewed to elicit unstated drivers. One HA refused to participate (relating to the community trust I merger). Semi-structured interview topics included the background, drivers and objectives of the mergers. In-depth case studies Case studies of four mergers were conducted (one acute, one mental health and two community providers). These were selected purposively (Bowling, 1997) to ensure the range of trust types and geographical spread in London. The purpose was to explore in greater depth the process of merger, assess how far objectives had been met, and their intended and unintended consequences. This paper reports ndings in the second and third years following merger. During the rst phase, 2226 interviews were conducted with internal and external stakeholders during year two post-merger (Table 3). Interviewees were asked about objectives and drivers for merger, processes involved, and for their assessment of its impact on service delivery. They were asked to reect on the period before merger and the rst 2 years. In each case study, during the second phase (3 years postmerger), 810 stakeholder interviews were conducted

(see Table 3) and two service delivery or managerial developments were followed through in detail over 2 years (see Table 2, focus services). During the third year post-merger, the community providers were preparing for further reconguration: the formation of Primary Care Trusts (PCTs).

Data analysis Data were analysed using a preliminary theoretical framework (Miles, 1979), rather than purely grounded theory (Glaser & Strauss, 1967), so that analysis is a combination of induction (data-driven generalisation) and deduction (theory-driven exploration of hypotheses) (Langley, 1999). This framework draws on the concepts of context, complexity and organisational culture as well as themes emerging from the data. In the drivers study, public consultation documents were analysed for evidence of stated objectives. These form part of the statutory consultation process and set out arguments for the favoured organisational structure. The analysis identied commonly articulated reasons for the proposed mergers and some of the differences. Four researchers read transcriptions and notes from interviews to ensure reliability of the analysis. Emergent themes were discussed and agreed. Findings from each stage were written up in separate documents, producing analysis of consultation documents, the interviews in the drivers study, and the rst and second round of case study interviews. Findings from the different stages of analysis were then compared and synthesised.

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N. Fulop et al. / Social Science & Medicine 60 (2005) 119130 Table 3 Details of case study interviewees Case study trusts Senior trust managers (chief executive, medical director, human resources director, etc.) 1 and 2 7 9 9 6 31 3 4 5 5 4 18 Service managers External stakeholders (CHC, PCG/T, LA, HA) 3 5 3 2 3 13 1 and 2 8 5 11 10 34 3 2 0 1 1 4 36 31 34 30 131 Total 123

Years post-merger Acute trust Mental health trust Community trust I Community trust II Total

1 and 2 10 9 6 6 31

Note: Community Health Council (CHC)independent statutory bodies representing the interests of the public in the health service in their area. Health Authority (HA)provides local strategic leadership, leading the development of local health improvement programmes, and work closely with other local stakeholders for the planning and delivery of health care. Trustspublic bodies providing NHS hospital, mental health and community care. Local Authority (LA)locally elected bodies with responsibility for the provision of a range of services including social care, education, environmental health, and leisure. Primary Care Group/Trust (PCG/T)NHS organisations providing primary care and commissioning secondary care.

Results Results are presented in two sections. The rst presents ndings from the study of stated and unstated drivers of the nine mergers. This provides the context for the ndings from the four case studies, as the balance between stated and unstated drivers and the way the merger decision was taken affected implementation. The presence of stated and unstated drivers also underlines the multiple, sometimes competing, objectives of public sector organisations (Ferlie, 1997). Stated and unstated drivers for merger Stated drivers were obtained from the public consultation documents and subsequently, interviewees were asked to comment on their importance. Unstated drivers do not appear in the consultation documents but emerged through interviews. Stated drivers The consultation documents suggested mergers were intended as management reorganisations. There were six main stated drivers: (i) Internal management cost savings: This was emphasised in all consultation documents. They aimed to save at least d500,000 d750,000 through the merger of boards. Interviewees conrmed that nancial pressures represented a signicant driver. These included budget reductions to address previous overspends or in anticipation of future budget reductions.

(ii) Safeguarding specialist units and guaranteeing service developments: Merger was also seen as a framework to safeguard specialist units and guarantee service developments. For example, creating a larger mental health organisation was expected to ensure survival of the specialist forensic unit at mental health trust 23. For mental health mergers J and I, nancial pressures resulted from the need to develop community mental health services. Mergers were presented as a way of implementing service reviews within tight nancial constraints. Acute trusts 12 and 13 presented the proposed merger as a way of increasing investment and service opportunities through combining management and optimising income by increasing specialist tertiary work across two sites. (iii) Ensuring the quality and level of service in light of external policy drivers: Common to all mergers was the need to maintain quality and level of service in the context of external policy drivers. In the acute services, this included recommendations to move acute services closer to where people live (Department of Health, 1997), improving cancer services (Department of Health, 1995); consultant cover and junior doctor training; and local service reviews. A key driver in mental health was Government policy to develop single-focus mental health trusts (Department of Health, 1997, 1998). (iv) Improve conditions and career prospects for staff, and address recruitment and retention problems:

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All merged trusts aimed to improve conditions and careers for staff. These issues were cited as important drivers of acute and mental health mergers. HA representatives argued that a larger staff and expertise base would help maintain and develop services. This was viewed as essential for supervision of service delivery, and for training, education, and clinical governance, given constraints of junior doctors hours and senior staff time. (v) For community and mental health trusts: closer cooperation with local government through greater co-terminosity: For community and mental health trusts, the recongurations were informed by pressures for improvements to services and closer co-operation with local government and partnership agencies. The national policy shift towards community mental health services was seen as requiring closer collaboration with local partners. (vi) For community trusts: support for primary care development. A driver for community trusts was the need to support primary care development. Mergers could secure survival of community trusts, ensuring their strategic role in primary and community health developments. Unstated drivers These were mainly local issues in one or more constituent trust. It is hard to estimate their signicance. They might have affected the type of reconguration in specic cases, or in addressing a specic local problem. Three main unstated drivers reported were: (i) Addressing managerial decits: Some mergers imposed new management on trusts seen by HAs or the NHS regional ofce as under-managed or lacking control. Merger introduced better management from another merging trust or outside. Similarly, trust 17 was seen as having under-performing community services that raised concern about future service quality. I was concerned that [trust 17] was well organised here while [trust 15] had a reputation for being less well organised. I was worried we would be diluted. Actually, with trust 17 taking over as its been described, it remained the same (PCG representative, community trust merger I). (ii) Addressing nancial decits: Some debts of constituent trusts were expected to be written off to give the new trust a better start. While not stated in writing some HA representatives reported that decits had been part of the merger negotiations. In trust K, it was argued that

the merged organisation could not be expected to assume a large debt from one constituent trust. In the community trust merger II, one trust had a large decit. When this became apparent after the merger, the new trust was allowed to write it off. (iii) Local and national political context: In three of the nine mergers, lobbying from central government, inuential institutions and individuals, and from public pressure groups played a role in driving the merger process. The local HA representative interviewed saw the conguration adopted by merged acute trust B as a compromise over an inefcient, outdated but much-loved hospital (trust 4). The merger of acute trusts A and B was politically sensitive due to a high-prole public campaign to avoid the closure of trust 4. The organisational merger was mixed up with the future of the [trust 4] site, although this went through a separate consultation process. In the context of this decision, the health authority commissioned an options analysis, which came out in clear favour of a single site option. This in turn galvanised the opposition to the merger and produced the high prole Save [trust 4] Hospital campaign (HA1 representative). The high-prole, agship character of acute trust 11, and its high esteem with local and national politicians, provided an added incentive to secure its future in a new organisational setting. The merger basically bought trust 11 ve years. If [current developments] are approved, it will probably buy them another 20 yearsy (Community Health Council [CHC] representative).

The four case studies A summary of the key features of each case is shown in Table 2. Acute trust A teaching hospital merged with a district general hospital (DGH). The teaching hospital serves a relatively afuent outer London community, whereas the DGH serves a very deprived, ethnically diverse population. The main stated drivers for the merger were to optimise service provision and secure nancial viability of the two organisations. An important (unstated) driver was to address the perceived management decit in the teaching hospital. The DGH management took over the teaching hospital. This had implications for the merger process.

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Mental health trust Four mental health providers were merged into two trusts, one of which was this case study. The main drivers for merger were to create single-focus mental health providers and to make provision co-terminus with boundaries of local government that provides social services. For the HAs, the merger provided the opportunity to address perceived inefciencies in previous service congurations and trust management, and reduce costs. Community trust I Four providers were merged to create two trusts, one of which was this case study. The main aims were to introduce borough-based community services, to facilitate co-operation and partnership working with other agencies (especially local government) and PCG development. The nancial driver included management cost savings from reducing senior management and boards. When the development of PCTs was announced, the trust was to play a central role in the transition and in holding community services until their transfer to local PCTs. For the NHS Regional Ofce, the merger offered the opportunity to address perceived management failings in one location.

Community trust II This was a merger of three trusts into one, creating a geographically large and dispersed provider. Financial and organisational viability were key drivers, with each trust recognising the advantage of the new organisation. New policy regarding community service developments was a further driver of the merger.

Cross-case comparison Comparison across case studies identied the following themes: process of merger decision; perceived differences in organisational culture; perceptions of takeover; opportunities for learning; impacts on staff; service delivery and development. Delays to service development and improvement are negative effects, but others may be positive or negative depending on the drivers that underlie the process. Fig. 1 provides a schematic representation of the development of these themes during the merger process. Process of merger decision The four cases varied in the balance between being driven more by stated or unstated drivers and how far the merger decision was top down or bottom up. The

Consultation document published

HIGH

Official beginning of newly merged trusts

LOW

Pre Merger

Consultation Period

1-2 yrs post merger

3 yrs post merger

TIME

Delays to service development Loss of managerial control Perceptions of takeover

Opportunities for learning/sharing good practice Emotional cost of merger process

Fig. 1. Schematic representation of the development of the impact of the merger process.

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acute trust merger was driven heavily by unstated drivers, particularly the perceived managerial decits in one hospital. The decision, effectively made at regional level, was top down and had little buy in from staff within the two hospitals. The decision regarding the mental health merger was also top down, but it was mainly driven by the stated driver to create single-focus mental health providers. This made sense to staff and there was more buy in. The Community trust 1 merger was also top down but was driven by a combination of stated and unstated drivers, including a perceived management decit in one trust. This contributed to factionalism during the merger process. In the Community Trust II merger, although the decision was ultimately top down, it followed local discussion amongst the relevant organisations each of which recognised the advantages of merger. These differences did not affect the disruptive impact of merger implementation, but did inuence certain merger processes such as the sharing of good practice (see below). Perceived differences in organisational culture Respondents used the term culture to highlight differences between the organisations and explain conicts of values and priorities. Where a major driver of merger is the perceived failure of one or more provider, some clash of culture is inevitable and probably desirable There might be four miles difference between us but there is two decades in terms of culture and practice (Executive board member, acute trust). Differences in culture included attitudes to innovation and risk taking and an outcome or process orientation, for example: [Community trust I] seems very process oriented, and thats a culture thats come from [trust C]. You need processes, but you also need creativity. [Trust E] was low on processes, which was a weakness, but high on innovation and creativity, it had a at management structure. It was an organisation prepared to support risk, and to support failure when things go wrong. [Trust C] tend to blame the individual. I championed an innovative nurse-led service, which is not championed now, and its falling apart. [Trust C] culture dominates and is more negative about innovation (Borough Director, community trust I). So you have one part of the trust being about staff development but not getting anything done, and another part quite decisive and accountable but with a bit of a spirit of cultural deprivation (Executive board member, mental health trust).

Perception of takeover This was a key theme that emerged from the data. Two years post-merger, staff in all case studies reported feeling taken over by another trusts management. Although appointment to management posts was competitive, senior management tended to be dominated by one former trust. In all four case studies, the Chief Executive came from a constituent trust and most senior managers followed their former Chief Executive in post. In the mental health merger (involving four trusts), some outside senior appointments were made. Nevertheless, most senior managers came from one of the trusts (trust 21). This was seen by staff from other parts of the new trust as a takeover and was resented by some respondents. It felt like a takeover. It felt that the new Chief Executive would surround himself with his people. They did not put their cards on the table, and there was no thought about the impact on staff. It felt like a death every time you went to trust 15 and someone hadnt got a job (Manager, community trust I). Takeover was considered particularly harmful if management structures and approaches of one trust were imposed in the other(s). In community trust I, there were contrasting views. Trust 15 described Trust 17 as boring, process driven. Trust 17 saw itself as managed. Conversely, Trust 15 saw itself as innovative and developmental, while Trust 17 viewed it as chaotic. Harmful effects of takeover were also reported in the winning trust. Staff in organisations whose management now ran the merged trust complained that managements attention had shifted from its home to another part of the trust. Three years into the mergers, perceptions of takeover had greatly diminished: People dont really talk about takeover, they have resigned themselves to the fact that this management style is the one that presides (Middle manager, mental health trust). However, anxiety caused by perceived takeover reappeared in community trust II with the advent of yet another change in management structures, especially for trust 15. Some feeling of being taken over seems inevitable, and lasts for up to 3 years. Opportunities for learning and sharing good practice The opportunity to share clinical practice and learn from the fellow merging organisation(s) was a stated driver in all mergers. This was achieved to varying degrees. In the rst 2 years post-merger, the mental health and two community trusts beneted most from

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sharing clinical practice. Three years post-merger, the acute trust had had limited success in sharing good practice, although there was progress in unifying medical record systems and the introduction of new orthopaedic protocols. Initially [we] tried to adopt a new way of organising medical records, which was used at [trust 11] for a long time, but it was rejected. They have now accepted it and agreed it was a great idea. It was rejected in the rst place because it was from [trust 11]! It took two years for them to see its advantages. Thats real progress! The introduction of new orthopaedic protocols has also worked well. Its just like moving a big boulder, its damn hard to move, but once you get it moving, it keeps on moving (Senior manager, acute trust). Some interviewees warned against high expectations of immediate improvementthey regard benets of managerial and clinical expertise as long-term. One respondent argued that sharing good practice is difcult and takes a long time to become visible. He suggests that reconguration helped expose differences in services, funding and stafng levels between trusts, but examples of adopting good practice are not obvious. In the acute trust, the merger decision process and perceived differences in organisational culture contributed to difculties in sharing good practice. An external stakeholder suggested a difference remains between the previously separate providers for some period following the merger: It is difcult to transfer good practice because of the underlying distrust and prejudice toward the other, and because people havent themselves changed. There persists a difference between specialties and services. Clinicians talk of other clinicians (from the other trust) as if they are part of a different organisation and a unied organisational identity varies from service to service (PCG representative). In contrast, in community trust II, several respondents thought sharing of good practice was successful. A contributory factor was the more consensual approach to the merger decision process. An external stakeholder stated: The merger was positive in cross-fertilisation between services. The practices and protocols in providing services were quite different in the constituent trusts and the services learned from each other. This positive aspect is only now coming through because of the transition period (PCT representative, community trust II).

Impact on service delivery and development Despite clinical service improvements being a stated driver of mergers, there was agreement across the four case studies that the merger had made services worse. Respondents, both within and outside trusts, reported that the loss of managerial focus on services during the merger had harmed patient care. Service developments were delayed by 1830 months. However, some positive effects of mergers on service developments were also reported, for example, the creation of a critical mass of clinicians in smaller services and some sharing of good practice. Delays in service development All merged providers experienced delays in service development, mainly due to delays in middle management appointments. This affected the more outlying community trust services in particular, which remained under-managed for several months, and could not participate in local service development discussions. In community trust II this delayed development of intermediate care services. Particularly frustrating for external stakeholders was that providers lacked representatives with authority to take action and participate in discussions. Planned or anticipated service developments could not go ahead, opportunities were missed, and service improvement was delayed. For front-line staff the lack of management during the merger period was disconcerting and resulted in a holding attitude towards services. We did not see a [senior] manager for nine months after the merger (Service manager, community trust II). The acute trust merger experienced similar delays. Proposed changes to pathology, emergency and maternity services had not been implemented by the second year following merger. In the third year post-merger, delays were experienced due to lack of managerial control and little focus on services during the transition. Loss of managerial control In all mergers, external representatives, trust staff and management reported that senior management lost control over strategic direction and day-to-day operations at some early point in the merger. This was often due to unforeseen circumstances and delayed plans for reorganising services. These in turn were caused by delays in management appointments, nancial shortfalls and IT delays. Overall, trusts underestimated the

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time-scale involved in the merger. Commenting on the mental health merger, the LA representative noted: It takes a lot of time and energy to recongure. There were reports of people in some parts of the service being unhappy about some of the appointments. There was a lot of rivalry between [trust 21] and [trust 23]. For six months, a lot of energy went into sorting out management and stafng. And that must have an effect on how people can both manage and develop a service. Delays in senior and middle management appointments led to a loss of momentum, increased workloads, and a reduction in middle managements ability to cope. It took even longer than anticipated to ll the second and third tier posts, which created difculties for public communication at [trust 18] and elsewhere. People who would have gone to the community trust went to the PCGs. (CHC representative). Some vacancies remained into the third year of the merger, diverting management from operational duties and delaying service developments. The increased workload of senior managers following merger was an issue in all case studies and delayed developments. The increased scale and complexity was not met by an adequate strengthening of senior management, at least in the early stages. As workloads of senior managers increased, their capacity for developmental work decreased. Reduced management cost was a stated driver in all mergers, but the consequential undermanagement was not anticipated. The issue of undermanaged services continued into the third year of the merger. At operational level, things did not change much. At strategic level, attention was pulled from the local area. Management is stretchedy (Service manager, community trust II) In the third year post-merger, management capacity in the community trusts was affected by the transition to PCTs. Some senior managers left in the last 18 months of the trusts life. Some posts were lled internally, but others remained vacant, so managers had to take on extra roles. Impact on staffthe emotional cost of merger Benets to staff of the merger included improved clinical supervision, more coherent professional management, better appraisal, training, and career development. However, both clinical and managerial staff emphasised the stress caused by uncertainties and changes, and the increase in workload associated with the process of merger. Managers failed to anticipate

adequately the disruptive effects of integrating management and services across the merged organisations. Individual staff responded in different ways to the merger. Stress from uncertainties, changes, and higher workloads were emphasised. Alongside these mainly negative responses, interviewees reported increased autonomy in their roles, and gaining a voice in plans for innovation and change. The pre-merger consultation processes and the months leading to merger produced anxieties and fears for individual staff. Many sought alternative employment. Others felt anxious about having to work alongside staff groups from another organisation, which they previously considered rivals. The following is typical across all four case studies: We are short staffed as people move on and we have learned to live with whats left. Their leaving is undoubtedly caused by the merger. They feel no security, and no career pathway. Basically, no one wanted to move to [trust 10] (A&E Registrar, acute trust). Staff at all levels reported being overworked since the merger, which adversely affected their home lives. A CHC representative relating to community trust II commented that the merger applied Huge pressure on existing staff, people I respect almost went under, they were reduced to their knees, taking on the extra workload and adjusting to the new organisation. The process of appointing managers was difcult for staff teams and groups. Those who gained new management found it difcult to relate to them, particularly those from previously rival organisations. Even at middle management levels, people found this process difcult: The manager I worked with was made redundant. Its difcult to cope with that and I found it difcult not to allow resentment to spill over. Its a difcult period having to adjust to new styles of management when you knew that there were casualties. It wasnt a painless exercise (Middle manager, mental health trust). At 3 years post-merger, fewer references were made to the emotional costs of the merging process. Although some reported higher workloads, there was no mention of the stress and anxiety they reported earlier. The early tensions decreased and staff morale increased. References to anxiety and uncertainty related to the further proposed reconguration, for example, in pathology and maternity services and the transition to PCT status in the community trusts.

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Discussion and conclusions Our themes of context, complexity and organisational culture provided a framework for analysing the drivers for mergers and, in the context of these, the processes and consequences of merging health care organisations in the rst 3 years. Changes in structures were used as a lever for change, but, drawing on Giddens (1984) concept of structuration and its focus on the interplay between structure and human agency, this study shows that mergers are based on simplistic notions of organisational change that do not take into account the dynamic relationship between the organisation and its context and between the organisation and the individuals within it (see for example Child, 1997). For example, perceived differences in cultures seem to form a barrier to bringing organisations together. Differences were reported more strongly where there was less buy in from staff. This is important when part of the aim of the merger is to change the organisational culture of at least one provider. The amount of staff buy in for the merger in turn relates to those data indicating staff perceptions of takeover rather than merger and those showing the emotional cost of the merger process into the second year. This illustrates the two-way relationship between individuals and their environment: the process of merger created perceptions of takeover and had a negative effect on staff; these in turn affected the merger process itself. As McNulty and Ferlie (2002) found in their study of an attempt to radically transform an organisation, it is an example of where management action is mediated by very same cognitive and relational structures that the management action is meant to address. None of the mergers avoided the negative process effects: while the context and decision process differed, in all cases it brought a period of organisational restructuring and intense introspection, setting back organisation and service developments by at least 18 months. A major factor was delays in appointing middle managers. This highlights the importance of the merger process within public sector organisations with multiple objectives. These have to demonstrate due process in appointments, which takes longer than in private sector organisations. From this study it is evident that merger is an evolutionary process with ambiguous boundaries (Langley, 1999). This was not appreciated either by those who made the decisions to merge nor those who implemented the change. There is little evidence that the economic and clinical objectives that formed the drivers for mergers are achievable. Policies underplay the importance of the context within which mergers take place, of which the drivers are themselves a part, and ignore the processes of implementing mergers which includes the relationship between the organisation and

the people within it. The relationship between context and process is also apparent in the differing ways sharing good practice played out in the four cases. Respondents explain difculties and delays in implementing good practice between merged organisations in terms of perceived organisational differences. This study raises important methodological issues concerning the study of complex organisational phenomena such as mergers. The research was funded after the mergers had formally taken place. Ideally, research on mergers and recongurations would begin earlier, but it is unlikely to be feasible to start before there have been signicant inuences from the proposal for merger. Findings presented in this paper provide a picture of the impact of mergers at a relatively early stage in the life of the new organisation. It could be argued that, it is too soon to judge whether or not the mergers in this study have met their objectives. However, the longer the timeframe, the more difcult it is to attribute impacts on service developments, especially in a turbulent environment such as the UK health system. Studying the processes of organisational change provides important insights. It appears difcult to avoid the negative effects of merger, but some can be mitigated by anticipating certain issues, such as staff appointments in the new organisation. Negative effects persist into the third year post-merger, delaying any benets of improved performance of health care organisations (Denis et al., 1999; Weil, 2000). Some negative effects were found even when there was support for the change. The context for these changes is key to understanding the processes and their impact. Merger policy was based on simplistic assumptions about organisational change processes. It assumes that the effect of changing structures are independent of the context within which the changes take place, and will affect (positively) the organisation internally but ignores the relationship between these. As Child (1997) argues in relation to strategic choices, there is interplay between structure and action. In practical terms, this means better understanding of timescales and potential barriers to effective mergers might improve the planning of such changes, preparation for the process and, possibly, the balance of harm and benets.

Acknowledgements This study was funded by the NHS Executive London Region Organisation and Management Research and Development Programme. The authors wish to thank all those staff in NHS and allied organisations who took part in this study, and Rhiannon Walters contribution to data collection. We also wish to thank Peter Davis, Morris Barer, and two anonymous reviewers for their very helpful comments on earlier versions of this paper.

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