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How employees survived a major lab merger.

How employees survived a major lab merger

The word "merger" strikes fear in the hearts of many. That was certainly the case among the laboratorians who learned that the independent S.E.D. Medical Laboratory, Inc., and the lab next door at St. Joseph Medical Center, where I was manager, would consolidate. We would undergo a true merger: Both entities (including all jobs) would be eliminated and a third one, starting again under the same two roofs, would be formed. Our jobs would literally disappear. We would have to be rehired in positions and at a pay scale that hadn't even been created yet.

Understandably, we were concerned. Yet we came out of the experience wiser. In some ways, it brought us closer together. * Symbiosis. Working together in an informal partnership, the two staffs had enjoyed a symbiotic relationship for years. S.E.D., located in a professional building across the hospital parking lot, was cofounded and partly owned by the hospital's chief pathologist, Dr. S. Victor Savino. The two staffs worked in close collaboration; some employees worked at both sites from time to time. We even had picnics and holiday parties together.

As an independently owned reference lab, S.E.D. was able to make decisions more quickly and to pay lower salaries, thus keeping test prices competitive in the local commercial market. The hospital lab, driven by more Federal regulations, charged more but benefited from the services of many of the facility's departments: purchasing, personnel, employee benefits, billing, and accounting. * Sudden change. Then, as Dr. Savino recalls, "in the early '80s, DRGs arrived and changed our whole world." Hospital administrations were beginning to see their labs as cost centers. It would benefit laboratories, which in administration's view would soon be financial drains, to "get into the outpatient business."

To resolve these problems and reduce the increasing pressure of price competition from other reference labs, Dr. Savino and his three partners decided in 1985 that it would be a good idea to combine forces with hospital labs. Discussions took place with another private pathology group affiliated with a different hospital and reference lab in town, and with a third such arrangement in Santa Fe, about 70 miles away. These talks ended unsuccessfully after about a year. Negotiations that had been going on simultaneously with St. Joseph were fruitful, however, and the agreement was made. That's when staff members' uncertainty began. * Getting together. The 50 employees at S.E.D. and the 95 employees at the hospital lab had a history of trust with each other and with the two administrations. We had been treated fairly in the past and expected similar treatment in the future. Nevertheless, we were worried.

During the next few months, we worked hard under difficult circumstances. It wasn't until a general meeting held by Dr. Savino a day or two before the joint venture was to begin operation that employees were able to obtain solid answers to the questions that had been haunting them for many months: Will I still have a job? How will the new salary scale contrast with the old one? Will my fringe benefits be the same? Will my years of hard work be honored in the new laboratory?

Our many long-term employees were relieved to learn that their seniority would continue. Benefit packages were described in detail. For example, St. Joseph administrators explained to hospital employees what to expect regarding their retirement benefits when their lab was phased out of existence. Employees near vestment in the retirement plan were to be fully vested. Both sets of employees would be paid for unused accumulated vacation time.

It was validated at the meeting that most jobs would reemerge in one form or another under the new regime. Few jobs would be eliminated purely because of duplication. One exception was specimen processing, which had been done at both sites. A single specimen processing lab would be established in S.E.D.'s building, where all lab sections were to be located except the Stat lab, which would remain in the hospital. Of the two specimen processing supervisors, the one with phlebotomy supervisory experience was placed in charge of the new specimen processing lab. The other supervisor transferred to the new client services department.

Until that general meeting, uncertainty reigned for a long time. * Disruption. Six months earlier, St. Joseph had begun a full year of major renovations to accommodate its new cancer treatment center. Physical displacement of the lab intensified workers' feelings that the hospital simply wanted to get rid of them. While hospital employees felt dumped, S.E.D. employees felt that their lab was being shoved out. Laboratorians who worked in both places felt shunned by both!

Once the merger was in place, we had our own disruptions to deal with. Almost every department in both labs had to move at least once. The phlebotomy front desk was relocated several times, increasing turnaround time and disturbing the quality of service. Several departments (histology, Stat chemistry, and hematology) moved permanently into renovated areas in the professional building where S.E.D. was located. Fortunately, S.E.D.'s space had been fairly extensive. The marketing and client services departments were moved off one floor to make room for clinical areas.

We worked for four months in a dusty, noisy, crowded environment with construction workers dangerously close to our hematology cell counter, hanging over our shoulders, and bumping into the chemistry analyzer. Our heating and air conditioning would work one day and break down the next. (For employees' views, see "Constructing a merger" elsewhere in this article.) Eventually, these problems were fixed. * Emergency. But that didn't end our renovation woes. After construction was complete, a water pipe broke in the ceiling above the blood gas instruments in the rebuilt hospital Stat lab. Total wipeout! Employees raced to put clean plastic biohazard bags over the equipment. We immediately turned off the electrical power, evacuated employees from the lab, and with the aid of hospital administrators pulled many pieces of equipment away from the water. With the water shut off, we vacuumed the spill and carried buckets of water from the lab, assisted by housekeeping, hospital administrators, security, and emergency room personnel.

The blood gas instruments were destroyed. A third laboratory in town over which our pathologists had oversight, and with whose employees we had a working relationship, lent us backup blood gas instruments the same day. It was another month before negotiations with the insurance company were complete, bids were evaluated, and new instruments of our own arrived.

Amid the chaos, it was no wonder that test result turnaround time increased, requisitions were lost, complaints from nurses and physicians accumulated, and morale declined. Also disappointing to quite a few employees was that their new salaries were lower than they had received in their former positions. Nor did all the positions that changed go upward in the hierarchy.

All but one full-time and one very part-time employee had been given jobs. For a while, almost everyone remained. In the first year after the merger, however, attrition accelerated. About 10 employees left - a low number compared with normal turnover nationwide, but unusual for us.

Most of those who decided not to stay were in phlebotomy. The probable reason is that phlebotomists at the hospital had formerly received night and weekend differential pay, which the new lab (like the independent S.E.D. before it) did not allow.

Since that time, St. Joseph/S.E.D. Laboratories, Inc., the official name of our joint endeavor, has greatly enlarged our courier system and taken over a billing company. In addition, St. Joseph now runs another hospital. The combined lab staff, which formerly consisted of about 145 employees - most of whom remain - contains about 200 FTEs. * Management techniques. Until employees knew exactly how things would turn out, they fantasized disturbing potential scenarios. Management had a tough job keeping the staff as calm as possible. Our previous educational activities stood us in good stead when it came time to attempt this.

[paragraph] Workshops. About a year before the merger, St. Joseph and S.E.D. lab educators had held a joint workshop for middle managers entitled "Nix the Lone Ranger Syndrome." The purpose was to show that teamwork is best. Participants were urged to call upon their colleagues for assistance as needed. When the merger became a reality, having attended that extremely appropriate session served as a source of strength for many supervisors.

As the merger was being planned, hospital and S.E.D. educators discussed management communication techniques, such as Motivational Dynamics,(1) with all lab and hospital managers. Outside groups were brought in to present programs on Leadership Effectiveness Training(2) and active listening. During these sessions we learned ways to provide constructive feedback to our staffs and colleagues, handle disagreements, respond to defensiveness, and use our own resources to resolve problems.

[paragraph] In-services. Our laboratory supervisors and managers had always enjoyed attending in-services on various useful topics. Many of these presentations, which have continued, came in particularly handy after the merger. Titles have included "Marketing Strategies in the '90s," "Effective Public Speaking," and "Time Management: How to Accomplish it."

[paragraph] Retreats. A mountain retreat for middle and upper laboratory management the summer before the merger helped create a unified management team for our new laboratory. We participated in such teamwork activities as volleyball games and developing win/win problem-solving skills.

Several months after the merger, when problems were surfacing, managers devoted a full day to an off-site brainstorming session. The entire lab management, including the pathologists and the managers of all technical lab sections, met at a local hotel. We split into groups and were assigned specific problems to discuss. Many good ideas emerged. * Hierarchy of needs. Some of the management classes we had attended made it clear to me as the merger progressed that our situation mirrored the hierarchy of human needs outlined by psychologist Abraham Maslow.(3) Human needs at the bottom of a scale he created - first physical requirements, then security - must be met, he said, before higher needs, such as increased work productivity, can be considered. Since our employees' basic requirements were in jeopardy, we were too busy surviving to focus on other goals.

Realizing this, I worked to address our employees' needs for physical ease and security. Although I couldn't speed up the electricians or have the carpenters create less dust, I could speak with the staff about their responses to the mess. In some cases, keeping lines of communication open was all management could do - but frequently it was enough. * Communication efforts. The administration at St. Joseph had believed for a long time in the importance of teaching communication skills. We had held numerous programs on the subject. One result was that when the merger took place, we had accumulated more information than we could have absorbed in a short time. We were thus prepared to engage in a broad scope of activities designed to promote communication:

[paragraph] Listening. As lab manager, I had found the most successful communication technique was to let employees know I heard their anger, alarm, frustration, or sadness. Paying close attention to the staff's feelings was imperative during and after the merger. Treating employees as individuals and with respect - not like pawns on the lab chessboard - relieved their feelings of being victimized and ignored.

Listening must be done all the time - to what has not been said as well as to what has been said. It was important for our managers to realize that people naturally resist change, even for the better, because it makes them feel anxious.

[paragraph] Memos. Believing that the way employees learned about upcoming changes would affect their work and partly determine their attitudes, we wrote memos promptly, as decisions were made, to undercut the grapevine.

[paragraph] Upward reporting. We forwarded lists of staff members' questions to Dr. Savino, who raised them at management meetings and dealt with them as they arose.

[paragraph] Role play. Acting out hypothetical situations, the staff practiced positive and negative modes of communication. In one type of exercise, lab employees were invited to write and enact scripts. A technologist was told: "You are staying late to run hepatitis profiles because the instrument wasn't working properly earlier. Everyone else is gone; you have your gloves on and need to add a reagent immediately. The phone rings."

Another technologist participating in the same dialog was instructed: "You are a physician calling the laboratory. Your calls have been transferred twice and you need the result of a pregnancy test. Since your patient may have an ectopic pregnancy, you must obtain this result immediately." Working through such problems enabled the staff see other points of view and develop ways to deal with tough situations.

[paragraph] Newsletter. An employee newsletter that began publication shortly before the merger promoted our development into one large staff. "Calibrations" welcomed new employees, presented employee profiles, announced birthdays, and ran a column of personal news. From a professional standpoint, the newsletter provided information on technical matters, procedures, and new equipment. Dr. Savino spoke to employees through his own column, "From the Director's Desk." The newsletter was so popular and useful that it developed into a glossy monthly publication prepared by a lab staff writer.

[paragraph] Venting session. Shortly before the merger was to take place, the two lab educators and I organized a meeting we called "Do you have the merger blues?" We held it in the middle of the afternoon so that employees from all shifts could attend. As people described their feelings on large sheets of paper taped to the walls, they realized their worries weren't unique. "I'm not the only one who is scared and angry," one technologist told me. "It helps to know that others feel the same way I do." This meeting allayed some self-doubts and provided emotional support to the stressed-out staff.

[paragraph] Task forces. Shortly after the merger, the laboratory management created a nursing/lab task force and a physician/lab task force to address concerns expressed by the nurses and physicians who worked with us. Through these task forces, rounds on all nursing units began to include a representative from the lab. With this informal network in place, nurses' complaints declined rapidly. Instead of filing complaint forms, they would give us a call or tell us about a problem the next day on rounds. Rapid feedback, more friendly than accusatory, enhanced interdepartmental communications.

The task forces resolved another problem as well. Lab workers had been toting racks of specimen-filled test tubes from the hospital to the professional building and then carrying the test reports back. We already had a connecting covered walkway, built several years before, on the second floor, but most simply walked across the parking lot in the open air. (It hardly ever snows in Albuquerque.) Not only were we wasting workers' valuable time, but test turnaround time had increased.

The solution was a pneumatic tube system. Once this had been installed, TAT dropped (but test tubes didn't) and our relationship with the nurses and physicians improved greatly.

[paragraph] Career workshop. A couple of months after the merger, it was clear that some staff members were considering leaving. Deciding to address the subject directly, we presented a program on career options for lab workers, including jobs in related fields.

Having this information, we felt, would permit those who stayed to do so as a positive choice. The strategy worked well; for many, simply realizing other options existed was relief enough. * Hindsight. If we had a merger to face all over again, we would attempt less renovation all at once. Combining two large laboratories is too overwhelming a task to mix with any other project. The physical inconvenience was an important factor in the temporary downturn in the quality of service.

It would have been wise to involve the staff earlier in the planning stages. Giving them additional input in more decisions might have lifted morale and reduced some of the stress and confusion.

Our most effective tool was communication. Without altering a thing, this one element made all the difference. Although we did a great deal, I would have tried to communicate with staff members even more. * Conscious response. Job stress is a state of mind that results from our own perception of what is happening to us.(4) Those who responded positively to the stressors induced by our merger did not take the attitude: "Look at what is being done to me." Instead, they resolved: "This is what I see happening here. I can accept it or work to change things. I can choose to view this as an opportunity for growth or I can choose to leave."

For many of the majority of employees who chose to stay, it was an easy decision; they'd worked here for a long time and liked the way the lab was run. Some felt they had always worked for both institutions. For others who remained, the decision was more difficult; but they stayed on and helped smooth over the rough spots. Through their communication efforts, hard work, and dedication, these staff members in effect forged their own workplace. * Change as a friend. At the three-year mark, we have become accustomed to change and no longer view it as the enemy. We feel more excitement than fear when we consider new ventures and markets. In one area, we have made substantial strides: Our lab is only a step away from becoming a National Institute on Drug Abuse (NIDA) toxicology lab. We hope to be approved before the end of the year. Such accomplishments make us proud.

We have been in business as a combined operation since April 1987. Although our lab took a financial loss during the first year, we made a profit of $250,000 in the second year and continued to do well in the third. Employees benefit directly by profit sharing. Under an optional 401(k) plan, a tax-deferred annuity, employees can establish their own retirement programs.

One of the unique aspects of our lab is the amount of time our staff members have worked here. It is not unusual for people to have remained for 15 or 20 years. This commitment was one reason so many of the staff decided to stay. As a long-time employee recently told me in explaining how he'd survived the merger, "I felt a sense of ownership." In a sense, we all did - and that feeling grows stronger as we settle in more firmly with a view to the future. (1) "Motivational Dynamics." Minneapolis, Minn., Control Data Education Co., 1975. (2) Gordon, T. "L.E.T. - Leadership Effectiveness Training." Ridgefield, Conn., Wyden Books, 1977. (3) Zunker, V.G. "Career Counseling: Applied Concepts of Life Planning," 2nd ed., pp. 70-72. Monterey, Calif., Brooks/Cole Publishing Co., 1986. (4) Pascarella, P. Job stress: A state of mind. Industry Week 215: 49-51, Nov. 29, 1982.
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Title Annotation:includes related article on employee views on planning
Author:Dubbs, Jan; Touye, Lisa
Publication:Medical Laboratory Observer
Date:Sep 1, 1990
Previous Article:Coping with difficult people.
Next Article:Marketing your lab's services more effectively.

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