Home' Australian Ageing Agenda : AAA May-Jun 2017 Contents Over the past decade we’ve seen increasing
consolidation within the aged care
sector due to an overly fragmented
market and growing demand. As
demand and industr y competition continue
to grow so too will the trend of mergers and
acquisitions in the sector.
While consolidation is inevitable, it will
bring significant operational challenges. The
merging of two separate organisations can be
onerous and affects ever y part of the business,
including IT systems, processes, employee
roles, customer ser vice, risk and governance.
In a sector where the focus is on providing
quality care for vulnerable consumers, having
anything affect operations can be risky. If the two
organisations merging have completely different
ways of working, back-end systems and processes,
then disruption is likely.
For instance, differing standard operating
procedures and processes can leave staff confused
about how they should work within the newly
merged entity. Also, switching over to new IT
systems can cause issues in back-end support
areas, like finance and administration, as well as
critical areas such as resident care.
From an operational perspective, here are the
five considerations for aged care providers when
planning for a merger.
1. Review the situation
It’s important to fully comprehend the scope of
the merger, understanding where you’re starting
from and the requirements involved in where
you need to go.
Capturing the operating model will facilitate
this process and give some clarity to which parts
of the business will need to change and what the
likely impacts will be. The model should map
out the value streams, capabilities, processes,
procedures, use of systems and compliance
obligations to help ensure nothing is overlooked
when the two organisations merge.
2. Assess the difficulty
Costs and risks need to be thoroughly
considered. Use your model to assess what
capabilities will be required, what roles and
systems will be needed by the new entity, what
processes and procedures will be relevant, how
compliance obligations will be met and how
value will be created in the new organisation.
3. Simulate the transformation
The model of the current operation can be used
to identify processes to be combined, those that
need to be removed, umbrella structures and
systems required, and people impacted.
The capacity planning, based on known
volumes of work, staff numbers and systems
capability will be contained in the business models.
Simulating the merger will remove much of
the risk associated with the transformation and
will allow you to determine an effective future
4. Execute the strategy
Once simulated, you can start to implement
the transformation using the new business and
operating models to guide the process.
The model will also provide guidance on
requirements such as training and realignment
of responsibilities and how this will affect
employees and their roles. Standard operating
procedures will also be easier to develop using
The majority of the risk and cost of a merger
lies in the implementation phase but if you do
your due diligence, use a modelling approach and
undergo simulation you can have a high degree
of confidence in a successful outcome.
5. Lock in the benefits
Many change initiatives fail to retain
improvements. The operating model that
has been captured in earlier steps becomes a
business management system that guides the
effective operations of the merged entity. This
system becomes a reliable guide to consider
further changes and additional mergers and
acquisitions, reducing the effort required
for steps one to four on the next, inevitable,
Mergers and acquisitions are difficult and do
not have a good track record. The steps outlined
above will improve the likelihood of success,
create a better operating environment and
position the organisation for future change. n
• Fully comprehend the scope
of the merger
• An operating model should map
out value streams, processes
• Costs and risks need to be
Five steps for
BRUCE NIXON, the CEO of Holocentric, an
advisor on business strategy and operations,
shares his insights into successful mergers.
“If the two
australianageingagenda.com.au | 33
Links Archive AAA Jan-Feb 2017 AAA Jul-Aug 2017 Navigation Previous Page Next Page