'Merger Games': When business met academia
In 1994, Hahnemann University Medical College and the Medical College ofPennsylvania merged with Allegheny Health Care System in order to savetheir fledgling endowments.
In 1994, Hahnemann University Medical College and the Medical College of Pennsylvania merged with Allegheny Health Care System in order to save their fledgling endowments.
According to the new book by Judith P. Swazey, Allegheny’s CEO Sherif Abdelhak followed the acquisition by addressing the Hahnemann faculty, pointing his finger at them threateningly and saying, “Don’t cross me.” If business mergers can be compared to marriages, this one was on the rocks right from “I do.”
“Merger Games: The Medical College of Pennsylvania, Hahnemann University, and the Rise and Fall of the Allegheny Health Care System” is Swazey’s first-hand account of the only merger between U.S. medical schools in over 80 years. It’s a cautionary tale that she hopes will be taken to heart by university leaders around the country.
“Allegheny had a very typical business culture. It was top-down management. Academic institutions — at least in theory — operate by collegial governance. It was a huge clash of cultures,” says Swazey. “The faculty of the schools felt they should have a major governance role, but the business culture of Allegheny wouldn’t allow that.”
By 2000, both HUMC and MCP were no more, Allegheny was bankrupt and Abdelhak faced 1,500 charges of misappropriating funds. Plus, adding to the Rubik’s Cube of mergers, Drexel University — along with Tenet Health Systems — had taken over the whole shebang.
No mergers are smooth from the start. “People go into mergers thinking that when the paperwork is done, the thing is a done deal,” says Swazey. “But the research on mergers, including my own, shows that if it’s going to be successful, it’s going to take five to seven years. Everybody involved needs to be prepared for that.”