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One of former GE chief executive Jack Welch's more famous maxims is "Change before you have to."
For hospital executive Doug Hawthorne, that phrase might have summed up the thinking behind his decision to help steer a merger of health systems in the Dallas-Fort Worth area in 1997. Although the system he headed, Dallas-based Presbyterian Healthcare System, was financially viable in its own right and respected as quality provider, when Hawthorne surveyed the horizon in the mid-1990s he and his counterparts at other area hospitals foresaw consolidation among health care payers and realized it could put comparatively smaller hospital systems at a disadvantage.
Presbyterian Healthcare System and Fort Worth-based Harris Methodist Health Systems merged in August 1997 to form a new faith-based not-for-profit, Texas Health Resources. Arlington Memorial Hospital, a freestanding hospital located midway between Dallas and Fort Worth, joined the new system a month later. Dallas-based Baylor Health Care System also held merger discussion talks with the parties before eventually bowing out.
A powerhouse is born
With the merger of the three formerly separate entities, THR immediately became one of the dominant players in the north Texas region with 14 hospitals in non-overlapping areas.
While the new system had a number of obvious advantages, its combination also posed a number of challenges. There were some comparatively small issues to be resolved based on the fact that three different religious faiths were represented in the merger (Presbyterian and Methodist, plus Harris Methodist operated a Catholic hospital for the Daughters of Charity.) More notably, Harris Methodist, which had its own health insurance company, was highly capitated, while Presbyterian was not, resulting in different practice patterns among physicians at the two former systems. And perhaps most daunting, Presbyterian and Harris Methodist had very different cultures and styles of leadership associated with their respective communities.
Hawthorne-who assumed the helm of the combined health system-said one of the bigger challenges he faced was to honor the heritage of the individual cultures, but also to look beyond what already existed, in effect to use the cultures "as a guidepost, not a hitching post" when framing the new organization. One way to achieve that was to develop a new vision, mission...