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Healthcare Mergers Rebranding Costs
Project scope and zero-based budgeting are two insights identified that define the level of investment required for rebranding. Unfortunately, research could not identify any insights directly related to the level of investment in rebranding in healthcare mergers and acquisitions (M&A). Advice from rebranding and marketing practitioners such as Brand Active contributed to this part of the brief.
Project Scope
- Brand Active notes that the rebranding project scope will determine the investments that will be devoted to rebranding activities of any merger or acquisition.
- It further admonishes that every decision about the breadth of rebranding must clearly be stipulated in a project charter before any rebranding efforts begin. As the "source of truth", the project charter should serve to determine how much investment is required and to also keep the rebranding budget in check.
- Brand Active further asserts that the development of such a project scope should also include several cost scenarios that take into account different factors such as quality and time implications. It can be safely assumed that such cost scenarios may help determine the level of investment required for rebranding.
Zero-Based Budgeting (ZBB)
- Revcycle asserts that zero-based budgeting is a useful technique that healthcare companies considering a merger should employ. Zero-based budgeting is defined as an intense review of cost synergies, such as those instigated by mergers, that is combined with "next-generation forecasting" to create a targeted plan. This plan may be construed to include rebranding amounts.
- Mark O'Toole, the VP of Commodities and Treasury Solutions for Open Link, posits that ZBB analyzes costs and the business in its entirety. He continues to say that zero-based budgeting can help firms enmeshed in M&A, including healthcare companies, to amalgamate operational, branding, and accounting needs in a single plan.
Time and rebranding efforts are two contributing factors that determine rebranding investment amounts. Research could not identify any hard figures or commentary of healthcare mergers that detailed whether their rebranding budgets were determined as a percentage of revenues, cost of acquisition/merger, or determined by the number of patients. UNC Health is reported to have spent $1 million in rebranding efforts and Northwell Health is noted as spending "tens of millions of dollars" in its rebranding efforts from January 2016. In both these cases, however, research was unable to definitively find evidence of any mergers and acquisitions in the same period.
Rebranding Efforts
- Mimeo, a content management company, notes that acquisitions involve "massive levels" of rebranding activities to ensure the seamless transition for the companies involved.
- This stage, dubbed conversion, entails a whole scope of rebranding activities. To determine this scope, merging entities must agree on the nature of the rebranding effort. Depending on the agreement, it could entail a complete brand takeover or dual branding effort.
- Examples of other rebranding efforts that may determine rebranding investment amounts include a name change, new logos, revised brand messaging and values, websites, and other visual identity markers.
Time
- The Henley Group advises that the M&A process may not go according to a set timetable, possibly frustrating rebranding efforts. It asserts, therefore, that marketers should set short, medium, and long term goals around rebranding efforts to accommodate any potential time lapses. This protracted approach may affect how rebranding amounts are apportioned.
- Nick Ragone, the Chief Marketing and Communications Officer at Ascension, advises healthcare systems to give 18 to 24 months for the external rebranding process to be complete. He recommends the same amount of time for internal rebranding alignment among employees, executive leadership, partners, and other stakeholders.
Research Strategy
To provide insights on how the level of investment in rebranding is defined, the research team sought to examine healthcare mergers in an effort to ascertain how they went about their rebranding activities and consequent cost implications. Unfortunately, research was unable to identify any healthcare acquisitions/mergers that stipulated how they went about their rebranding efforts, much less how they defined investment levels. We searched through industry commentary from sites such as Healthcare Finance, Modern Healthcare, as well as client testimonials from branding and advertising agencies, but could not identify an example related directly to a known healthcare acquisition/merger. A preliminary search through our proprietary database of over 1 million sources did not yield any relevant results either.
Brand Active, an agency exclusively dealing with rebranding implementation, offered parameters on how rebranding budgets may be defined but did not specify if these were directly related to healthcare mergers or even the healthcare industry in general.
To provide insights that describe the process of determining rebranding investment amounts, the research team began by scouring through press releases, authoritative websites, industry commentary, and expert analysis to identify how healthcare companies in the process of, or completed, an acquisition or merger determine their rebranding budgets. Sadly, research could not locate any merger that noted how the companies went about allocating rebranding amounts. We identified major healthcare mergers of 2019, such as the Dignity-Chi and Total Health-Priority Health mergers, but could not locate finer details about their rebranding costs. Research also looked through their financial statements in an effort to locate merger or transaction budgets, to no avail. The only financial information we were able to uncover for some mergers examined was the cost of acquisitions, which did not shed any light on rebranding allocations or expenditure.
Research was also unable to identify an industry-wide practice or percentages allocated to rebranding investment by healthcare mergers, thus we could not triangulate any hard figures based on available data such as cost of acquisition or annual revenues. UNC Health was the only example of rebranding costs research identified that was reported to have spent an estimated $1 million on rebranding efforts. This was determined as 0.02% of its annual revenue of $5 billion. The news article reports that UNC Health rebranded from UNC Health Care, and research was unable to find any evidence of a merger or acquisition by UNC Health at this time.