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Benefits May 17, 2024
Increased M&A of U.S. Hospitals Leads to Turnover, Benefits Confusion
When a hospital goes through a merger or acquisition, health care workers must deal with salary and benefits changes, which can lead to stress and distrust in senior management.
Reported by Remy Samuels
With major hospitals increasingly going through mergers and acquisitions, Fidelity Investments found in a recent study that these changes can cause extra stress and worry for health care workers and can lead to higher turnover rates.
Nearly 50% of employees said they would reconsider their employment after an M&A, according to Fidelity.
This statistic is significant given that the health care industry continues to face challenges with attracting and retaining health care employees. In fact, the turnover rate among nurses in 2022 was 27%, 8.4% higher than the previous year, and half of workers who left their employer had a tenure of less than five years.
Meanwhile, experts expect the rate of M&As in the health care industry to continue to increase. In the first quarter of 2024, hospital mergers and acquisitions hit a first-quarter high since 2020, with 20 announced transactions generating $12 billion, according to a Kaufman Hall report.
According to Fidelity, the three primary drivers of M&A at health care organizations are ongoing staffing challenges, higher wages and inflation.
Sangeeta Moorjani, head of tax-exempt business and retirement solutions at Fidelity, says constant M&As can also cause a level of distrust and confusion among health care workers and employers.
For example, only 48% of health care workers said they trust senior leaders to make the right decision in situations that affect their experience at work compared to 55% in other industries.
Moorjani says during M&As, workers are also concerned about what it will mean to their salary and benefits, which could include their retirement plan.
“Often when a merger [or] acquisition [occurs], each plan could have slightly different benefits or completely different benefits,” Moorjani says.
She adds that it is important that plan sponsors provide workers with information and resources that explain what changes are being made to benefits when a merger or acquisition occurs. Fidelity found that resources on new benefits and support selecting new benefits were noted as most wanted by employees during an M&A. When it comes to learning about benefits changes, employer-provided communication, benefits portals and virtual workshops resonated the most with employees, according to the research.
“Transparency from leadership is the most important thing,” Moorjani says. “When people feel aligned with the senior leadership directly, it corresponds to better job satisfaction and reduced turnover. Building this trust takes a little while, but having that clear, honest communication is the first step that senior leaders can [implement] in their workforce.”
Moorjani adds that when communicating with health care workers, employers need to be aware of employees’ work schedules, as nurses and doctors tend to work long hours at various times of day.
“If you’re communicating through workshops during the daytime, nurses may not have a lot of time to step away to [participate],” Moorjani says. “So having multiple ways of communicating is really important.”
Workers also seek clarity on pay and compensation changes, as 77% of employees included job security assurance as most important to them during a merger or acquisition.
A survey conducted by Aon last year found that many U.S. hospitals are demonstrating their commitment to improving the mental health and resiliency of their workforce by improving pay and benefits. Aon revealed that 70% of hospitals in the past year implemented or bolstered sign-on bonuses, 59% increased new-hire pay and 54% increased minimum wage scales.
