How to Retain Key Employees During an Urgent Care Transaction
When acquiring an urgent care center, it can be useful for buyers to retain key employees before and after the transaction.
“Most people agree that keeping the team intact as you go through a transition is favorable because they’re the ones that have connections to your patients and the community,” Ali Edwards, Senior Counsel and Director of Compliance at CEDR Solutions, says. “Retaining strong leadership is important.”
“With certain transactions, it makes sense for the buyer to retain key staff members,” Maurice Reid, MD, CEO and Chief Medical Director of Express Care, says. “It makes it easier to learn the lay of the land, and also makes it easier for the buyer to deal with the community and any vendors.”
However, employees often face a lot of uncertainty once they’re told that the center will be sold.
“Key employees may feel like their position is no longer secure, and have a lot of questions about their future, and if they even have a future with the company,” Logan McCall, former CEO of Carolina Quick Care, says. “The buyer may have to step forward and let them know that they are still wanted and valued.”
Reassurance, as well as open lines of communication, transparency and honesty between the seller, the buyer and the employees can help retain key employees during an urgent care transaction.
“Being completely honest and open is best,” Suzanne Buck, area marketing representative for NextCare, says. “The seller should have a staff meeting that lets everyone know that the practice is being sold, but reassure them that nothing will change except the name.”
Reassurance is a responsibility that falls on both the seller and the buyer.
“The seller needs to assure key employees and staff that the transaction isn’t happening because it’s a bad company, or because the business is failing; it’s because of the great staff and what they have done that allows the seller to be able to sell the company in the first place,” McCall says. “The buyer then needs to come in and reassure staff members that they are a big reason why they wanted to purchase that center.”
Edwards says it’s also important for the buyer to establish trust with any key employees that they wish to retain.
“When a transaction happens, key employees may be worried about keeping their jobs and the same pay, and who is going to be managing them,” Edwards says. “Buyers can establish trust by anticipating what their needs and concerns are going to be, having answers prepared in advance and by being honest and saying ‘I don’t know’ when they don’t have an answer.”
In addition, Edwards recommends that the buyer meet individually with any key employees they wish to retain.
“When the buyer lets the employee know exactly where they stand with each other, there’s less resentment,” Edwards says. “I think it’s about honesty and transparency. Give key employees enough information to let them know why the buyer is making the decisions they’re making. When there’s open communication, that trust can be born.”
Early integration can also help smooth over the transition of ownership and help retain key employees. Reid says that when he makes an acquisition, he requires the seller to let him come to the center and do a presentation.
“The main thing employees will want to know about is HR; will they have the same hours, vacation time, benefits and pay?” Reid asks. “If the buyer isn’t affecting their pay and benefits, key employees will be more likely to give them a chance.”
For Reid, urgent care providers are the key employees that he wishes to retain.
“To me, providers are the key staff that will stabilize the company after the buyer takes over,” Reid says. “If there are no providers, the buyer can’t see any patients.”
However, McCall says that retaining key administrative and managerial staff can be just as important as retaining key providers, if not more important.
“They’re managing all the employees, and they’re the connection between the providers and other employees,” McCall says. “Some providers may not be that invested in the business, and will want to move on after a transaction, especially if they work part-time or as needed, and only have a shift once a week. The manager is that person that can hold it all together between the providers and the regular employees; they’re essential to keeping everyone together.”
Buck says that she thinks it’s important for buyers to retain all key staff members, regardless of their position.
“I think all staff is important; they already know the system and how to handle the patient base that they deal with,” Buck says. “NextCare retains providers, back office staff and the reception staff during acquisitions. Whenever a buyer can retain key employees, the better it is for the transition. The less change at one time, the better.”
Sometimes, a key employee at an urgent care center will be a physician owner. It can be a tough situation to figure out whether or not the buyer should retain the seller after the transaction.
“Whenever the former owner is still on the books, it’s a recipe for a disaster; it will encourage the employees to go around the new owner and continue to go to the old one, and it encourages things to stay the same, rather than allowing for a new start with a fresh slate,” Edwards says. “It’s very hard for a physician owner to transition from owner to employee, even if they think that’s what they want.”
“That does happen, but I don’t typically favor that,” Reid says. “It’s very hard for a former owner to now become an employee, so I don’t like to keep the former owner with the practice in any capacity.”
McCall says that depending on the motivations of the physician seller, the situation could work out.
“He or she may want to stay on in a part-time or as needed, provider only role because they may say that part of the reason they’re selling is because they don’t want to deal with anything except the medicine,” McCall says. “They don’t want to worry about personnel issues, insurance issues, etc., they just want to practice medicine. So in those cases, it might work out.”
Sometimes the buyers will even want to retain a physician seller.
“In NextCare’s most recent transaction, we wanted to retain the physician seller; he’s a very popular provider in the community, and it gives folks in the community reassurance that nothing major was going to change,” Buck says.”We wanted to rebrand the clinic but assure the community that key staff member would remain in place; a physician that had been working in the community for 30 years would still be there.”
Urgent care M&A transactions can be scary, but open communication and honesty can help retain key staff members and smooth over the transition of ownership.
“Some people adapt to change better than others, but if buyers keep their lines of communication open, they will see less tension,” Buck says. “If employees are kept well informed of what’s happening, they will be more likely to stay after a transaction, and it will also make for a better work environment once the deal is closed.”
If you have an interest in learning more about the subject matter covered in this article, the M&A process or desire to discuss your current situation, please contact Blayne Rush, Investment Banker at 469-385-7792 or Blayne@AmbulatoryAlliances.com
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