An Eye On The Changing Healthcare Climate for the Communicator
Who: Humana Inc. [HUM] and United Healthcare Corp. [UNH] mutually agreed to terminate merger plans (M&A Watch, 6/11/98).
The deal was called off due to United's projected $900 million in "operating realignment charges" announced on Aug. 6. When the news broke, United said it lost $565 million, or $2.96 a share.
When: Both companies announced the decision to cancel the merger on Aug. 10.
Effect on PR/Marketing: So far, Humana has received more than 100 media calls about the failed deal and United fielded more than 50 calls on Monday, Aug. 10 alone.
Most of the 20 Humana communicators who worked on the initial merger announcement in May were on hand for the recent effort, which made the organizational process run smoothly considering the magnitude of the event, according to Tom Noland, Humana's VP of corporate communications.
United depended on a skeletal staff of three communicators (many of its core communicators were on vacation when the deal hit the skids).
Ironically, the two organizations did not collaborate on merger communications strategy beyond the joint announcements that were made in May.
Often, in other friendly mergers, the two PR teams meet to discuss internal and external communication approaches that involve divulging proprietary information.
Had this happened, the two companies could have shared critical competitive information with each other.
M&A Campaign: Humana's strategy to communicate about the failed deal, which began Aug. 6, involved taking a template approach to two merger scenarios - a decision to renegotiate the deal or terminate it. While Humana developed targeted messages for employees and its contracted physicians, its shareholders and vendors.
The immediate projects for the companies included:
- Developing a voicemail script for Humana's CEO, Greg Wolf, that would update the company's 17,000 employees about the merger decision before the media was told;
- Developing a special edition of the employee newsletter that would update the merger status and highlight Humana's viability as a singular entity, such as its $10 billion in revenues in 1997;
- Creating Q&A information about the merger decision and its affect on Humana's members, employees and stakeholders;
- Briefing United's management with information on the mutual agreement to dissolve the merger deal;
- Informing United's employees of its realignment goals to drop its most unprofitable markets;
- Developing a joint press release that emphasized the mutual agreement to end merger talks;
Both communications teams worked through the weekend and by Sunday evening (Aug. 9) were formally told by each company's executives the deal was off. Then, talking points were finalized. The key messages included:
- Greg Wolf congratulating Humana's employees for staying focused on its 1998 business goals despite the potential merger with United;
- Emphasizing that the merger was always meant to be a transaction between two viable managed care plans that are strong individually; and
- Clarifying what the $900 million restructuring charge represents-a projection of what its realignment will cost over the next several years, says Susan Busch, United's director of PR.
(Humana, Tom Noland, 502/580-3644; United Healthcare, Susan Busch, 612/936-1932)