GEISINGER MEDICAL CENTER:
AFFECTS OF THE MERGER ON EMPLOYEE BENEFITS

Executive Summary

I. Introduction

The purpose of this case study is to evaluate the effectiveness of the changes in employee benefits as a result of the merger.
II. Situation As of 17 January 1997 our HMO, the Geisinger Health System (GHS) merged with the former Penn State Milton S. Hershey Medical Center (HMC). Since then we have moved forward as Penn State Geisinger Health Systems. The merger brought together two long-standing giants in Pennsylvania health care. Both organizations were not-for-profits, shared a common institutional history, and were brought together to combine their strengths in an increasingly competitive managed health care environment.

Penn State’s Hershey Medical Center (HMC) founded in 1963 and included Penn State’s College of Medicine, the University Hospital, and Children’s Hospital. HMC bring with it over 6,000 employees and handled 20,800 inpatients and 356,000 out patients during fiscal year 1995-1996. (Reeves 1999 p. 44).

HMC added to our own Geisinger Health System, which served more than 2 million people in Pennsylvania and southern New York. The University hospital system joined our regional health system, which incorporated Geisinger Medical Center, Geisinger Wyoming Valley Medical Center, Maryworth treatment center, the Geisinger Clinic, and the Geisinger Health Plan our 200,000 member HMO. (Reeves 1999 p. 44). Under the previous Penn State University system HMC employees were the beneficiaries of excellent pay and benefits packages provided by the University system. Geisinger has honored those benefits packages since the merger with only small changes made. In addition to there have been many former HMC employees tuition benefits were grandfathered over into the new system. There is some concern over the changes to the benefits package for the former HMC employees. This case study will seek to evaluate the impact of the merger and changes to employee benefits on employee attitudes, behavior and productivity.

III. BENEFITS

SECTION 1: HMC BENEFITS

HMC employees enjoyed a comprehensive benefits package under the Penn State University system. Under the previous system employees fell under a 22-grade pay structure based on value of work, with each grade having a pay range assigned. Employees enjoyed a choice between three different life insurance plans and several different health care benefits. Reduced tuition rates were available to the employees and their family members for Penn State. Sick leave was authorized for the care of family members. A tax deferred annuity plan was available as well.

Vacation time benefits were five additional days paid time off in December for the University holidays on top of the standard three weeks vacation time for employees with less than 10 years of employment and 4 weeks per year for those over 10 years. Sick leave was accumulated at 1 day per calendar month. Sick leave could be taken for personal illness or to care for an ill family member. Paid time off was also available in cases of a death in the family, involuntary jury duty, and volunteer fire fighting. Retirement programs for employees included Pennsylvania State Employees Retirement System (SERS) or the Teachers Insurance and Annuity Association/College Retirement Equities Fund (TIAA-CREF). Five percent contributions from annual salary were required to participate in either plan.

HMC employees, retirees, and immediate family were eligible for a 75% tuition- grant for a maximum of 16 credit hours allowing for employees to provide a very affordable college education for their children. One of the intangible benefits of being part of Penn State was association with a respected Pennsylvanian institution and even reduced price season football tickets for those employees who were fans of the Nittany Lions football team. (Reeves 1999 p. 48).

SECTION 2: CHANGES TO BENEFITS

1. Pay- Since the Merger there has been no change to salaries for former HMC employees. The reality is that in a competitive health care market employee wages will be “market driven.” The future may require a slight reduction in employee wages or possibly an increase depending on outcomes within the health care market. Some former HMC employees have already indicated that while their pay has not changed their responsibilities have increased in this new business driven atmosphere.
2. Retirement- Former HMC employees who were on the SERS plan have had to convert to one of several GHS plans. TIAA-CREF participants have been able to keep their old plan.
3. Leave/Vacation-The five paid days for the University holidays has been lost since the merger.
4. Health Care Plan- We have encouraged former HMC employees to use GHP as their health care provider. They still have a choice at the time of this case study but it is likely that participation in GHP become mandatory at a later date.
5. Education Benefits- Former HMC employees will be grandfathered in for a period of six years where they may still receive the Penn State 75 % tuition grand education benefit. Otherwise the education benefits and associations with the University are no longer available.

SECTION 3: BENEFITS REVISION MATRIX

IV. Sample

A random sample of 100 former HMC employees was conducted through an online survey. The survey was conducted through an Internet website. The website address and invitation was distributed via GHS email to all former HMC employees. Of the over 6,000 former HMC employees 100 were randomly selected for data purposes. Anonymity was ensured through the use of randomly assigned polling numbers for poll participants. One on one interviews with 20 randomly selected former HMC employees were conducted. The goal was to gain more in-depth information than would be practical through examination of purely online polls. Employee evaluations will be examined to see if there have been any marked changes in employee performance and job satisfaction since the merger. We will also be reviewing former HMC employee complaint forms that were filed and any benefit package disputes.

SECTION 2: METHODS

The methods chosen to evaluate the impact of the merger and changes to employee benefits on employee attitudes, behavior and productivity will include an Online employee satisfaction poll, one-on-one interviews, and examination of quarterly evaluations as well as filed employee benefits disputes.

The online satisfaction poll will be the primary method used to gather employee satisfaction data. The benefits to using an online poll is that it is easily administered by randomly assigning employees poll access numbers, which also helps to ensure anonymity. The survey questions were completed after reviewing employee concerns over the merger and the need to gather data on the effects on employee’s satisfaction with their new benefits package. The poll was disseminated by GHS email; which allowed each employee access through a URL with the random access number. Employee personal information, personal email, and phone numbers were not needed which assured added anonymity.

One-on-one interviews were conducted with twenty different persons to gain more in depth data on employee opinion in regards to the research topic. The questions for the interview were developed from earlier employee concerns over the changes to their benefits since the merger. Questions were more focused on the “why” rather than “what.” Ten different questions were selected for the interviews. Participants were randomly selected from throughout the GHS system. A representative from an outside polling contractor conducted the one-on-one interviews. Each employee interview packet was assigned a number rather than the employee’s name. GHS management will obviously know who the twenty employees assigned for interviews were but will not know which individual response was whose.

Examination of GHS employee quarterly evaluations may give some additional insight into the performance of employees after the merger. We can easily compare the evaluations to see how the merger affected performance marks for the employees. A detailed examination of employee filed benefit dispute claims will also provide valuable information into the effects of the changes to employee benefits.

V. Research Design Limitations.

While conducting this public opinion polling there was risk in designing the questions in such a way as to allow personal bias to creep in. Care was taken to ensure that the questions could be presented as neutrally as possible to not contaminate the data.

Other sources of contamination could come from the employees not wanting to “spotlight” themselves with responses which they believe may get them in trouble with management. The random poll access codes should help to alleviate the concerns employees may have over confidentiality.

Management must also keep an open mind and maintain realistic expectations that many employees will not be enthusiastic with some of the changes to their benefits package. There are also some cultural issues that need to be addressed. HMC had a solid grounding in the academic world while we at GHS operate on a much more efficient business model. Preliminary examination already has concluded that there are problems arising because of these two different cultures now trying to operate under one organization. (Sidorov 2003 p. 60)

The objective of this case study is gain data on the effectiveness of the changes made and the employee’s reaction to those changes. The data being obtained should be used to provide better training for employees on the new changes and to allow for increased cooperation between employees and management to resolve any lingering problems from the merger.

VI. ANALYSIS

To be completed after polling.

VII. CONCLUSION

To be completed after polling.

References:

Baker, Cinda (2000). “Meet The New Boss.” Modern Healthcare 30 no28 2-3, 14.

Hensley, Scott. (1999). “Geisinger Pulls the Plug”. Modern Healthcare 11/22/99, Vol. 29 Issue 47, p2.

Reeves, Zane T. (1999) “No More Nittany Lions.” Cases in Public Human Resources Management. Itasca, Ill: F.E. Peacock Publishers, 1999: 41-50.

Sidorov, Jaan (2003). “Case Study of a Failed Merger of Hospital Systems.” Managed Care November 2003 p.58.

APPENDIX A-SURVEY

This employee poll is to determine the effectiveness of the changes in employee benefits as a result of the merger.
This is an employee satisfaction poll concerning the changes to your benefits package since the HMC and GHS merger. The topic is “The effectiveness of the changes to employee benefits since the merger”. It is fairly short at 20 questions and is anonymous through the use of randomly assigned access numbers. The button questions are one answer only and the block questions allow for multiple answers. Again your participation is greatly appreciated and any information requested in completely anonymous and for research purposes only.

Thank you,

Jason Erickson.

1. How would you rate your overall job satisfaction?

Very satisfied

Fairly satisfied

Neither satisfied or unsatisfied

Unsatisfied

2. Are you more or less satisfied since the merger?

Much more

Fairly more

Neither

Somewhat less satisfied

Much less satisfied

3. How familiar are you with the changes in policy since the Merger?

Very Familiar

Somewhat Familiar

Neither Familiar or Unfamiliar

Unfamiliar

4. How familiar are you with the benefits package?

Very Familiar

Somewhat Familiar

Neither Familiar nor Unfamiliar

Unfamiliar

Very Unfamiliar

5. Have your employee quarterly evaluations changed since the merger?

Yes

No

Not sure

6. Do you feel your productivity has changed since the merger?

Much Better

Somewhat Better

The Same

Somewhat less

Much less

7. Has GHS training on the new benefits policies helped to address your concerns?

Yes

No

Not Sure

8. Do you feel that management is open to hearing your concerns over changes to the benefits package?

Yes

No

Not sure

9. How has the new benefits package changed your attitude towards your career at GHS?

Much Improved

Somewhat Improved

No change

Somewhat worse

Much worse

10. What parts of the benefits package are you concerned with (pick all that apply)?

Pay/Wages

Retirement

Vacation

Health Plan

Education

11. Have you received training on new advancement opportunities within GHS?

Yes

No Not Sure

12. Do you feel that your new Health Care Plan meets your needs?

Yes

No

Not sure

13. Do you feel that you are being adequately compensated in wages?

Yes

No

Not sure

14. What is your Gender?

Male

Female

15. Are you White, Black or African-American, American Indian or Alaskan Native, Asian, Native Hawaiian or other Pacific islander, or some other race?

Black or African-American

American Indian or Alaskan Native

Asian

Native Hawaiian or other Pacific Islander

Hispanic

From multiple races

Some other race (please specify)

16. What is the highest level of education you have completed?

Did not attend school, 1st grade, 2nd grade, 3rd grade, 4th grade, 5th grade, 6th grade, 7th grade, 8th grade, 9th grade, 10th grade, 11th grade, Graduated from high school, 1 year of college, 2 years of college, 3 years of college, Graduated from college, Some graduate school, Completed graduate school.

17. What is your current Pay Grade?

Enter in block.

18. How long were you employed at HMC?

1-5 years

5-10 years

10-15 years

15-20 years

20-25 years

25-30+ years

19. What is your age?

18-25

25-30

30-40

40-50

55+

20. Was there a change in your position after the merger?

Yes

No

Not Sure.