Merger failure: a five-year journey examined.

In 1994, Catholic Medical Center and Elliot Hospital in Manchester, New Hampshire, merged to form Optima Health, a full-ownership, not-for-profit IDS. Initially, Optima Health was an economic success. A number of strategic miscalculations, however, led to the IDS's demise. First, Optima Health's leaders failed to fully consider the divergent cultures of the two hospitals, particularly with respect to their religious differences. Second, Optima Health's leaders did not anticipate the public's response to the organization's consolidation plan. And third, the consolidation was found to have changed the charitable missions of the two tax-exempt hospitals in violation of Federal laws regarding charitable trusts. The issues combined to undermine the commitment of the organization's leaders to the consolidation strategy, and Optima Health was dissolved.