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Centerstone, post-merger: Not quite all according to plan

June 20, 2013
by Dennis Grantham, Editor-in-Chief
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Part 2: Centerstone CEO David Guth reflects on what worked - and what didn't

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The 2008 merger that created Centerstone was based on a series of plans, expectations, and assumptions, a number of which are listed below. Many worked as planned, but there have been some surprises, as CEO David Guth revealed in our recent interview. 

 

Pre-merger expectation  (2008)

 

Post-merger reality (2013)

Be a right-sized organization, capable of developing and supporting infrastructure required to sustain excellence

·         $250 million in revenues

·         3 organizations, with more to follow

·         4 state reach

2008 recession caused significant cutbacks and uncertainties among behavioral health providers, limiting additional merger activity and growth.

·         $140 million in revenues

·         4 organizations (so far)

·         2 state reach

Retain talent at all levels as “legacy” organizations become “one.” Address stakeholder concerns while highlighting shared mission.

Four of five legacy CEOs remain in place, five years later. Boards merge into one larger body, then shrink as terms expire. 

Improve the organization’s ability to develop and win grants.

Centerstone’s grant funding has nearly tripled, from $35 million in 2003-08 to $100 million in 2008-13 period. “We knew we’d improve, but none of us predicted that,” said Guth.

Create resources and capabilities far beyond those of the legacy organizations.

Progress in data analytics, predictive modeling, and expansion of Knowledge Network has exceeded expectations. “We never could have done this without the merger,” said Guth.

Technology will overcome distance in helping to build a new culture between entities in non-contiguous states.

Centerstone found that “culture is built on relationships and familiarity” that depend, in part, on people’s proximity to each other.  “You can’t take a distance relationship and build familiarity into it,” Guth observed.

Adapting technology platforms across the merged organization will not be nearly as difficult as adopting technology in the first place.

Centerstone found that “bringing together multiple organizations with complex and disparate technology platforms” requires “a very difficult” process of “trying to select the best technology” for each need and then undergoing “a huge systems migration in every case.”  Each one, said Guth, “brought more humility and appreciation for how difficult those are.”

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