AHA Continues To Streamline Operations Through Management Consolidation

July 1, 2007       Mark Hrywna      

The national operations management consolidation of the American Heart Association (AHA) continues as this month the new 11-state Midwest region officially blends together.

The consolidation started about 10 years ago, with 56 affiliates incorporated into just 15 units. The projected savings for the new region, which combined four states from the Heartland affiliate with the former Greater Midwest chapter, is expected to save between $1.3 and $1.5 million. The states involved in the latest consolidation are: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri Nebraska, North Dakota, South Dakota, and Wisconsin.

According to Gordon L. McCullough, chief operating officer, field operations, once consolidation is complete, the number of AHA affiliates will drop from 15 to eight nationwide. He explained that the goal is for the change to be low impact on the communities.

“At the local community level or major market level — we really feel that the consolidation of affiliate operations is something that we strive to have it be as transparent as possible, when you get to that local level, in terms of impacting the way that local markets do,” McCullough said.

“We really strive for them to not see any kind of impact that changes their world from the standpoint of their AHA involvement, except that we hope they end up seeing additional resources to help them do work.”

The bottom line of the affiliate consolidation is, well, the bottom line. Though he couldn’t pin down an average savings of an affiliate merger, McCullough pointed to the Midwest region (Midwest and Heartland), which officially merged effective July 1. Preliminary projections expected savings of $1.3 million to $1.5 million. “As we have completed that consolidation, the amount that we’ve been able to save or redeploy toward mission, from what had been more redundant administrative, backroom type operations, we’ve exceeded that early, anticipated number,” McCullough said. “When you go into it, and do the early preliminary investigating, it [the savings] definitely has to be significant enough” to warrant a merger.

McCullough now oversees the consolidation in-house, but in 1998, with the help of an outside consultant, AHA started the process of streamlining, which has since morphed into an evolutionary process. Since the late 1990s, affiliates have investigated potential mergers after executive turnover or other opportunities have arisen to present synergies with neighboring affiliates.

In addition to the new 11-state Midwest region, McCullough expects a new South Central Affiliate to become operational soon, pending a vote by the local boards. That would combine Texas (a stand-alone affiliate) with Oklahoma and Arkansas from the former Heartland affiliate, and New Mexico from the Pacific/Mountain affiliate.

In the Northeast, boards are exploring the realignment of the New England affiliate (Maine, Massachusetts, New Hampshire, Rhode Island, Vermont and New York) with the Heritage affiliate (Connecticut, New Jersey, New York City and Long Island). A vote by those affiliates’ boards could come by Labor Day, McCullough said.

A typical consolidation could take between 60 and 90 days, from the initial exploratory discussion among volunteer leaders to the board’s final approval, McCullough said. In every situation, efforts are made to identify staff that could be reassigned or relocated to another affiliate should positions be eliminated. If all else fails and the organization can’t place an individual, then an outplacement process begins, he said. However, he described as minimal the number going that route in an average consolidation.

“One of the things we have found is in most cases consolidations are pretty transparent when it comes to local operations. Consolidations are more about how administratively we operate as an organization,” he said.

“The bottom line is we’re looking to put all donor dollars into mission work of the organization,” said McCullough. “As we go through the consolidation process, we’re able to streamline operations activities and backroom operations, which frees up resources to put additional revenue toward programmatic activities, increased staff, programs, products and services.”

Feedback has been generally positive, he said, with some dialogue to address concerns or questions. The most common concerns are around human resources, such as what happens to staff if no positions are available. “We’ve been able to manage through both those issues with good outcomes,” McCullough said.

“When you look at the nonprofit sector and more specifically at health organizations, I think one of the things that really behooves us to do is how to maximize what we’re able to do with the contributions we receive,” McCullough said. “We’re always seeing how can we be more efficient and effective. We’ll constantly be seeing this kind of change in the sector.”

As part of the consolidation process, representatives of each affiliate board work out the details of the overall consolidation, McCullough said. A major focus is to ensure finding new positions at the new affiliate level for volunteer leaders that will be out of a slot. Sometimes there are positions rotating off the board anyway, he said, and in the majority of cases volunteers decide it’s a good time to step back and become more engaged, perhaps in a programmatic area or serving on a standing committee. The affiliates strive to have boards of 18 to 24 members.

Maintaining local ties to the community, McCullough said, “is definitely one of the key priorities that we focus a great deal on in the consolidation process. One thing we absolutely want to ensure is that the end impact is really greater service at the local community level. “The end outcome and key driving forces [of consolidation] is to ensure we’re able to put more resources into the local community level,” he said. “We’ve seen that over and over.”  NPT

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