A Corporate Acquisition That Almost Went Up in Smoke
I knew I’d have my hands full the moment they each took a cigar from the breast pocket of their suit jackets.
The evening was a tapestry of elegance, and the banquet hall was bathed in soft lights that underscored the sophistication of the event. As I mingled with the well-dressed – not to mention, well-heeled – crowd, Rob*, the CEO of Lusitano Health Partners, a company that owned five hospitals, approached. “Join us on the veranda,” he invited, gesturing to the ornate glass doors that led out to a breathtaking view of the golf course below. It was there that he intended to introduce me to the executive team.
A commanding presence with a penchant for top-down management, Rob had invited me to this spare-no-expense gala to honor Lusitano’s donors. Lusitano’s board had recently engaged me to consult on the best way to structure its acquisition of Genexis Medical Group, a large, multi-specialty medical practice, which would expand Lusitano’s geographical reach, solidifying its position as a regional leader in healthcare. Rob thought this event would be a good opportunity for me to meet Lusitano’s C-Suite group.
We stepped onto the veranda and breathed in the crisp night air, taking in the lush landscape that stretched luxuriously below. My attention instantly pivoted to the scene that unfolded before me. Like a well-rehearsed theater ensemble, the male executives clustered around Rob while the female executives huddled nearby, close, yet distinctly separate. It felt like a scene right out of Mad Men, a throwback to a gender-divide in an executive group I had wishfully assumed anachronistic.
As introductions flowed, Rob reached into his breast pocket and drew an unwrapped cigar, one presumably quite expensive. He ran it lengthwise under his nose, slowly and with relish, as if to revel in its opulence. Reflexively, Trent, a vice president, reached into his pocket to fetch a lighter, lifting it to light the cigar just as Rob inserted the cut end into his mouth. The choreography could not have been more perfectly executed.
Then, like clockwork, his entire entourage followed suit, and out came cigars from each man’s breast pocket, an orchestrated display of allegiance to their leader.
In that moment, the cigars were more than just tobacco – they were a symbol, a smoke signal illuminating the obsequiousness of this group. I immediately suspected that this group’s inclination to say “yes sir” to any utterance of the CEO would stifle any belief that a dissenting view should be expressed.
In short, whatever the boss wants, the boss gets.
With Rob’s and his cigars lit, Trent’s hand slipped back into his breast pocket and produced a second cigar, which he offered to me. As he brought it closer to my hand, he said, with a hint of swagger, just enough to serve his ego, not enough to compete with Rob’s, “It’s an Arturo Opus, not easy to find.”
An Arturo Opus. As though such a thing is commonly known. Which of course even he would understand is preposterous – it was just to show off. How pompous!
I waved him off. “Thanks, but not for me,” I said, pointing to the cigar, but metaphorically signifying my intent to not be drawn into this sycophantic escapade. I was reminded of the “blob,” the term used in Sondheim’s Merrily We Roll Along to describe a fawning groupthink-driven mass, willing to sacrifice any modicum of personal integrity to be within reach of a charismatic coattail.
To be effective in my role, I’d need to be a professional peer of the CEO, not a blind supporter of his views. 
Over the last 10 to 15 years, thousands of medical practices have been absorbed into hospital systems. Sometimes they work out beautifully, and sometimes they fail to live up to expectations.
With small medical practices, those with one or two doctors, shifting much of their management to the hospital system makes sense. By analogy, think of a neighborhood corner hardware store being taken over by a chain. The world for them changes overnight. Where handshakes and handwritten receipts had ruled the day, the business now operates under the sterile efficiency of a corporation’s oversight. The cash register sitting atop the checkout counter is replaced by a sleek point-of-sale system that tracks everything from inventory levels to customer retention metrics. Conversations once limited to fixing a backed-up toilet now involve performance dashboards, compliance training, and HR policy.
Management is no longer just about keeping the lights on and welcoming customers but about contributing to strategic initiatives and forecasting revenue trends in meetings sprinkled with terms like “market penetration” and “brand alignment.” All this may be over the head of the current manager, so a strong guiding hand from the corporation could prove crucial.
But large multi-specialty group practices such as Genexis, which have offices scattered across several communities, are a
different story. They employ hundreds of people in diverse medical disciplines like pediatrics, orthopedics, oncology, cardiology, and urology and the administrators are accustomed to managing at a higher level. The key question for Lusitano in forming an acquisition plan is how to preserve the features that underpin the practice’s success while integrating it into the larger corporation.
Yet for all that goes into making that work effectively, it was clear that the greatest challenge was not in determining the right approach. No, with Lusitano the greatest challenge was that the truth doesn’t drift up to Rob. Shielded by layers of executive curation, it doesn’t take much more than observing the cigar episode to know that he’s not getting honest information from his executive team. Instead, he's being fed narratives designed solely to reinforce his perspective, not challenge it.
There are several ways to shape a deal like the one Lusitano was eyeing, each with its own advantages and pitfalls. One option is for Lusitano to take full control of the medical practice, making every decision from who to hire, including physicians, to scheduling patients, setting salaries, determining profit sharing, and deciding which new medical services to introduce and how to expand existing ones. Predictably, Rob strongly advocated this vision, believing in the power of centralized leadership. Equally predictably, his management team rallied behind this aggressive, all-in approach.
I disagreed.
No question, some acquisitions work best with a strong top-down approach, especially when the acquired company’s management isn’t up to the task. But my analysis suggested a different path with Genexis. They had a capable, experienced management team. In this case, the smarter move was to give them significant operational independence. As the saying goes, “If it ain’t broke, don’t fix it.”
I had lots of evidence showing that taking too much control away from Genexis could backfire. It could reduce productivity, push out talented younger doctors, and ultimately lead to revenue loss. The more Genexis felt disempowered, the more likely these outcomes would come to pass.
One example stood out. For years, Genexis had run a clinic in a poor, underserved community. One of the company’s founders, now retired, grew up there, and always had a special feeling for it in his heart. Many residents didn’t have insurance and avoided going to the doctor. As a result, diseases like diabetes and heart problems often went untreated, sometimes with fatal consequences.
The clinic became a vital resource in the area. Over time, it launched outreach efforts to bring people in for care, making life-saving inroads through early detection. Several Genexis doctors and staff even volunteered their time each month.
State subsidies helped keep the clinic open, but only because it was owned by a medical practice. If ownership passed to a hospital system, the subsidy would end. The new owner would need to cover a $400,000 yearly deficit.
Lusitano’s hospitals didn’t serve that area, so they’d likely shut the clinic down or try to sell it. But selling would be tough, since it was unlikely that the subsidy would carry over to another medical practice.
The clinic had been part of the Genexis family for 40 years. It wasn’t just a facility – it was a symbol of their mission to serve those in need. Over the years, as Genexis expanded into wealthier communities, the clinic stood as a reminder of their commitment to health equity.
If Lusitano took full control of Genexis’ operations, they might shut down the clinic or pressure Genexis to boost revenue to justify keeping it. By retaining some decision-making power, Genexis could protect the clinic. But even more, if they had a seat on Lusitano’s board, they could evaluate how the clinic could fit into Lusitano’s long-term growth strategy.
A few days after the gala, I met with Rob privately to offer preliminary thoughts on my recommendations, although a workable approach was already clear to me. It was for a hybrid model – Genexis retains management of its operations, Lusitano and Genexis share strategy development, and Lusitano holds fiduciary responsibility for Genexis – one with a proven track record in situations just like this. When I shared it with Rob, he dismissed it immediately, haughtily declaring that his management team unanimously supported total control.
"Did they truly agree, or are they hesitant to offer an alternative opinion?" I probed.
“I personally selected each member of the executive team. And high on the list of attributes I insist upon is transparency and that they say what’s on their mind,” Rob insisted.
“That may be,” I began with sensitivity. “But how you structure this acquisition is going to be critical to its success. The experience of other hospital systems with similar acquisitions is not in doubt. If you create a shared structure, give a board seat to Genexis and leave hiring decisions to them, you’ll have a smoother transition and far fewer operational headaches. Your executive team can function more like a board of directors – confine your hiring to just the senior administrator and make sure their strategy aligns with yours.”
Rob leaned forward in his desk chair. “My team has already endorsed the complete management role for us.”
“Are you confident that the team is aware of the evidence that would caution against that approach?” I asked.
He blinked. “They should be. Why else would they go in lockstep with that recommendation?”
“I may be out of line saying this. But if they think it’s what you want, that may outweigh their better judgment.”
“That would be confusing,” Rob asserted. “They are all independent-minded.”
How Rob manages his team was outside the scope of my engagement. But it was my job to make sure my best advice would be carefully and constructively considered.
“Let’s proceed this way,” I suggested. “We’re scheduled to attend next month’s board meeting where I’ll be presenting my recommendations. I’ve got a very persuasive body of research showing why the hybrid model is advisable. Even though your team has done their own research, let me share what I have with them next week prior to the board meeting. We’ll go from there. Better to go into the board meeting with one voice on a recommended approach, if that’s possible.
Rob agreed. We convened the following week, this time with all the executives present. I laid out the research, demonstrating how their approach could backfire, even reduce patient volumes and revenue.
As I spoke, the room filled with shifting glances and furrowed brows, the kind that surfaces when long-held assumptions are challenged.
"Your thoughts?" Rob asked, scanning the table. The silence stretched taut as a bowstring until, finally, a lone hand tentatively went up.
“The data are compelling,” Sharon, a VP, began. “There are clearly some risks to the full management model we’ve been thinking about, especially in terms of physician retention and culture fit.”
It was tepid acknowledgment that their original approach may have warranted some rethinking. But at least it cracked the wall of servitude.
Rob’s stare sharpened. “Why hasn’t this been brought up earlier?”
Sharon cleared her throat. “To be candid, many of us believed – no, wait, I’ll speak for myself – I believed the direction had already been decided. We’ve had great success with a centralized approach across our network, and it seemed consistent with your preference. It didn’t feel like there was room or need for a different recommendation.”
A few others nodded. The elephant in the room – Rob’s overbearing management style – was coming into focus.
Another VP, Robin, added, “It wasn’t that we didn’t want to question the strategy. It’s just that, historically, full control has worked well for us. And frankly, it felt like we were simply executing on a decision already made.”
Rob leaned back, eyes narrowing. “You thought the decision had already been made?”
There was a ripple of subdued acknowledgment.
“I need to be clear about something,” Rob said slowly. It was as if the clouds were finally moving across the sky. “If I’ve given the impression that disagreement is unwelcome, then I’ve failed in a fundamental way.”
There was a pause, more contemplative than uncomfortable.
Jason, another VP spoke. “It’s not that we’re afraid to speak up, Rob. We’re just used to moving quickly once the direction seems clear. And with your early comments about taking full control, it felt like our job was to build around that, not reopen the debate.”
I watched Rob carefully. He tapped a finger on the conference table, a slow, rhythmic motion, then nodded, almost to himself.
“That’s fair,” he said. “And maybe I need to be more specific about distinguishing between an idea and a directive. I’ll own that.”
It was a brief statement, but a seismic shift – a leader acknowledging ambiguity and a team willing to meet him halfway.
“We will obviously discuss this matter of communication more fully,” Rob continued. “But right now, we need to rethink our strategy for the acquisition.”
He then went around the room and asked each person to state which model they now favored.
“I support the hybrid,” said Sharon. “It gives us the best chance to retain the Genexis team and build trust with them. That will go a long way toward making this acquisition successful”
“Hybrid,” said another. “It aligns better with our strengths and still allows us oversight where needed. They manage operations, we work with them on strategy”
In the end, the hybrid model wasn’t unanimous, but it was a clear consensus.
Rob didn’t speak for several seconds. Then, with a tight, wry smile, he said, “All right. Hybrid it is. But this isn’t just about Genexis. We’re also committing to how we operate as a leadership team. No more assumptions, no more rubber stamps. Agreed?”
Heads nodded. But this time it was more with sincerity than ritual.
As the meeting wrapped, the group lingered, chatting in small clusters, some exchanging ideas, others even laughing. It was subtle, but there was a new energy in the room, lighter, less tense. Something had changed.
This story, for me, carries two enduring lessons.
The first is that evidence and transparency aren't merely lofty principles, but operational necessities. Rob’s company nearly pursued a strategy that could have undercut both revenue and morale, not through ill intent, but because assumptions outpaced analysis and conformity muffled candor. Beneath the veneer of consensus, there was an unspoken but consequential gap between the culture Rob believed he had built and the one that was actually shaping decisions. Once that disconnect surfaced, the mood shifted from performative agreement to genuine dialogue, and with it, the path forward became not only clearer, but more likely to lead to a better outcome.
The second lesson was more personal. I had too quickly sized up the executive group as one of domineering leadership and passive followership that was fixed, unalterable. But neither turned out to be quite true. Rob had enough self-awareness to listen, and enough humility to recalibrate his leadership approach. And the executive team, when given space, showed they were far less compliant than I had assumed.
The cigars, once props in a tableau of acquiescence, may now be seen as emblems of an evolving leadership ethos. No longer
smoke signals of submission, but markers of a transformation from authority to authenticity, from control to collaboration. They now remind me to think of difficult situations as defined less by their constraints and more by their possibilities – not of closed doors, but of those that may be opened.
Of course, progress is by no means a guarantee. Clearly, some leaders will forever remain wedded to outdated norms, unwilling or unable to adapt. But when we allow for the possibility of change and work diligently to achieve it, we raise the probability of its occurrence. At Lusitano, the transition from an insular “old boys” executive culture to one grounded in gender equity won’t happen overnight. Still, the ground is more fertile today than it was yesterday.
At its heart, this is a story about what becomes possible when dialogue is protected, dissent is not just tolerated but invited, and decisions derive from evidence. When those principles guide leadership, decision-making doesn’t just improve. It becomes more humane, wiser, and more likely to lead to success.
* All identifiers have been changed.
