At the intersection of crisis and opportunity: strategic alliances

The new normal must look far beyond 2020-21 and it will involve shared services, shared academic programming and mergers.

Even before the pandemic, institutions of higher education were being challenged by disruptive forces, including demographic changes, the movement toward online education, political pressure for free tuition and the national narrative questioning the value of a college education. In a nod to these disruptors, S&P recently gave the higher ed sector a negative outlook, saying that the pandemic has intensified pressures already facing colleges.

Daan Braveman, Harter Secrest & Emery LLP
Daan Braveman, Harter Secrest & Emery LLP

One bright spot emerged as colleges and universities responded to the pandemic. They moved beyond their typical silo approach to challenges and collaborated with other schools.  At the local, state and national levels, institutions teamed up, sharing information and plans, in a manner rarely seen in the past. In the midst of this crisis, we now find ourselves ready to—and needing to—formalize strategic alliances, in service to our students and institutions.

First, schools should form regional shared services entities that consolidate administrative operations. These entities could provide a variety of services and benefits, including payroll, campus safety, health insurance, health services, human resources, information technology, legal services, maintenance, Title IX and transportation. The benefits are two-fold: reduced costs (administrative and staffing) and enhanced results (due to collaboration among experts).

A second kind of alliance focuses on shared academic programming. Creative and meaningful academic alliances among higher ed institutions enable the expansion of academic programs with reduced financial outlay and avoid the kind of expensive duplication of programs that is common .  To be sure, many campus-based obstacles stand in the path of such academic alliances and it may be more difficult to develop academic partnerships than shared administrative services.  Even so, the significant benefit to students of more diversified, high-quality, lower-cost academic programming makes this type of alliance worth a try, even if hard discussions are a necessary part of the process.

There already are some interesting collaboration models, including the following:

As we plan beyond the pandemic, we should explore these and other models that offer opportunities for expanded academic offerings and reduced costs.

A final form of alliance is the merger of schools. Clayton Christensen predicted that one-half of schools will fail by the end of the decade. Many believe that this prediction is too high.  There is agreement, though, that there will be a significant rise in the number of failed schools and that the pandemic may increase the number of schools forced to make the difficult decision to close. Many of these schools will consider merging with another institution, but if closure is imminent, it may be too late for a successful merger.

Mergers are extraordinarily difficult and provoke opposition from faculty, students, staff, alums and trustees. Successful mergers depend heavily on two equally important factors: finances and the culture and mission of the participating schools. Despite the challenges, however, some schools would benefit from a merger and it is wise to enter into discussions before they are on the brink of closure. Higher education might be wise to study the recent path taken in the health care industry, where we have seen a great number of mergers and acquisitions of hospitals.

Theresa Conroy, Harter Secrest & Emery LLP
Theresa Conroy, Harter Secrest & Emery LLP

We hear talk these days about the “new normal.” For higher education, though, the new normal is not just the way schools will look in the 2020-21 academic year. Rather, we must create a new future for colleges and universities for the decade and beyond. For too long, institutions have operated as siloed entities. It is time to consider meaningful and mission-driven strategic alliances that expand academic opportunity, reduce expenses, increase efficiencies and provide added value and benefit for the students we have committed ourselves to serve.

Daan Braveman is president emeritus of Nazareth College in Rochester, New York, having retired on June 30, 2020, after 15 years as president. He now serves the higher education sector as Senior Higher Education Counsel at Harter Secrest & Emery LLP. Theresa Conroy is a partner at Harter Secrest & Emery LLP and the Higher Education practice group chair. She is an experienced higher education attorney who also has worked as a faculty member, administrator, human resources professional and seconded Title IX Special Counsel. 


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