New Models for Consolidation in Higher Education

Consolidating Higher Education: The Community Solution Model

This episode of the Changing Higher Ed® podcast features Dr. Michael Horowitz, Chancellor of The Community Solution Education System (formerly TCS Education System), who discusses using innovative models for higher education consolidation as an additional category in or alternative to traditional mergers or acquisitions. Horowitz highlights the system's unique approach, a collaborative model prioritizing resource optimization and expertise sharing among member institutions while maintaining individual identities.

The conversation addresses challenges facing higher education, including increasing closure rates and the importance of proactive strategies like mergers, acquisitions, and consolidations. Both McNaughton and Horowitz emphasize the necessity of early planning and shared vision, particularly involving faculty, for successful integration.

They also touch on broader trends and challenges in higher education, such as increasing closures and the challenges boards face in adapting to the uniqueness of the business of higher education.

They conclude with practical advice for institutions considering consolidation, focusing on partnership development, early financial assessment, and resource amplification to strengthen academic missions.

 

Key Discussion Points

 

The Community Solution Model: A Collaborative System

• Alternative to Traditional M&A: The Community Solution operates as a "system" where institutions collaborate rather than compete. This approach aims to optimize resources, share expertise, and improve student success.
  
  

Quote: "The consolidation that operates as a system in which its institutions collaborate instead of competing, gain resources, share expertise, and optimize expenditures in the process." – Michael Horowitz

• System Integration: The system model integrates non-student facing operations like finance, technology, and marketing. This allows individual institutions to focus on academic endeavors.
  
  

Quote: "All of that can be scaled. To better quality, for the same dollar... The uniqueness has to drive through the academics."– Michael Horowitz

• Maintaining Institutional Identity: Each college within the system retains its own accreditation, president, board, leadership, assets, and liabilities. The system consolidates operations, not the institutions themselves.
  
  

Quote: "…each of our colleges keeps its own accreditation, president, board, leadership, their own assets and liabilities." – Michael Horowitz

Trends in Higher Education and the Need for Consolidation

• Increasing Closures: The concerning trend of college closures, which have a significant negative impact on students and communities. Clayton Christensen's prediction of closures is revisited and said to be possibly understated.
  
  

Quote: " The closure rate is accelerating. Last year there were 80 closures total, including 16 nonprofits." – Drumm McNaughton

• Mature and Declining Market: The higher education market is described as mature with overcapacity and declining student populations. The need for a new strategy to remain viable is clear.
  
  
• Boards Waiting Too Long: Many college boards are hesitant to act proactively and address financial or enrollment trends until it is too late. Relying on 'hope' is not an effective strategy.
  
  
• AI Prediction: AI models could accurately predict most college closures based on historical data, showing that many of these closures are foreseeable.
  
  

The Benefits of a System Approach

• Resource Amplification: Consolidation of back-end services leads to cost savings that can be reinvested into academic programs. The system aims to "amplify" resources, not just save money.
  
  
• Scalability and Efficiency: Shared resources and centralized functions create economies of scale and improve overall efficiency.
  
  
• Shared Talent and Ideas: The system fosters collaboration and the sharing of best practices among institutions and staff, resulting in shared knowledge.
  
  

Quote: "...we're amplifying our brain power by coming together." –  Michael Horowitz

• Enhanced Faculty and Student Resources: The system provides faculty with resources like teaching and learning support and global engagement programs.
  
  

Implementation and Integration Challenges

• Regulatory Process: Post-merger integration involves navigating a complex regulatory process that requires meticulous planning and execution and can take an extended amount of time.
  
  
• Project Management: Successful integration requires strong project management skills to coordinate the various tasks and stages.
  
  

“The most valuable person that you have on your post-merger integration team is your project manager." – Dr. Drumm McNaughton.

• Faculty Buy-In: Obtaining faculty support and ensuring clear communication are crucial for a successful transition.
  
  
• Timeline: The process from initial discussion to full integration can be lengthy and can take up to three years.
  
  

Consolidation Governance Structure

• Dual Board Structure: Each college retains its own board, which is deeply involved with the day-to-day operations, while a system board oversees the overall system mission, risk, and financial health.
  
  
• System Board Role: The system board provides guidance and support but does not interfere with the day-to-day operations of the colleges. This board looks at how the system works together.
  
  
• Shared Governance: Overlap between the two board structures allows for a shared understanding of institutional goals and needs.
  
  

Future Plans at The Community Solution (TCS)

• New Facility in Chicago: The Community Solution is consolidating its system office and Chicago school into a new facility to increase collaboration and efficiency. This includes plans for a second medical school.
  
  
• Canadian Recruitment: The system is planning to establish a presence in Vancouver, Canada, to recruit more international students without needing to create duplicative offices.
  
  
• Global Perspective: The system sees the importance of global education and perspective in higher ed.
  
  

Three Takeaways for Institution Presidents and Boards Considering Consolidation

1. Seek Partnerships: Proactively explore potential collaborations with other colleges, universities, or community entities.
   
   
2. Act Early & Study Financials: Have these conversations early, don't wait until urgency arises, and be very aware of financial and enrollment trends.
   
   
3. Amplify Resources: Focus on amplifying resources through collaboration to strengthen both the academic mission and community impact.
   
   

Wrapping Up

This podcast provides valuable insights into an alternative model for higher education consolidation that prioritizes collaboration, resource optimization, and the preservation of institutional identity. The Community Solution's approach serves as an example for other institutions facing challenges in a changing higher education landscape. The conversation highlights the necessity of proactive decision-making and strategic planning.

Read the transcript on our website at https://changinghighered.com/new-models-for-consolidation-in-higher-education/

#HigherEducation #HigherEducationConsolidation #HigherEducationPodcast

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About Our Podcast Guest

Michael Horowitz, Ph.D., is the founder and president of The Community Solution Education System, an integrated, nonprofit system of six colleges and universities that work collaboratively to increase student success and enhance community impact. Prior to founding The Community Solution, he served as president of The Chicago School for nearly a decade. Dr. Horowitz has more than 30 years of experience in higher education roles that include faculty member, program director, and dean. He holds a Ph.D. in Clinical Psychology from Northwestern University and a B.A. in Psychology from Columbia University.

Connect with Michael Horowitz on LinkedIn →

 

About the Host

Dr. Drumm McNaughton is the founder, CEO, and Principal Consultant at The Change Leader, Inc. A highly sought-after higher education consultant with 20+ years of experience, Dr. McNaughton works with leadership, management, and boards of both U.S. and international institutions. His expertise spans key areas, including accreditation, governance, strategic planning, presidential onboarding, mergers, acquisitions, and strategic alliances. Dr. McNaughton’s approach combines a holistic methodology with a deep understanding of the contemporary and evolving challenges facing higher education institutions worldwide to ensure his clients succeed in their mission.