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Texas Hospital Giants Baylor Scott & White and Memorial Hermann in Merger Talks

Discussion in 'BBS Hangout' started by Xerobull, Oct 1, 2018.

  1. Xerobull

    Xerobull You son of a b!tch! I'm in!

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    https://www.wsj.com/articles/texas-...d-memorial-hermann-in-merger-talks-1538410793https://www.wsj.com/articles/texas-...d-memorial-hermann-in-merger-talks-1538410793


    Two Texas hospital giants said they are in merger talks that would combine dominant hospital systems in two of the nation’s largest metropolitan markets, one of the latest signs of the consolidation reshaping the health-care industry.

    Baylor Scott & White Health, a nonprofit based in Dallas, and Memorial Hermann Health System, based in Houston and also a nonprofit, announced a letter of intent to create a 68-hospital system spanning from the Gulf of Mexico to the Oklahoma border.


    The combination would be among the largest U.S. systems, by number of hospitals, with annual revenue of more than $14 billion.

    With that size comes potential for greater efficiency and savings that can be invested to catch up with market demand for less costly and more convenient care, the hospital systems’ executives said in a joint interview.

    Jim Hinton, chief executive officer of Baylor Scott & White Health, which is in merger talks with Memorial Hermann Health System. Mr. Hinton would be CEO of the combined system. PHOTO:BAYLOR SCOTT & WHITE HEALTH
    “The means is to create economies” of scale, said Baylor Scott & White Chief Executive Jim Hinton. “The end, the more important end, is to improve care and invest in digital and ambulatory and other modes of care.”

    Mr. Hinton would be named CEO following the merger, which could close as soon as July.

    Around the country, the rise of regional hospital powerhouses is accelerating as hospitals respond to pricing pressure, and technology moves more medical care outside their walls.

    Bon Secours Health System Inc., based in Marriottsville, Md., merged last month with Mercy Health, based in Cincinnati, to form a seven-state health system with nearly four dozen hospitals. That followed the April combination of Chicago-based Advocate Health Care and Milwaukee-based Aurora Health Care, which created a 27-hospital giant.


    “Scale done right is vital,” said Bon Secours Mercy Health CEO John Starcher, Jr. in an interview last month. “It’s not secret to anybody…how far behind the consolidation curve” the hospital sector is compared with others, such as airlines, he said.

    That is changing as hospitals come under continued pressure to curb costs and companies across health care strike deals that aim to steer patients away from hospitals. That is the case with the roughly $70 billion acquisition of AetnaInc. by CVS Health Corp. and UnitedHealth Group Inc.’s continued buy-up of physician practices.

    Meantime, hospitals are snapping up one another and physician groups to protect their market position. That could hinder efforts to lower spending where hospitals gain leverage in talks with insurers and employers.

    Hospitals with market power can negotiate terms with insurers that stifle competition on price and quality.

    Limited competition has enabled hospitals to often operate inefficiently. Hospitals budget and set procedure prices using cost approximations that can sometimes be wrong or mask waste. As hospitals rely on raising prices—rather than tight control of costs—to maintain margins, they drive spending higher.


    The newly formed Texas hospital giant would likely speak with insurers early about “how we can be their best partner,” Mr. Hinton said.

    “We all understand the problem of price and cost is one of the highest concerns in health care,” said Chuck Stokes, president and CEO of Memorial Hermann.

    Memorial Hermann’s hospitals dominated the Houston-area market in recent years, treating one in four residents hospitalized in 2017, it said in investor filings. Houston is a competitive, fast-growing market where hospital rivals are racing to consolidate.

    But in the past year, Memorial Hermann’s closest competitor has gobbled up a handful of nearby hospitals, challenging Memorial’s No. 1 market position. HCA Healthcare Inc., the nation’s largest hospital system, acquired four Houston-area hospitals from Tenet Healthcare Corp. , and a fifth from Community Health Systems Inc. HCA continued its expansion there with a deal last month to acquire North Cypress Medical Center from a real-estate investment trust.

    HCA’s expansion wasn’t a factor in the possible merger with Baylor Scott & White, Mr. Stokes said.
     
  2. heypartner

    heypartner Contributing Member

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    "White Health" ... that's racist...typical Dallas.
     
    BigM likes this.
  3. justtxyank

    justtxyank Contributing Member

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    Been waiting for this news to become public.
     
  4. Buck Turgidson

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    What's your take on this? BS&W is our local hospital up here.
     
  5. justtxyank

    justtxyank Contributing Member

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    I can't comment much on the BSW side, but this is important for Memorial Hermann. I'm pretty sure BSW will basically gut the Memorial management so you shouldn't see much change from your side.
     
    Buck Turgidson likes this.
  6. Haymitch

    Haymitch Custom Title
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    Yeah this merger has an acquisitiony feel to it IMO. BSW will change a ton in MH, and that change is sorely needed. But it will mean a lot of layoffs for people in non-clinical roles in Houston.
     
  7. Buck Turgidson

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    They opened up here a couple of years ago and I've been really impressed with them during the times a couple of my family members have been there, so it's good to hear that .
     
  8. justtxyank

    justtxyank Contributing Member

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    Memorial has been basically up for sale for a few years now. They’ve been struggling
     
    MiddleMan likes this.
  9. duwende

    duwende Member

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    This is going to be confusing for people. They'll think Baylor Scott & White is part of Baylor College of Medicine! None of the Baylors are connected anymore (BU, BSW, BCM)
     
    AB423 likes this.
  10. Haymitch

    Haymitch Custom Title
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    I think MH will stay branded as MH. At least that's what I saw in a release today.
     
  11. Buck Turgidson

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    Nobody wants to be associated with Baylor U these days.
     
    duwende likes this.
  12. plates300

    plates300 Member

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    As a Hermann employee, this should be interesting...Luckily my position is clinical
     
  13. cheke64

    cheke64 Member

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    Memorial Hermann is a toxic place for employees. Their management is horrible and their benefits too. Go to Methodist instead.
     
    MiddleMan likes this.
  14. Rocket River

    Rocket River Member

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    interesting
    Never heard much about any of the hospitals

    Rocket River
     
  15. AB423

    AB423 Member

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    Speak for yourself.. I'm enjoying my employment with Memorial Hermann. I think it's a great place, well maybe except SW MH.
     
    Rocket River likes this.
  16. Haymitch

    Haymitch Custom Title
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    Yeah I'm pretty new here but this is honestly the best job and best atmosphere I've ever had. And it's the easiest job I've ever had too. But I have seen some managers and roles that would be miserable, so I can see how some would despise MH.
     
    AB423 likes this.
  17. cheke64

    cheke64 Member

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    What's your role? Corporate or clinical.
     
  18. plates300

    plates300 Member

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    SW MH is so bad they've been trying to sell it but no buyers.
     
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  19. ipaman

    ipaman Contributing Member

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    This sounds very bad for Houston based non-clinical staff. So on the basis of that I say it sucks.
     
  20. Xerobull

    Xerobull You son of a b!tch! I'm in!

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    Middle managers always find....uh....a way.
     

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