Dallas-based Baylor Health Care System and Temple-based Scott & White said Friday that they intend to combine forces to create the largest not-for-profit hospital system in the state, and one of the largest in the nation.
The merged organization, which will be called Baylor Scott & White Health, will have $7.7 billion in revenues, 42 hospitals, more than 350 patient-care facilities and 34,000 employees. The organizations said that, pending regulatory approvals, they hope to complete the merger in six to nine months.Baylor CEO Joel Allison called the merger "a wonderful opportunity to create a new, patient-centered healthcare delivery system."Baylor has hospitals in Fort Worth, Arlington, Grapevine and Trophy Club.Hospital systems have been merging for years in an effort to gain efficiencies and broaden service offerings to meet the demands of insurers and in response to federal healthcare legislation.But with the passage of the Affordable Care Act in 2010 and the Supreme Court's approval in June, such combinations are expected to accelerate.PriceWaterhouseCoopers, a national consultancy, earlier this year said that there were 980 mergers or acquisitions among healthcare businesses, worth $227.4 billion, in 2011, and it expected similar activity this year.And, more recently, PwC said it "expects 2013 to be a banner year" for mergers in the healthcare industry. For care providers, such as doctors and hospitals, "this momentum will be buoyed by economic pressure to accept lower reimbursement rates," PriceWaterhouseCoopers said.Alongside the financial element is the call for health systems to take responsibility for the wellness of populations, rather than simply treating the sick, which will require a tighter integration of the efforts of hospitals, physicians and other patient-care providers."We're going to get a different reimbursement system," Allison said.In Scott & White, Baylor has picked a partner with a history that is unusually well-adapted for coming challenges. Formed in 1897, the physician-led system has operated a health insurance plan for decades, requiring it to blend its medical facilities with the demands of fixed budgets."Our health plan has taught us how to be cost-effective. We see more data than a hospital alone would see, such as what's the cost of an episode of care?" said Robert Pryor, president and CEO of Scott & White.While U.S. health plans are scrambling to form Accountable Care Organizations, which under federal rules will be responsible for managing the care and expenses of Medicare beneficiaries, "we consider ourselves an ACO [for] our entire history," Pryor said.Allison said Scott & White's experience with its health plan is "definitely an opportunity for us to learn. I think there will be more responsibility on the providers" to assume financial risk in providing care, he said.Steve Love, president of the DFW Hospital Council, said that "generally, under healthcare reform, the focus is on prevention and wellness. As we look at care coordination, you'll see closer affiliations of hospitals, physicians and other providers."Drayton McLane, chairman of Scott & White's board of trustees, said the two organizations have worked together in the past, but merger talks commenced about 18 months ago. They will operate separately for now, said Allison, who will be CEO of the combined entity while McLane will chair its 14-member board. Each partner will have seven members on that board.Jim Fuquay, 817-390-7552Twitter: @jimfuquayHave more to add? News tip? Tell us
