HCA Healthcare looks to expand in Dallas-Fort Worth by acquiring Wise Health System
The largest hospital chain in Texas is poised to add three North Texas hospitals to its expanding presence in Dallas-Fort Worth, the latest sign of health care’s trend toward consolidation.
Wise Health System, which is operated by the Decatur Hospital Authority, announced in January that it had agreed to enter into exclusive acquisition discussions with Medical City Healthcare, a division of HCA Healthcare.
“We’re in our due diligence phase … we’re still working toward final binding agreements,” said Wise Health System CEO and president Jason Wren during a board meeting Monday.
Wren said it would likely be several months before a final acquisition agreement was brought before the hospital system’s board. Wise Health System operates three standalone hospitals in Decatur, Parkway and Argyle, in addition to multiple clinics and other services.
If the acquisition is finalized, Wise Health System would transition from a locally owned and operated nonprofit health system to being part of one of the nation’s largest for-profit hospital operators in the nation. The move toward consolidation is one that Texas and other states will likely continue to see, said Kristie Loescher, the academic director of the Health Care Innovation Initiative at the McCombs School of Business.
“More and more hospitals are looking at consolidating within bigger systems,” Loescher said.
Larger hospital systems generally have more bargaining power to negotiate better payment rates with private insurance companies, she said, meaning that a larger system can draw in more revenue than a small nonprofit system. Large systems also have an advantage when it comes to negotiating for the cost of supplies, she said.
But an acquisition would mean that local control of the hospital system would be forfeited, and major decisions about services, operations, and expansions or cutbacks would be determined by HCA, which is based in Nashville.
Although Wise Health System will likely continue to still work with a governing board, “big decisions will now have HCA buy-in,” Loescher said. It’s too early to say how the potential acquisition would affect the hospital system’s structure of operations.
HCA is the largest hospital operator in the state, and owns almost 17% of all licensed hospital beds, according to state data. It’s the second largest health system in the Dallas-Fort Worth region, after Texas Health Resources.
More than 1,800 people work for the health system, making it the largest employer in Decatur.
The health system suffered a steep drop in net operating revenues — from $438 million in 2021 to $385 million in 2022 — caused by changes in agreements with insurance providers, fewer inpatients in the hospitals, and the closure of 32 clinic locations, according to the health system’s most recent financial disclosure. The 2021 February winter storm resulted in $9 million loss for the health system, as it canceled and delayed services.
