Business

Memorial Hermann Health System and Baylor Scott & White Health intend to merge

Merger could happen as soon as mid-2019


By Britni R. McAshan | October 1, 2018

Leaders from Memorial Hermann Health System and Baylor Scott & White Health announced Monday, Oct. 1 that they have signed a letter of intent to merge into a combined health care system.

“Through this new, proposed system, we have a unique chance to reinvent health care and make a profound difference in the lives of millions of Texans,” Chuck Stokes, president and CEO of Memorial Hermann, said at a press conference.

After a period of negotiations and the standard regulatory review processes, a definitive agreement—the next step in this process—could be complete by the middle of 2019.

The proposed merger, leaders said, will help provide integrated, consumer-centric, cost-effective care for Texans.

“Some of the best in health care is at Baylor Scott & White and Memorial Hermann,” said Jim Hinton, CEO of Baylor Scott & White Health. “What we will do together will truly be transformative. Our goal is to build a model for the rest of the country to follow, and today is about coming together, recognizing our strengths and building on our histories of investment of bold innovation and moving health care forward across the state.”

Hinton said the proposed merger will involve growing outpatient and digital care delivery and capabilities, as well as prevention and wellness programs designed to keep populations healthy and out of the hospital—unless hospital visits are medically necessary.

The two nonprofit health care systems are among the most comprehensive in Texas; Baylor Scott & White Health is based in Dallas and Memorial Hermann is based in Houston. Together, the systems employ more than 73,000 people and serve patients in 30 Texas counties.

Once the merger goes through, the combined health care system will acquire a new name, as yet to be determined, though each system will continue to operate under its current brand in its respective service areas. Hinton will become the CEO of the proposed combined system and will be joined in the CEO’s office by Stokes and Pete McCanna, president of Baylor Scott & White Health. In addition, a unified board will be made up of an equal number of appointees from both health systems.

“What makes this proposed combination so special is the similarities between the two organizations—not just what we share today, but the similarities of our visions for the future,” Hinton said. “Together we will further advance the health of Texans by increasing access to care that is safe and high-quality and high-value.”

The merger comes as a response to the ever-changing landscape of health care in the United States and the financial challenges that go along with delivering care.

“The cost of health care is the number one issue in America—whether it is in Washington, D.C. or Austin, Texas, so taking cost out of the system will be an important part in this journey as we come together,” Hinton said. “We are on a tailwind here and the tailwind is a result of Memorial Hermann and Baylor Scott & White having dealt with some financial challenges in the recent past, and we have come out the other side of that as stronger organizations.”

Deborah Cannon, chair of the Memorial Hermann Health System Board, said the merger will allow Memorial Hermann to offer innovative care to patients.

“As we keep efficiencies up, it will enable us to become more innovative and allow us to be on the cutting edge of technologies that will enable us to deliver care to all people,” Cannon said.

Stokes said patients should see nothing but positive change as a result of the merger.

“There should be no impact on the delivery of care,” Stokes said. “We are expanding our campus in the medical center by 148 beds because we are tapped out in our capacity there.”




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