Baylor Scott & White, Memorial Hermann Health Mega Merger Called Off
Two major Texas hospital systems, Baylor Scott & White Health in Dallas and Memorial Hermann Health System in Houston, called off a mega merger deal Tuesday that would have created the largest hospital system in the state.
No specific reason was given for the cancellation.
“After months of thoughtful exploration, we have decided to discontinue talks of a merger between our two systems. Ultimately, we have concluded that as strong, successful organizations, we are capable of achieving our visions for the future without merging at this time,” a hospital spokesperson said in a joint statement. “We have a tremendous amount of respect for each other and remain committed to strengthening our communities, advancing the health of Texans and transforming the delivery of care. We will continue to seek opportunities for collaboration as two forward-thinking, mission-driven organizations.”
If the merger had passed, the system would have managed 68 hospitals and more than 73,000 employees. It also would have created one of the largest not-for-profit systems by revenue, according to Modern Healthcare.
Baylor Scott & White Health and Memorial Hermann Health signed a letter of intent in October to merge “to further strengthen communities, advance the health of Texans and transform the delivery of healthcare.”
Another huge year for hospital, healthcare mergers
While this mega merger deal fell through, several other major joint ventures made headlines in 2018, capping off another year of increased mergers and acquisitions activity in the healthcare industry.
The total volume of deals increased by 14.4 percent from 2017 to 2018, according to an analysis by PricewaterhouseCoopers, although the value of those deals declined more than 30 percent, and slowed some in Q4.
Of all the healthcare deals in 2018, the largest and most notable was CVS Health’s acquisition of Aetna for $69 billion, which was finalized in November.
“Today marks the start of a new day in healthcare and a transformative moment for our company and our industry,” CVS Health President and Chief Executive Officer Larry J. Merlo said in a press release. “By delivering the combined capabilities of our two leading organizations, we will transform the consumer health experience and build healthier communities through a new innovative health care model that is local, easier to use, less expensive and puts consumers at the center of their care.”
Healthcare leaders are still waiting to see how this landmark deal will impact the industry and marketplace, and providers are wary that the merger could create a landscape that incentivizes use of urgent care centers and retail clinics over traditional healthcare facilities, according to a report from Revcycle Intelligence.
Merger and acquisition activity in 2019 is expected to remain strong, although healthcare executives expect the actual volume of activity will level out, according to a recent survey by Capital One.
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