Two large Oklahoma City hospitals have agreed to merge into a new parent organization, Oklahoma Health System.
The combined hospitals are expected to control 27% of the state's largest market.
The agreement, announced last week, is between 380-bed Southwest Medical Center and 577-bed Baptist Medical Center. The new parent organization also includes Baptist Healthcare of Oklahoma. In October, Baptist Medical Center agreed to merge with Baptist Healthcare, a system of 14 rural hospitals (Oct. 18, 1993, p. 16). All of those hospitals are located outside the Oklahoma City market.
Oklahoma Health System will have 16 hospitals with 1,705 beds and $500 million in combined annual revenues.
"It makes a lot of sense geographically, and our hospitals are among the few not-for-profits in this community that are locally controlled," said Stanley Hupfeld, Baptist Medical's president and chief executive officer.
Oklahoma City has been a divided market in which Baptist Medical operated on the northern side of the Canadian River, which runs through town, and Southwest operated on the south, Mr. Hupfeld said. Each hospital has its own medical staff, although some surgeons practice at both facilities, he said.
The two hospitals have about 27% of the hospital admissions in Oklahoma County, Mr. Hupfeld said.
Initially, the medical staffs will not be merged. Instead, the new system will focus on administrative consolidation, which Mr. Hupfeld estimated will save the two hospitals $25 million over the next five years.
Mr. Hupfeld will be president and CEO of the new system. Southwest's president, Thomas R. Rice, and Baptist Healthcare's president, Joe Ingram, will be executive vice presidents. The new system will be governed by a 25-member board. Baptist Medical will appoint 13 directors, while Southwest and Baptist Healthcare each will appoint six directors.
Mr. Hupfeld said the hospitals planned to file pre-merger notification documents with the Federal Trade Commission late last week. He said he didn't expect any antitrust objections from federal authorities.