Some of Houston's largest providers last week revealed they're eyeing alliances or mergers that would consolidate the market.
Sisters of Charity of the Incarnate Word Health Care System and Memorial Healthcare System, both based in Houston, said they will study the development of a joint network.
Meanwhile, 1,117-bed Methodist Hospital and its rival, 646-bed St. Luke's Episcopal Hospital, said they're discussing a merger or affiliation.
Houston's healthcare marketplace changed drastically last year with the creation of Columbia/HCA Healthcare Corp. The company now operates nine hospitals in the area and dominates in beds, with 3,000 staffed beds.
A network of Incarnate Word and Memorial would include seven acute-care hospitals with 2,000 staffed beds, two specialty hospitals, a nursing home and outpatient center in the Houston area. Incarnate Word operates three other hospitals in southeast Texas and six outside the state.
Incarnate Word, a Roman Catholic system, reported operating income of $196.3 million on net patient revenues of $1.2 billion in 1993, according to MODERN HEALTHCARE's Multi-unit Providers Survey. Memorial, a not-for-profit system, had operating income of $21.5 million on net patient revenues of $349.9 million.
The systems expect to complete their study in 90 days.
A merger with St. Luke's is one of many options Methodist is exploring with various providers, a Methodist spokeswoman said. She declined to name other options, saying discussions are "informal."
After the Houston Chronicle reported that the two hospitals are in the midst of serious merger negotiations, they issued a joint written statement.
"Speculation on the details of any alignment is premature since we are in the very earliest stages of discussion," it said.
A merger would align competing and highly respected programs in cardiovascular surgery and orthopedics. Methodist reported net income of $54.7 million on net patient revenues of $482.7 million in 1992, according to HCIA, a Baltimore-based healthcare research firm. St. Luke's had net income of $10.1 million on net patient revenues of $303.3 million in 1992, HCIA said.