The two-hospital Iowa Health System has made an effort to ensure it remains the largest healthcare system in the state by announcing a merger with a third hospital.
St. Luke's Methodist Hospital, a 441-bed facility in Cedar Rapids, will join the Iowa Health System, which was formed after last year's merger of
710-bed Iowa Methodist Medical Center and 319-bed Iowa Lutheran Hospital, both in Des Moines.
"It has to be a merger if we are going to talk about clinical integration," said St. Luke's President Sam Wallace, who will become executive vice president of the revamped Iowa Health System. "We would like to offer a product that would cover the whole state. Iowa has only 2.8 million people to begin with, so we have to think in terms of statewide planning."
With nearly $400 million in net patient revenues and assets of some $450 million, the Iowa Health System is expected to be a powerhouse in attracting insurance contracts, executives said.
The merger is the Iowa Health System's first venture out of the Des Moines market. St. Luke's market share is 62% of a seven-county service area, with a population of 300,000, which includes Iowa's second-largest city, Cedar Rapids, population 120,000.
Executives don't expect any resistance to the merger from the U.S. Justice Department, since less than 10% of the three hospitals' service areas would overlap. Cedar Rapids is a 21/2-hour drive from Des Moines.
The Iowa Health System name will be used as a holding company for Methodist, Lutheran and St. Luke's. System officials believe it will grow to include other Iowa hospitals.
David Ramsey, currently Iowa Health System's president and chief executive officer, will serve as presi-dent of the new Iowa Health System. "We will provide consistent, high-quality services that will be conveniently available to patients almost statewide," Mr. Ramsey said.
The system's next steps are to attract other hospitals through mergers with facilities across the state, Mr. Wallace said. "Right now, eastern Iowa is joining central Iowa (through the merger), and we'd like to bring in far western and far eastern Iowa," he added.