A 73-member board would oversee the Methodist/Episcopal Health Care System in Houston under a proposed agreement to merge two Texas Medical Center hospitals with more than 2,000 licensed beds and more than $1 billion in assets.
Although the merger of Methodist Hospital and St. Luke's Episcopal Hospital was announced in September, few details about the proposed merger agreement between two of Texas' largest not-for-profit hospitals were available until last week.
Details of the system's governance were distributed to 900 delegates of the Episcopal Diocese of Texas, which approved the concept of the merger on Nov. 12. In addition, the Texas Conference of the United Methodist Church approved the merger in principle the same day at a separate meeting.
The merger also has been cleared by the Federal Trade Commission.
Steering committees from both hospitals are developing a final merger agreement, which is expected to be completed by the end of the year. The church sponsors would be asked to approve the agreement in February.
When the merger is completed, the hospitals would be governed by a complex system of boards, the highest ranking of which would be a board of electors, made up of 47 Methodist representatives and 26 Episcopal representatives. The ratio on that board would represent the percentage of assets each system brings to the merger.
The primary authority of the board of electors would be to select the healthcare system's board of directors, but it also would have reserved powers that include the authority to merge, dissolve the system or issue new debt.
The system board would govern the Methodist/Episcopal Hospital, the foundation, medical office buildings, and an HMO, if the system decides to start one. The system board of directors would have equal representation from Methodist and Episcopal groups. Each group would have 11 members, including the bishops from both religious organizations. The newly merged hospital's new chief executive officer would be the 23rd board member.
The Methodist/Episcopal Hospital also would have its own 18-member board, which would include an equal amount of Methodist and Episcopal representatives.
In 1993, Methodist Hospital System reported $20 million in net operating income on net patient revenues of $585.6 million, according to MODERN HEALTHCARE's Multi-unit Providers Survey. The system reported assets of $1.3 billion.
St. Luke's declined to provide any financial data.