The merger of Indiana's largest not-for-profit hospital and its only academic medical center gained final approval last week, but the new corporation won't be operational until the end of the year.
The trustees of Indiana University last week approved a definitive agreement allowing 611-bed Indiana University Medical Center and 923-bed Methodist Hospital of Indiana, both in Indianapolis, to merge assets. Methodist's board of trustees and corporate board, Methodist Health Group, approved the deal last month (April 29, p. 4).
"Because this consolidation is starting from a position of strength, the new organization can control the pace of change and do it thoughtfully, carefully and with sensitivity to the impact on employees and the community," said William Loveday, Methodist president and chief executive officer. Loveday will be CEO of the new not-for-profit corporation, which hasn't been named.
The $1.1 billion deal would merge the two hospitals' balance sheets, governance and leadership, creating a corporation with one CEO. The combined entity is expected to have annual net revenues of about $1 billion.
Executives had hoped to have the new corporation operational by July 1, but they said it simply took more time to finalize the mammoth consolidation. The deal has undergone intense scrutiny, including an eight-month review last year by a blue-ribbon task force led by Indiana Attorney General Pamela Carter. After the panel committed the hospitals to adequate levels of charity care and to strengthening the presence of the IU medical school, Indiana Gov. Evan Bayh also signed off on the deal.
The hospitals are expected to maintain current charity-care levels and provide similar support for the medical school, which will receive between$8 million and $10 million annually.
The hospitals said they expect to save "at least $50 million per year by the end of five years."