The two largest healthcare systems in Baltimore and Washington have agreed to a full-asset merger, setting themselves up as end points working toward the middle of the 35-mile-long population corridor between them.
The union of Helix Health and Medlantic Healthcare Group would create a system with 2,500 beds, 4,500 affiliated physicians and $1.3 billion in operating revenues. The deal is expected to close this spring, pending customary antitrust approvals.
Their long-term strategy, though, is to move beyond their strongholds and into a suburban "megalopolis" where the husband may head southwest to Washington while the wife leaves for Baltimore each workday, said Helix spokesman Gerry Blair.
Medlantic's system includes flagship Washington Hospital Center, National Rehabilitation Hospital and a range of subsidiaries. Helix includes five community hospitals and a physician organization with more than 1,000 doctors.
"With these two metropolitan areas coming closer together, we have to respond and develop a network to suit the changing patterns of our communities and lifestyles," said Michael Merson, president and chief executive officer of Lutherville, Md.-based Helix.
John McDaniel, CEO of Washington-based Medlantic, said the two companies are discussing mergers with a half-dozen hospitals as part of a "fill-in" strategy. Other deals probably will be full-asset mergers, not alliances, he said.
"When it really comes time to implement and effect this organization in the right way, affiliations and loose alliances won't do it," McDaniel said.
Helix and Medlantic had formed a joint venture in 1996, called BW Health, to explore ways "to pull us together" with the assumption that the regions would eventually link up in healthcare, Merson said.
That strategy moved to the back burner last fall when former Helix CEO James Oakey decided to explore a consolidation with Baltimore's Johns Hopkins Medical Institutions, parent of the renowned teaching and research facility.
Merson, who was vice chairman of the Helix board at the time, said the Johns Hopkins leadership had changed and "we owed it to ourselves to explore fully" a possible combination of Baltimore's two biggest systems, which already had some academic relationships.
While the talks turned up a lot of similarities between the organizations, they also revealed that "at this juncture, there are some things that would keep our organizations, as different as they are, apart," Merson said. Local news coverage had pegged the problem as a culture clash between a community-based system and an academic research institution.
During the week of Nov. 10, "some unresolved issues" prompted an end to talks, he said. On Nov. 11, Oakey resigned for personal reasons.