Many hospitals in today's managed-care environment view consolidation, in the form of mergers or partnerships, as a key to future financial viability.
Rufus Harris, principal of Westmont, Ill.-based consulting company TriBrook/AM&G, will discuss the making of a successful merger in the HFMA session "Best Merger in Delaware and Why it Works" on Monday, June 29, at 3 p.m.
Harris will analyze the 1996 merger of 193-bed Kent General Hospital in Dover, Del., and 72-bed Milford (Del.) Memorial Hospital into Bayhealth Medical Center, based in Dover. He will be joined by Dennis Klima, president and chief executive officer of Bayhealth.
While reducing operating expenses is usually the top reason for a merger, in Bayhealth's situation maintaining local control and autonomy was most important, Harris says.
"This was a proactive merger," he says. "It didn't have to be done."
Bayhealth's other goals were to expand services, reduce costs and position the hospitals to compete for managed-care contracts.
After the merger, Bayhealth added a cardiac catheterization laboratory, and it's planning to add radiation therapy services soon. Administration processes were consolidated, but patient-care services remained intact. Bayhealth projects five-year savings of $17 million.
"(Bayhealth) declared war on overhead, not patient care," Harris says.
He believes the merger was successful because management set realistic goals.
"They did not overshoot," Harris says. "A lot of mergers out there are promising a lot of things that are never achieved. This is one merger that is delivering the bacon."