Unity Health is no more. What was once St. Louis' second-largest healthcare system is changing its name as the second of its three founding hospitals has decided to leave the system.
St. Luke's Hospital, a 495-bed facility in the St. Louis suburb of Chesterfield, Mo., announced last week that it will drop its full-fledged membership in Unity and instead will maintain a loose affiliation with the system, effective March 31.
In July, 685-bed St. Anthony's Medical Center, another founding partner, left Unity. Officials said they were frustrated by limited autonomy in the corporate structure. St. Alexius Hospital, a 203-bed hospital owned by St. Anthony's, also left Unity in July.
As part of a restructuring process, Unity will change its name to St. John's Mercy Health Care, effective with St. Luke's departure, reflecting the system's lone founding member: 859-bed St. John's Mercy Medical Center in St. Louis. St. John's will be one of three hospitals remaining in the system.
Along with St. Anthony's and St. Luke's, St. John's formed Unity in 1995. But unlike a true merger, each hospital member maintained separate governing boards in addition to a system board--a cumbersome arrangement that hindered crucial decisionmaking power.
St. Luke's declined to discuss its reasons for leaving Unity. In a written statement, St. Luke's President Gary Olson said the decision "addresses the desire of St. Luke's and Unity members to continue working together while enabling each to maintain their autonomy."
"The structure didn't allow for the desired level of management integration and the ability to truly coordinate clinical services planning," said Jim Hobbs, Unity's former president and chief executive officer.
Along with the changes announced last week, Hobbs was promoted to executive vice president/chief operating officer of Unity's Roman Catholic sponsor, Sisters of Mercy Health System-St. Louis.
Judy Horowitz, vice president with consulting firm Jennings Ryan & Kolb, said such system breakups are not unusual around the country.
"We see a lot of integrated systems disintegrating," she said.
News of the Unity dissolution was welcomed by the purchaser community, which has seen the St. Louis hospital market consolidate into large clout-wielding systems that dampened employers' bargaining power.
"We are encouraged that the market has become less concentrated," said Jim Stutz, executive director of the St. Louis Area Business Health Coalition. "Overall that is a good trend for consumers and purchasers."
Unity's unwinding during the past six months has transformed St. Louis from being a highly concentrated hospital market to a moderately concentrated one, Stutz said.
Before St. Anthony's departure, Unity had controlled 24.4% of the market as measured by discharges, second behind BJC HealthCare's 32.4%. Once St. Luke's leaves, the renamed system will be third in the market with a 10.1% share.
In addition to St. John's Mercy Medical Center, hospitals remaining in the system include 185-bed St. John's Mercy Hospital in Washington, Mo., and 115-bed St. Clement Health Services in Red Bud, Ill. The system also includes Unity Medical Group, a 200-physician practice.
The newly named organization will continue to be sponsored by Sister of Mercy Health System-St. Louis, the nation's fourth-largest Roman Catholic healthcare system.
The affiliation between St. John's Mercy Health Care and St. Luke's is expected to include continued joint ownership of an ambulatory-care organization and participation in a shared managed-care contracting function, Hobbs said. Also, physicians employed by Unity in practices closely affiliated with St. Luke's will be given the option of contracting directly with St. Luke's or remaining as members of Unity Medical Group.
In October, Unity sold its 1-year-old, $40 million corporate headquarters building in a western St. Louis suburb to move its shrinking corporate staff to a smaller facility.
St. Luke's reported net income of $11.2 million on $195.8 million revenue for the fiscal year ended June 30. Unity declined to provide systemwide financial data.