The Federal Trade Commission and Texas attorney general will review the deal's potential impact on competition. Scott & White operates hospitals clustered around Temple, Texas, a city about 130 miles south of Dallas that's home to its flagship facility and headquarters. Baylor—the larger party to the deal—has all of its hospitals in the Dallas-Fort Worth area. Their service areas come close but don't overlap.
The Texas Insurance Department must also review the deal because Scott & White owns an insurer. That was one thing that drew Baylor to the table, Allison said.
The shift underway to pay hospitals and doctors to better manage patients' care and costs requires data collection and analysis and expertise managing financial risk, which an insurer can provide, Allison said. Baylor saw an opportunity in the Scott & White deal to gain access to those assets, which it would otherwise have to develop internally or acquire, though deals or joint ventures.
The deal is expected to close this fall. If successful, the combined system will have $7.7 billion in assets and $6 billion in net revenue, Allison said, citing last year's audited financial statements. The newly created organization would be called Baylor Scott & White Health.
Allison said he believed that “execution risk”—threat to operations and strategic goals that merging companies face while a transaction diverts time and resources—will be minimal because a cultural audit found the potential partners “much more alike than different.”
Allison would be named CEO of the new company and Pryor is expected to be its president and COO.
Follow Melanie Evans on Twitter: @MHmevans
