Baptist Health South Florida, Coral Gables, and Bethesda Health, Boynton Beach, Fla., have agreed to merge within the next two years.
The two not-for-profit systems announced Friday that they would combine operations by September 30, 2017, pending customary and regulatory approval. The two hospitals will retain their brands in the combined system, which will include seven hospitals from Baptist and two from Bethesda.
Roger Kirk, president and CEO of Bethesda, said the merger is “certainly not for financial reasons."
“None of our discussions have been financially motivated at all,” Kirk said. “Both institutions are extremely financially stable institutions.”
But financial statements show that both systems have suffered operating losses over the past year.
Bethesda reported an $8.5 million operating loss in the third quarter caused by declining revenues and higher expenses, partially due to a nearly doubled cost for contract labor. This quarter's loss is nearly three times higher than the same period the year before, when the system lost $2.9 million.
Baptist reported a $5.2 million operating loss in the third quarter, down significantly from a $74.7 million operating surplus reported during the same time the year before. The results were driven by a $55.5 million operating loss attributed to the system's medical group.
Wayne Brackin, Baptist Health’s executive vice president and COO, said in a statement that Bethesda will be a “strong anchor” for Baptist in the northern parts of South Florida.
“There is a great cultural chemistry between both organizations,” Brackin said. “We believe that successful health systems need a greater footprint that will support both inpatient and outpatient strategies.”
Kirk said Bethesda is specifically looking to Baptist for help in expanding its outpatient services, as well as its geographic footprint.
“Baptist has a very successful history of strong outpatient programs and services,” Kirk said. “We are also very much focused on our clinical program growth, particularly our heart program and our cancer program.”
Though he claimed finances weren't an issue, Kirk acknowledged that the affiliation was necessary to ensure the systems are able to continue to grow their operations. Eventually, consolidation could force Florida hospitals into just seven to 10 large systems, he predicted.
“I think it's going to be very difficult for standalone systems to compete,” Kirk said. “We're in a very competitive market, currently a very for-profit dominated market. I think you're going to have to be a part of something larger … and I think that coupled with the opportunities that we have to drive clinical excellence and expansion of clinical programs, it makes it the right thing to do.”
