Baptist Memorial Health Care and Mississippi Baptist Health Systems completed their merger, the companies announced Monday, creating the largest not-for-profit healthcare system in the region.
The deal, which federal regulators already have approved, combines Memphis-based Baptist Memorial's 17 hospitals across Arkansas, Mississippi and Tennessee with Mississippi Baptist's four hospitals. It will allow the combined organization to expand its reach and improve the level of care, hospital executives said. Terms were not disclosed.
The deal is the latest in a flurry of major hospital mergers as systems look to expand their footprint to compete on a national level and create economies of scale. Hospital system executives claim they are better together with the ability to lower costs and improve care by streamlining operations. Critics argue that fewer competitors will translate to higher costs.
"By combining our resources, we can invest more heavily in our team members, facilities and equipment, which will result in greater access to new technologies, best practices and medical specialists," Jason Little, president and CEO of Memphis-based Baptist Memorial Health Care, said in a statement. "Ultimately, this merger is about elevating and expanding the care we provide to our communities in Mississippi and beyond."
Baptist, which is scheduled to open a new $300 million hospital in Oxford, Miss., later this year, has been working on the deal with Jackson-based Mississippi Baptist since September. Mississippi Baptist is in the process of moving its electronic health records to Baptist Memorial's Epic system.
"Importantly, our ability to be competitive in a healthcare environment that is increasingly complex, competitive and challenging will be significantly enhanced," said Chris Anderson, president and CEO of Mississippi Baptist.
Several major mergers have been announced this year including the Massachusetts-based Beth Israel Deaconess and Lahey Health deal, the Fairview Health and HealthEast merger proposal in Minnesota, Pennsylvania-based UPMC system and PinnacleHealth deal, and the Steward Health Care System of Boston and Community Health Systems proposal.
There are two types of hospital mergers currently in play, said David Jarrard, CEO of healthcare consulting firm Jarrard Phillips Cate & Hancock. Regional health systems are acquiring nearby facilities to grow market share while major regional systems combine resources, expertise and geographies to provide population health management, he said.
"The Baptist hospital merger is an excellent example of culturally aligned regional health systems coming together for scale and shared expertise," Jarrard said. "It's a smart move for both organizations and we expect to see more like it."
From 2001 to 2016, the number of short-term acute-care hospitals nationwide was reduced by 238, according to the not-for-profit MergerWatch, which studied the regulatory laws by state.
Those that are left are merging at a faster pace: 112 hospital deals were made in 2015, up from 66 in 2010, according to analysis by consulting firm Kaufman, Hall & Associates.
Without effective competition, hospitals can secure higher price concessions in their negotiations with insurers, the Center for Health Policy at the Brookings Institution and Carnegie Mellon University's Heinz College said in a recent paper. Hospitals with fewer than four local competitors are estimated to have prices nearly 16% higher on average—a difference of nearly $2,000 per admission, researchers found.
"As large corporations gobble up facility after facility, it appears that caring at a human level is being lost," said Martine Brousse, a patient advocate in Santa Monica, Calif., who negotiates fee reductions with providers.
Baptist Memorial and Mississippi Baptist have 100-plus-year histories in their communities. Baptist Memorial was founded in 1912 with one hospital in downtown Memphis while Mississippi Baptist was Jackson's first hospital, erected in 1911.
