The planned merger of BJC HealthCare and Saint Luke’s Health System, announced Wednesday, signals the latest pursuit of a statewide health system.
The combination of St. Louis-based BJC and Kansas City, Missouri-based Saint Luke’s would form a system that spans Missouri, with 28 hospitals and roughly $10 billion in annual revenue. The proposed cross-market transaction mirrors recent deals, including the proposed merger of Milwaukee-based Froedtert Health and Neenah, Wisconsin-based ThedaCare, the deal completed in November between La Crosse, Wisconsin-based Gundersen Health System and Green Bay-based Bellin Health, and the February 2022 merger of Southfield, Michigan-based Beaumont Health and Grand Rapids, Michigan-based Spectrum Health.
Generally, administrative efficiencies drive statewide or regional transactions. Health systems executives also say that growing their networks will allow the organization to improve recruitment and retention, boost quality by sharing treatment strategies, expand service offerings and advance research efforts.
Since there is minimal if any market overlap, cross-market systems would not consolidate services like orthopedics or cardiovascular care. Instead, the mergers could reduce the cost of back-office overhead related to supply chain, facilities, revenue cycle, technology and other departments. While research shows that hospital mergers among facilities with overlapping service areas typically lead to higher prices as those facilities exert bargaining leverage with insurers, there is less data on cross-market hospital combinations and their effects on prices.
Here is how BJC and Saint Luke’s plan shapes up compared with some other letters of intent and completed transactions.
