Coming Soon to Your City: More Hospital Mergers

UPON THE COMPLETION OF THEIR MERGER AT THE END OF SEPTEMBER, Baylor Health Care System and Scott & White Healthcare became the largest not-for-profit health system in Texas, boasting $8 billion in assets and annual revenue of about $6 billion.

Now known as Baylor Scott & White Health, the system operates 43 hospitals and 500 patient care sites. Affiliated physicians total 6,000 and there are 34,000 employees. The reason I am calling your attention to this mega-merger between two big health systems is that it is not unique!

Also on the last day of September, the merger was finalized between New York Mount Sinai Medical Center and Continuum Health Partners. This created one of the largest not-for-profit health systems in New York. It has 3,500 beds on seven campuses throughout the New York City metro area. It employs 36,600 people and has 6,600 affiliated physicians.

The creation of huge health systems via merger is a sign of the future. Health system administrators recognize that Kaiser Permanente and Geisinger Health—among the integrated health system models studied by experts tasked with creating the accountable care organization (ACO) model—are very large integrated care systems that cover a big geographical area. This is one reason behind the belief that larger ACOs will be more successful at controlling the cost of care and thereby earning adequate reimbursement from one year to the next.

If true, then it is easy for me to predict that we shall continue to see ongoing consolidation of hospitals and health systems, particularly in the nation’s largest cities. It is possible that cities like Chicago, Houston, and San Francisco will eventually see just three or four super-sized integrated health systems that dominate healthcare across the entire urban area.

For anatomic pathologists, this points to the need for smaller pathology groups within an urban metro area to consolidate into larger pathology practices. The mega-sized health systems that emerge in these cities will want to do business with pathologists who practice in a setting that offers local sub-specialty expertise and the latest molecular and genetic technologies.

For hospital laboratories, this same ongoing hospital and health system consolidation is likely to mean a further concentration of inpatient and outpatient testing into the larger core lab facilities owned by these mega-health systems.


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