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 BJC based in St. Louis and Saint Luke’s based in Kansas City, Missouri will form a system spread across Missouri, with 28 hospitals and about $10 billion in annual sales. The proposed intermarket transaction reflects recent transactions, including the proposed merger of Milwaukee-based Froedtert Health and Neenah, Wisconsin-based ThedaCare, and the November completion agreement between Health Systems. Gundersen Health is headquartered in La Crosse, Wisconsin and Bellin Health is headquartered in Green Bay and the February 2022 merger between Beaumont Health based in Southfield, Michigan and Spectrum Health based in Grand Rapids, Michigan.
Generally, administrative efficiency drives transactions across the state or region. Health system executives also say that growing their network will allow the organization to improve recruitment and retention, improve quality by sharing treatment strategies, expand delivery services and enhance research efforts.
Because there is little if any market overlap, intermarket systems will not consolidate services such as chiropractic or cardiovascular care. Instead, mergers can reduce the overall administrative costs associated with supply chain, facilities, revenue cycles, technology, and other divisions. Although research shows that hospital mergers between facilities with overlapping service areas often lead to higher prices when those facilities use bargaining leverage with insurers, there are few more data on the mix of hospitals in the market and their impact on prices.
Here’s how the BJC and Saint Luke’s plan came to be compared to several other completed letters of intent and transactions.
