Mergers Have Defined Healthcare in Recent Years, but They Aren’t the Only Way Forward

Merger announcements have dominated recent news in healthcare. In 2018, Advocate Health Care merged with Aurora Health Care to form Advocate Aurora Health, one of the largest not-for-profit systems in the country. But that merger only took place after Advocate spent two and a half years and $15 million on a failed attempt to unite with NorthShore University HealthSystem.[1] And Catholic Health Initiatives and Dignity Health recently merged to create CommonSpirit Health after more than two years of challenging negotiations.[2] However, recent developments show that a merger is not always the way to go. Rumors circulated for months that St. Louis-based Ascension Health was considering a merger with Renton, Washington’s Providence St. Joseph Health, to create the nation’s largest system of hospitals. But the two health systems ultimately decided to shelve talks, opting to restructure their organizations instead.[3]

A particularly striking example of a merger exploration that ended before completion is that between Baylor Scott & White Health and Memorial Hermann Health System. The systems recently announced they had dissolved their consolidation plan after previously signing a letter of intent and conducting months of talks.[4] The deal would have combined two of the most well-known hospital systems in Texas to create the largest nonprofit integrated delivery system in the state, and possibly the southwest.[5] In a joint statement the two hospital systems said, “Ultimately, we have concluded that as strong, successful organizations, we are capable of achieving our visions for the future without merging at this time,” adding, “We will continue to seek opportunities for collaboration as two forward-thinking, mission-driven organizations.”[6] Ultimately, consolidation is the right move for some organizations, but many independent hospitals simply don’t want to be acquired or take part in a major merger.

As stated in our previous post, by design, stand-alone hospitals differ significantly from their larger counterparts. They value their independence, flexibility, and freedom from corporate mandates or value extraction that could ultimately detract from care. They are fixtures in their communities and have formed generational relationships with the patients they serve. They pride themselves on their agility and aptitude to bypass large-system bureaucracy.[7] Though there are undeniable strengths to remaining independent, there are just as many challenges. One of them is size and scale, which puts smaller hospitals in a difficult position when negotiating with insurers and suppliers. Often, they don’t have the perceived stature of larger systems to command the desired results. Mergers are one way to build scale, but it isn’t the only way. TPC offers an alternative that allows hospitals to remain independent while gaining the benefits of economies of scale and the shared knowledge of a larger system.

TPC creates a virtual system of independent, community-based hospitals that together achieve sizable tangible value that lowers costs and enables Members to remain competitive. By way of standardization and performance optimization at the financial, operational, and clinical levels, TPC builds a framework for hospitals to remain independent but take advantage of their collective size to achieve similar results to national systems. This approach allows stand-alone hospitals to remain agile, while also providing access to the resources and benefits that only large scales allow. It’s the perfect solution for hospitals disinterested in merging, but wary of remaining isolated in an industry undergoing major change.

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