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ST. LOUIS — BJC Healthcare announced Wednesday afternoon plans to merge with Kansas City-based St. Luke’s Health System.
The healthcare system will retain its own name and operate from two headquarters, one in St. Louis, serving eastern Missouri and southern Illinois, and one in Kansas City, serving western Missouri and parts of Kansas.
BJC Chief Executive Officer Richard Leakweg will serve as CEO of the Integrated Health System. The first chairman will come from St. Luke’s University.
Leakweg said an integrated health system would have a “stronger financial base.”
“In a rapidly changing medical landscape, now is the right time to further develop our established relationship with St. Luke’s Church,” said Liekweg in a press release.
Melinda Estes, CEO of St. Luke’s, said combining them into one integrated system was “the logical next step.”
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If federal and state regulators approve the partnership, it follows the industry trend of consolidating both hospitals and insurance companies.
Gebai, a professor of accounting and health policy at Johns Hopkins University, calls it an “escalating integration game,” in which insurers and health care providers alike scale to gain a bargaining edge. ing.
“The market and regulatory environment is becoming less and less friendly to small businesses,” Bai said. “Then how can the hospital survive? Be stronger.”
Hospitals have struggled to rebuild revenue streams since COVID-19 forced patients to postpone elective surgeries and keep them out of hospitals. And hiring nurses and doctors is becoming more costly and more competitive. Streamlining your back office with a larger system could free up cash for higher salaries.
“People in the health system are looking for efficiencies and finding ways to do the same amount of work with fewer people,” said Ryan Barker, an independent health policy consultant based in St. Louis. “In this kind of environment, everything that can be used now is being used and every penny is being exploited.”
BJC declined to comment outside of the press release, and a spokesperson declined to elaborate on the terms of the deal or the structure of the final integrated system.
Professor Bye of Johns Hopkins University said the deal was more of a merger than an acquisition, and said neither health system had to give up its name or headquarters.
BJC is one of the largest employers in the St. Louis area with over 30,000 employees. It reported 2022 revenues of $6.3 billion and operates 14 hospitals.
St. Luke’s will have over 12,000 employees as of 2022. Based primarily in downtown Kansas City, he operates 14 hospitals. The hospital is not affiliated with the smaller Chesterfield-based St. Luke’s Hospital System.
St. Luke’s Church of Kansas City is a faith-based system. A spokeswoman said it had to do with the Episcopal Diocese.
Both health systems are in the midst of major construction projects. St. Luke’s University broke ground on a $52 million expansion and renovation of the East Hospital at Leeds Summit in April. BJC is building a new building on the site of Queenie Tower on Kings Highway Boulevard.
John A. Romley, a professor at the University of Southern California who studies health policy and economics, said the two plans likely deal with many of the same insurers in Missouri.
“These are market leaders in their respective metropolitan areas that are not too far from each other. You could imagine there would be strategic partnerships that would benefit both parties,” Romley said.
Regulators may consider this partnership, but the fact that the merger will take place in another market makes it easier to clear regulatory scrutiny than a merger of two large systems within one metropolitan area. Romley said it’s possible.
The two healthcare systems are working towards a final agreement. The deal is expected to be completed by the end of the year.
Check out some of our 2022 highlights videos from our St. Louis Post Contingent Staff.
