Merger to Establish Big Hospital Chain

Two large hospital systems in the Midwest and mid-Atlantic said they plan to merge, in another example of hospitals bulking up as the battle for patients becomes fierce.
 A combination of Bon Secours Health System Inc., a nonprofit based in Marriott sville, Md., and Mercy Health, a nonprofit in Cincinnati, would rank as one of the largest chains nationwide, with 43 hospitals and operations in seven states.
 The combination would add to a string of health-care deals that aim to create behemoths with more sway.
 “Mercy Health and Bon Secours share a vision to improve the health of the communities we serve as the lowcost, high-value provider,” John Starcher Jr., Mercy's president and chief executive officer, said.

The system would have 43 hospitals and operations in seven states.

A spokeswoman for Bon Secours said it is “focused on the patients and communities we serve, and we do that in a variety of ways depending on the community and the resident needs.”
 Recently announced transactions would expand some hospital systems' national and regional footprint or beef up market share. Others—such as CVS Health Corp.'s plan to buy Aetna Inc. for about $69 billion and UnitedHealth Group Inc.'s push to snap up physician groups and clinics— seek to steer patients away from costly hospital settings.
 More consolidation could mean greater pricing power for hospitals, some economists warn. That could pose higher costs for employers—the primary source of health insurance in the U.S.—and patients already grappling with rising health-insurance premiums.
 Research suggests hospital mergers in the same market or state cause prices to rise, but there is less evidence on what happens to prices when deals combine hospitals in different states, said Leemore Dafny, a professor at Harvard Business School.
 Mercy operates 21 hospitals across Ohio and two in Kentucky. One of Bon Secours's 20 hospitals is in Kentucky. The nonprofit owns or jointly owns hospitals in New York, Maryland, Virginia and South Carolina, with additional outpatient and long-term care locations in Ohio and Florida.
 Hospital deal makers say they are seeking greater scale to lower costs and jointly invest in new initiatives. Research published last year in the Journal of Health Economics found costs dropped 4% to 7% on average at acquired hospitals after a deal.
 Combined annual revenue for Bon Secours and Mercy would total about $8 billion, based on 2017 revenue provided by Mercy and included in Bon Secours's financial statements.
 The merger of the nonprofits, which are both affiliated with the Roman Catholic Church, will need approval from the Federal Trade Commission and the Vatican, a spokeswoman for Mercy said.
 In December, The Wall Street Journal reported Ascension and Providence St. Joseph Health were in talks to create the nation's largest pure hospital operator, with 191 hospitals.
The news followed an agreement between Catholic Health Initiatives and Dignity Health to combine their 139 hospitals.

BY MELANIE EVANS

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