Memorial Hermann to merge with Baylor Scott & White creating largest health system in Texas

1 Oct 2018

By: Todd Ackerman - Houston Chronicle 

Memorial Hermann Health System and Baylor Scott & White Health, the state's largest not-for-profit system, have signed a letter of intent to merge, the institutions announced Monday.

The merger would create a mega-system stretching from Dallas to Austin to Houston, treating patients in more than 30 Texas counties and employing more than 73,000 people across the state.

"This is an opportunity for two progressive, like-minded organizations, who do similar service, to come together and provide a better model of health care," said Chuck Stokes, Memorial Hermann's president and CEO. "Through this combined system, we can reinvent health care to be more consumer-centric and technology-focused."

Jim Hinton, the current CEO of Baylor Scott & White, said the institutions hope to have a definitive agreement completed in the spring and for the new system operations to commence July 1. They are currently in exclusive negotiations, conducting due diligence.

The letter of intent was signed Friday and announced Monday at news briefings in Houston and Dallas.

Hinton said the proposed new system will have a new name to be determined before the merger closes -- "a corporate name that sits in the background" -- but both Memorial Herman and Baylor Scott & White will continue to use their old brand names in their respective service areas.

Scott & White merged with Baylor Health Care System to form Baylor Scott & White Health in 2013. It has 48 hospitals in central and northern Texas. Memorial Hermann has 19 hospitals, including five specialty or small hospital joint ventures.

The new system will be led by Baylor Scott & White officers, at least initially. Hinton will become the new CEO and Ross McKnight, current chair of Baylor Scott & White Holdings Board of Trustees, will serve as the new system board chair.

A vice chair, to be selected by the Memorial Hermann Health System Board of Directors, will be named prior to merger's closing and become chair at the end of McKnight's two-year term.

Hinton said Stokes and Pete McCanna, president of Baylor Scott & White Health, will join Hinton in the CEO's office. Hinton said they wouldn't be co-seconds in command so much as in the new system's Senate and House of Representatives. He said the system will "recognize Stoke's expertise on a lot of things, certainly Houston," and give McCanna and him "a big voice in shaping the overall direction of the new company."

Hinton said the new system will spread leaders around the state and won't make a big deal out of designating a corporate headquarters.

If a corporate headquarters ultimately is based in central or north Texas, the merger would leave Houston Methodist as the last hospital system headquartered in the city and the Texas Medical Center.

Stokes said he doesn't see anything changing from what Memorial Hermann patients are used to.

"Care should be more become convenient, more affordable, a better delivery model," said Stokes. "But patients shouldn't be worried about any other changes."

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