Updated Nov. 29 with information on finalized agreement
St. Louis-based BJC HealthCare has finalized a merger agreement with St. Luke’s Health System, of Kansas City.
The two companies announced their intent to complete the $10 billion merger in May, but the Federal Trade Commission and other regulators needed to sign off on the agreement before it could take effect.
The two health systems expect to finalize the deal by Jan. 1, with St. Luke’s officially joining the BJC system.
“As two nonprofit academic health systems we are ideal partners as we look to meet the evolving health care needs of our community,” said BJC President and CEO Richard Liekweg, who will become CEO of the combined system, in a letter to BJC patients. St. Luke’s CEO Melinda Estes will retire at the end of the year.
Original story:
Officials at St. Louis-based BJC Healthcare on Wednesday announced that the company plans to combine with St. Luke’s, a Kansas City-based health system.
Boards of directors from the two companies have signed off on the plan, and officials from the two health systems have signed a letter of intent to move ahead with the $10 billion merger.
“Amid the rapidly changing health care landscape, this is the right time to build on our established relationship with Saint Luke’s,” said BJC President Richard Liekweg in a statement.
“With an even stronger financial foundation, we will further invest in our teams, advance the use of technologies and data to support our providers and caregivers, and improve the health of our communities.”
BJC Healthcare operates Barnes-Jewish Hospital, the largest hospital in Missouri, and has 30,000 employees working at its 14 hospitals and other locations. Officials from the company declined to elaborate beyond the press release.
St. Luke’s is a faith-based hospital network that operates 14 locations in the bi-state Kansas City area, employs around 13,000 people and serves as a training hospital for students at the University of Missouri-Kansas City medical school.
The two systems have a combined revenue of $10 billion.
(St. Luke’s in Kansas City does not operate St. Luke’s hospitals in Chesterfield or Des Peres.)
“Our integrated health system, with complementary expertise and team of world-class physicians and caregivers, will set a new national standard for medical education and research,” said St. Luke’s Health System President and CEO Melinda Estes.
If regulators approve the merger, the health systems will maintain their existing names and brands and operate from dual headquarters in St. Louis and Kansas City, according to a press release.
Officials say they expect the two companies will reach a definitive agreement before the end of the year, but the decision will be subject to approval from regulators.
Since 2012 St. Luke’s has been part of the BJC Collaborative, a group of health systems that work to pool resources and save money.
Cross-market mergers of health systems in geographically separate markets have increased in the last decade, according to analysis published this year in the Journal of the American Medical Association.
The long tail of the coronavirus pandemic could accelerate other such mergers as hospitals seek ways to reduce costs as workers have fallen out of the labor market and health systems pay more to retain nurses and other employees. Costs for equipment and other supplies have also gone up, the authors said. Combining gives hospitals more latitude to negotiate prices.
“Together, these factors likely increased hospital motivation to achieve scale in labor and supply markets,” the authors wrote.
Because the phenomenon of long-distance mergers is new, there is limited evidence of the effect on patient costs and health outcomes, the analysis said.
Since 2012, St. Luke’s has been part of the BJC Collaborative, a group of health systems that work to pool resources and save money.
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