Priyanka Dayal McCluskey and Robert Weisman at the Boston Globe report that Boston Medical Cemter and Tufts Medical Center are considering a merger, "a deal that, if approved, would be the biggest union of Boston teaching hospitals in nearly two decades."
They note:
A merger would link two nonprofit hospitals that both treat many low-income patients and have endured financial struggles.
While such conversations are worth pursuing, the issue facing the institutions is whether they would be stronger together than they are separately. If not, this could be a case of strapping two leaky lifeboats together, leading to a faster demise than if they remained apart.
What are the obstacles to success? First, one of the consequences of the Affordable Care Act has been a diminution in public support for safety net hospitals, like BMC. There's no indication that government policy will change on that front.
Second, TMC has the weakest referral base of all the teaching hospitals in Boston and, despite best efforts on that front, it remains behind the other big hospitals on that front.
Third, BMC has a large number of unions (is it 14?) that, in the words of a prior CEO, "make it impossible to manage."
For a merger to succeed financially, we need to look for accretive value. Would it be possible to eliminate layers of overhead, achieve economies of scale in purchasing and other functions, and negotiate better contracts with insurers?
Is it possible to rationalize areas of clinical care? For example, both hospitals have kidney transplant programs that are, frankly, too small to justify in the own right. By combining them, costs could be reduced and outcomes likely improved. Might there be other examples?
But it is often difficult to accomplish such rationalizations, in that the doctors in each hospital might feel a proprietary interest in their programs. Someone would have to negotiate a new clinical leadership agreement.
Which brings up the biggest issue of all: Most mergers are not mergers. They are takeovers by one party. The BIDMC example is apt. A so-called merger of New England Deaconess Hospital and Beth Israel Hospital in the mid-1990's was actually a takeover of the former by the latter. This led to resentment, alienation, and near bankruptcy. (In contrast, the successful "merger" of MGH and Brigham and Women's Hospital to create Partners Healthcare System was not a clinical merger at all.) The cultural issues associated with mergers reign supreme, and I trust that the parties at BMC and TMC are thinking through those aspects as well as the clinical and business aspects.
Interestingly, the Globe story notes that while Tufts is connected with Tufts University School of Medicine and BMC is affiliated with Boston University School of Medicine, "the medical schools . . . would not be part of the deal."
A question to ask is, why not? We don't need to consider a merger of the two medical schools to rationalize their undergraduate medical education and graduate medical education programs. There might be efficiencies to be garnered there. And with the weakness of its other education affiliate, Steward Healthcare, perhaps Tufts Medical School should be considering more of a strategic alliance with its colleagues at BU to ensure the strength of its medical education program.
They note:
A merger would link two nonprofit hospitals that both treat many low-income patients and have endured financial struggles.
While such conversations are worth pursuing, the issue facing the institutions is whether they would be stronger together than they are separately. If not, this could be a case of strapping two leaky lifeboats together, leading to a faster demise than if they remained apart.
What are the obstacles to success? First, one of the consequences of the Affordable Care Act has been a diminution in public support for safety net hospitals, like BMC. There's no indication that government policy will change on that front.
Second, TMC has the weakest referral base of all the teaching hospitals in Boston and, despite best efforts on that front, it remains behind the other big hospitals on that front.
Third, BMC has a large number of unions (is it 14?) that, in the words of a prior CEO, "make it impossible to manage."
For a merger to succeed financially, we need to look for accretive value. Would it be possible to eliminate layers of overhead, achieve economies of scale in purchasing and other functions, and negotiate better contracts with insurers?
Is it possible to rationalize areas of clinical care? For example, both hospitals have kidney transplant programs that are, frankly, too small to justify in the own right. By combining them, costs could be reduced and outcomes likely improved. Might there be other examples?
But it is often difficult to accomplish such rationalizations, in that the doctors in each hospital might feel a proprietary interest in their programs. Someone would have to negotiate a new clinical leadership agreement.
Which brings up the biggest issue of all: Most mergers are not mergers. They are takeovers by one party. The BIDMC example is apt. A so-called merger of New England Deaconess Hospital and Beth Israel Hospital in the mid-1990's was actually a takeover of the former by the latter. This led to resentment, alienation, and near bankruptcy. (In contrast, the successful "merger" of MGH and Brigham and Women's Hospital to create Partners Healthcare System was not a clinical merger at all.) The cultural issues associated with mergers reign supreme, and I trust that the parties at BMC and TMC are thinking through those aspects as well as the clinical and business aspects.
Interestingly, the Globe story notes that while Tufts is connected with Tufts University School of Medicine and BMC is affiliated with Boston University School of Medicine, "the medical schools . . . would not be part of the deal."
A question to ask is, why not? We don't need to consider a merger of the two medical schools to rationalize their undergraduate medical education and graduate medical education programs. There might be efficiencies to be garnered there. And with the weakness of its other education affiliate, Steward Healthcare, perhaps Tufts Medical School should be considering more of a strategic alliance with its colleagues at BU to ensure the strength of its medical education program.