BJC HealthCare of St. Louis and Saint Luke’s Health System of Kansas City are exploring a merger that would yield a 28-hospital, $10 billion, integrated, academic health system, the nonprofits announced Wednesday.
The two have signed a nonbinding letter of intent and “are working toward reaching a definitive agreement in the coming months” with a targeted close before the end of the year, they said. The cross-market deal would be subject to regulatory review and other customary closing conditions.
“Together with Saint Luke’s, we have an exciting opportunity to reinforce our commitment to providing extraordinary care to Missourians and our neighboring communities,” BJC HealthCare President and CEO Richard Liekweg said in the announcement. “Amid the rapidly changing health care landscape, this is the right time to build on our established relationship with Saint Luke’s. 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.”
Both systems are based in Missouri but “serve distinct geographic markets,” they said.
St. Louis-based BJC Healthcare’s footprint is spread across the greater St. Louis, southern Illinois and southeast Missouri regions. It comprises 14 hospitals including two (Barnes-Jewish and St. Louis Children’s) affiliated with Washington University School of Medicine. It also operates multiple health service organizations providing home health, long-term care, workplace health and other offerings.
Kansas City, Missouri-based Saint Luke’s is a faith-based system with 14 hospitals and more than 100 offices throughout western Missouri and parts of Kansas. It also provides home care and hospice, adult and children’s behavioral care and a senior living community.
Should the deal close, both systems would continue to serve their existing markets and maintain their branding. The joined organization would be run from dual headquarters with BJC’s Liekweg as CEO but an initial board chair hailing from Saint Luke’s.
The organizations said their combination will expand the services available to patients and provide an estimated $1 billion in annual community benefits. The arrangement would also fuel clinical and academic research while supporting greater workforce investment.
“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,” Saint Luke’s President and CEO Melinda Estes, M.D., said in the announcement. “Through our decade-long relationship as a member of the BJC Collaborative, we’ve established mutual trust and respect, so the opportunity to come together as a single integrated system that can accelerate innovation to better serve patients is a logical next step.”
Years of health system consolidation have led to increased scrutiny from regulators and lawmakers, who have worried that mergers can harm competition. To date, however, efforts to block announced deals have been limited to situations where the parties are operating in the same geographic markets.
Larger, cross-market deals like BJC and Saint Luke’s have become more common in the past year, potentially due to the opportunity to distribute operational risks with limited regulatory scrutiny, analysts have noted. Multiple health policy researchers have warned that these deals are relatively understudied and, according to some prior analyses, very rarely translate to the quality and consumer cost savings often touted by health systems.