BJC HealthCare and Saint Luke’s Health System signed a nonbinding letter of intent to form a $10 billion nonprofit system with 28 hospitals across Missouri, Kansas and Illinois.
Richard Liekweg, president and CEO of St. Louis-based BJC, would serve as the CEO of the combined health system if a definitive agreement is reached and the transaction passes the customary regulatory review and approvals. The health system’s board would include representation form both BJC and Kansas City, Missouri-based Saint Luke’s.
The systems said they hoped to reach a definitive agreement in coming months and have the transaction close by the end of the year. It would mark the latest regional health system combination, following the likes of the proposed merger of Milwaukee-based Froedtert Health and Neenah, Wisconsin-based ThedaCare and La Crosse, Wisconsin-based Gundersen Health System and Green Bay-based Bellin Health, which completed their deal in November. If the deal closes, BJC and Saint Luke’s would maintain their existing brands and operate from dual headquarters—St. Louis and Kansas City.
BJC, which predominantly operates in central and eastern Missouri, and Saint Luke’s, which mainly operates in the western part of the state, do not have any market overlap among their hospital networks, a BJC spokesperson said. Each system operates 14 hospitals.
The proposed transaction builds off a longstanding partnership between BJC, Saint Luke’s and several other area health systems. The BJC Collaborative, formed in 2012, was designed to improve recruitment and retention, workforce development, broaden the portfolio of supply chain vendors, boost revenue cycle management and bolster data analytics.
BJC recorded a $48 million operating loss on $6.31 billion in revenue in 2022, down from $152.6 million of operating income on $6.02 billion of revenue in 2021. The 2022 data included a one-time impairment charge of $73.4 million.
Saint Luke’s reported $7.3 million of operating income on $2.35 billion of revenue in 2022, down from $147.1 million of operating income on $2.37 billion of revenue in 2021.
The Federal Trade Commission has been ramping up scrutiny of hospital mergers with overlapping service areas, which is in part why large systems have been increasingly looking across states for merger partners. The FTC, which typically argues that prices rise after nearby hospitals merge, is often hesitant to challenge cross-market transactions because antitrust law focuses on in-state transactions and minimal legal precedent exists for cross-state combinations.
BJC HealthCare, Saint Luke’s Health System plan merger is written by Alex Kacik for www.modernhealthcare.com