Bon Secours Health System, Mercy Health to complete merger in the fall

Marriottsville-based Bon Secours Health System and Mercy Health of Ohio expect to complete their merger in the fall, officials with both said Monday. Mercy Health President and CEO John M. Starcher Jr. will head the new health system, while Bon Secours board chairman Chris Allen will lead the new board.

The new entity, which will be the fifth-largest Catholic health system in the country, is to be named Bon Secours Mercy Health, officials said. They described it as a merger of equals that will aim to maintain the identities of both partners. Plans are for executives from each to serve in key leadership roles, officials said. Patients should notice little difference as the current names are preserved on signage, uniforms and badges at the facilities each system now operates.

“Our new ministry has an exciting future before it,” Starcher said in a statement. “It is positioned to be more successful than Mercy Health and Bon Secours ever could be as separate entities. We will expand our services and programs, provide greater access in our markets and help to serve more people.”

Mercy Health, based in Cincinnati, operates 23 hospitals in Ohio and Kentucky. It is not affiliated with Mercy Medical Center in Baltimore.

Bon Secours owns or is affiliated with hospitals in Maryland, Florida, Kentucky, New York, South Carolina and Virginia.

The combined 43-hospital system will span seven states and generate $8 billion in operating revenue, officials said.

Officials declined to be interviewed on the merger until it is completed, Bon Secours spokeswoman Terri McNorton said.

Hospitals around the country are joining forces to gain more market share or operate more efficiently, among other reasons. The most recent merger in Maryland brought the Dimensions Healthcare System together with the University of Maryland Medical System last year.

“This is a wave,” said Barak Richman, a professor of law and business at Duke University who follows hospital mergers. “Hospitals keep eating other hospitals up. That is kind of the way it is happening.”

Ben Steffen, executive director of the Maryland Health Care Commission, said mergers can give hospitals more access to capital for new construction and to expand clinical services and technology.

They can also bring together a hospital engaged with academic medicine, innovative research, and clinical trials with a partner that allows it to expand its patient referral system.

As Maryland’s hospital reimbursement model has moved from counting admissions to capping costs, hospitals are looking for ways to generate revenue and cut expenses. Under the new model, hospitals are required to operate within a budget assigned by state regulators.

Bon Secours and Mercy Health officials said combining the two hospitals will allow them to leverage economies of scale by sharing resources and staff. It will also help them deepen their commitment to communities, they said. Both hospitals follow the Catholic tradition of serving the poor and disadvantaged.

The Bon Secours campus in West Baltimore, which serves a population with high levels of chronic conditions, is known for its programs that address health disparities. It runs a community outreach and social services arm that addresses issues such as unemployment, housing and food insecurity that impact health.

“We will be able to do even more for people who are poor, dying or underserved,” Starcher said.

Cory Capps, an economist with Bates White Economic Consulting who studies health care antitrust issues, says the merger is unlikely to raise antitrust concerns because the hospitals are in different states.

The Federal Trade Commission reviews hospital mergers. With no overlap between the communities the hospitals currently serve, Capps expected a quick review.

Hospital officials announced plans to merge in February. They would not say where the new health system would be headquartered.

In addition to joining hospitals, the merger will bring together 50 home health agencies, hospice agencies, skilled nursing and assisted-living facilities. The system will employ 57,000 associates and more than 2,100 doctors and other advanced clinicians. It will handle more than 10 million patient encounters a year.

It has not yet been announced what changes, if any, would come to the Bon Secours hospital in West Baltimore, including whether its CEO, Dr. Samuel Ross, would remain on board.

Bon Secours president and CEO Rich J. Statuto will step into an advisory role with a focus on strategic growth and innovation. He will then retire after 13 years of heading Bon Secours.

“I have committed to helping over the course of the next year to ensure a robust start for Bon Secours Mercy Health as we bring together two incredibly strong organizations,” Statuto said in a statement.

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