The LifeBridge Health system plans to absorb Carroll Hospital Center, either through an acquisition or some looser form of partnership, as both organizations look to serve more patients in more health care settings.
Leaders of both entities signed a letter of intent Thursday to unite next year, in a manner to be determined after both spend the next four or five months evaluating each other's finances and facilities. No financial terms were disclosed. LifeBridge CEO Neil Meltzer said they are still being discussed.
Officials said the union will allow them to save money by no longer competing in areas like Reisterstown and Eldersburg, and to offer a broader array of services to patients, many of whom have to leave Carroll County for specialized care.
The move comes as smaller hospitals like Carroll's are increasingly looking to tap the resources of larger health organizations, and as systems like LifeBridge look to expand their reach and base of customers. Maryland shifted this year to a reimbursement system that aims to discourage unnecessary hospital visits, giving care providers an incentive to serve more patients in community clinics and outpatient centers, where care is cheaper.
"One of the things we're all charged with doing is keeping the communities healthier," Meltzer said. "I think together we can both benefit from each other's expertise in our respective communities."
LifeBridge consists of Sinai Hospital in Baltimore, Northwest Hospital in Randallstown, Levindale Hebrew Geriatric Center & Hospital in Baltimore and LifeBridge medical centers in Eldersburg and Reisterstown, as well as numerous network physician practices and affiliated facilities.
The Carroll hospital set out on a search for hospital partners in February as executives said shrinking reimbursements from the government and insurers were expected to pose ongoing financial pressures.
Officials entertained multiple proposals and decided LifeBridge was an ideal partner because the organization's geographic footprints and community-focused cultures were complementary, Carroll Hospital CEO Leslie Simmons said. She declined to provide details on other proposals.
The partnership will help the hospital pay for its strategic plan, which aims to increase its scope of services by 2020. The plan required $88 million beyond the hospital's expected budgets from fiscal year 2016 through fiscal 2020.
"Being part of a larger system gives us the size and the scale and the resources we need to do that," Simmons said.
Simmons said the partnership will allow the hospital to add a neonatal intensive care unit as well as new outpatient urgent care and surgical centers around the county.
LifeBridge and other large health systems have made similar expansions in recent years. LifeBridge invested in Bel Air-based urgent care company ExpressCare in 2013. Also last year, the University of Maryland Medical System completed a merger with Upper Chesapeake Health in Harford County, and the year before acquired St. Joseph Medical Center in Towson.
Also, Frederick Regional Health System, Meritus Health and Western Maryland Health System established an alliance to find cost savings.
Consolidation among health care providers has been increasing across the country as the industry faces its first declines in total health spending. That trend is expected to continue, said Jeffrey Bauer, a health care economist based in Chicago.
Falling reimbursement rates from federal and state health care programs and from private insurers are pressuring hospitals to change strategy, including focusing on overall population health rather than volume of hospital admissions. Going forward, those pressures could compound if broader efforts to improve health are successful, he said.
"They've got to start worrying about people having fewer of the diseases that require dramatic interventions," Bauer said.
Meltzer said LifeBridge is not actively pursuing partnerships with any other hospitals, though system officials are "always interested in considering" partnerships with other types of care providers, such as the Bel Air urgent care company.
Maryland hospitals have the added pressure of a new system adopted this year that ties hospital spending to the state economy. Rather than tying reimbursement to patient admissions, the system gives hospitals a pool of money, which grows depending on the state of the economy. Hospitals have said it puts more pressure on them to cut costs.
Carroll Hospital Center has been operating on a similar system for the past several years, as part of a pilot program in some of the state's smaller, rural hospitals, and Meltzer said he is eager to apply lessons learned from the experience to the rest of LifeBridge.
That includes efforts to limit hospital readmissions and hit certain health care quality standards — both elements of the new care model that hospitals can be penalized for falling short on.
"If you believe that in the future, health care is about managing lives and not filling beds, this gives both of us access to a much broader geography with a much larger number of lives that can be managed by our combined organizations," Meltzer said.
Baltimore Sun Media Group reporter Jon Kelvey contributed to this article.