Seeking to beef up its programs and expand its facilities for a growing population, Shore Health System of Easton announced yesterday that it will merge into University of Maryland Medical System.
The deal will give UMMS, based at University of Maryland Medical Center in Baltimore, its first presence on the Eastern Shore. The merger doesn't involve any direct payments.
Shore Health operates two small hospitals, Memorial at Easton and Dorchester General in Cambridge, and a handful of outpatient centers on the Eastern Shore.
"The Eastern Shore population is changing rapidly, growing with an older, retired population, and we want to accelerate our program development," said Joseph P. Ross, president and chief executive of Shore Health.
Ross said Shore Health has ambitious expansion plans it hopes to complete over the next five to eight years. As a small, rural, free-standing system, he said, Shore Health finds it difficult to access capital; being part of the University of Maryland Medical System not only ensures it will be able to sell bonds, but helps it get a better interest rate.
Among the projects on the drawing board, he said, are expanded outpatient services in Queen Anne's and Caroline counties, an expanded emergency department in Easton, and physicians' offices in Dorchester County.
Over the longer term, Ross said, Shore Health wants a new building to replace Memorial.
"Shore Health is very strong financially," he said. "We're looking to leverage our strength. You make deals when you're strong, and you get stronger."
The two nonprofit systems have been talking for nearly two years. They announced an intention to merge last fall, and have been working out the details since.
Under the plan announced yesterday, Shore Health and its hospitals will keep their names, current staffing, management and board.
Both the University of Maryland Medical System and Shore Health were shaped during a spate of hospital consolidation in the mid- and late 1990s. Shore Health was created in 1996 when its two hospitals merged. UMMS added its two community hospitals shortly after, Maryland General in 1999 and North Arundel (now Baltimore Washington Medical Center) in 2000.
Hospitals were merging into systems to cope with increasingly powerful HMOs and other managed care insurers, said Gerard F. Anderson, director of the Johns Hopkins Center for Hospital Finance and Management. Then, he said, "The mergers stopped because they'd gotten to sufficient size, so that they had enough market power to negotiate with managed care."
Mergers still make sense for small, rural hospitals looking to attract patients and staff and to draw on expertise to build sophisticated programs, Anderson said.
For an academic medical center such as University of Maryland, Anderson said, a merger with a community hospital helps assure a flow of patients to the major center for high-end procedures.
John W. Ashworth 3rd, UMMS senior vice president of network development, said while no other hospitals in the state are now discussing a merger with his medical system, "there's lots of dialogue around the state, as people are seeking ways to develop resources." He said his system would consider cooperative programs with other hospitals that did not involve mergers.
Ashworth said Shore Health already had strong market share in Talbot, Caroline and Dorchester counties, but was looking to add patients in Kent and Queen Anne's counties, where there's competition from Chester River Hospital Center, a 57-bed facility in Chestertown and from Anne Arundel Medical Center (260 beds with expansion plans) in Annapolis.
Shore already has a rehabilitation therapy center, a diagnostic center and a physician practice in Centreville, the county seat in Queen Anne's County, and Ross said it was looking to add at least one more outpatient center in the mid-county area. "Everybody's interested in that community."
He said Shore Health, which has 170 doctors practicing at its hospitals, was looking to add 50 more over the next five years, and he hoped to recruit from University of Maryland's medical school and residency programs.
Even while merger talks were under way, Ross said, the University of Maryland Medical System provided him with a full-time faculty neurosurgeon and helped recruit two kidney specialists from its fellowship programs to practice on the Shore.
James R. Walker, chief executive of Baltimore Washington Medical Center in Glen Burnie, said his hospital had benefited from joining UMMS in the way that Shore Health hopes to.
In fact, he was presiding yesterday at a groundbreaking for a $112 million patient care tower that will add 88 beds, including the hospital's first-ever obstetric unit. "We wouldn't have been able to get the capital, and I don't think we would have gotten approval for OB, without the system," he said.
He said UMMS also has helped his hospital open a cancer center and a vascular center, where two faculty surgeons from University of Maryland make regular visits. Ashworth, the UMMS vice president, didn't expect many faculty doctors to visit Shore Health regularly, but that it could help more in recruiting.
Walker also said the affiliation with the university center had produced "a definite halo effect with patients. They perceive an enhanced quality."
The systems at a glance
Here's a look at Shore Health System and its new parent, University of Maryland Medical System:
Memorial Hospital at Easton - 129 acute beds, 33 nursing-home level beds
Dorchester General Hospital, Cambridge - 58 beds
Other facilities and services
Regional cancer center, three diagnostic centers, four rehabilitation centers, five physician practices
UNIVERSITY OF MARYLAND MEDICAL SYSTEM
Academic medical center
University of Maryland Medical Center, Baltimore - 655 beds
Baltimore Washington Medical Center, Glen Burnie (formerly North Arundel Hospital) - 278 beds
Maryland General Hospital, Baltimore - 229 beds
Kernan Hospital, Baltimore - orthopedic and rehabilitation, 133 beds
University Specialty Hospital, Baltimore (formerly Deaton Specialty Hospital) -chronic care, 180 beds
Mount Washington Pediatric Hospital, Baltimore - pediatric rehabilitation, 102 beds