In a deal designed to address doctor shortages and bring new medical services to Harford County, the University of Maryland Medical System announced Wednesday that it will acquire Upper Chesapeake Health System, which owns hospitals in Bel Air and Havre de Grace.
Upper Chesapeake, the county's largest private employer, would be the latest example of hospital consolidation in Maryland, as large medical systems scoop up smaller hospitals that face competitive pressures. Also on Wednesday, executives marked the official takeover of Suburban Hospital in Bethesda by the Johns Hopkins Health System.
The consolidation trend continues to extend the reach of Central Maryland's medical powerhouses: the University of Maryland, Johns Hopkins and Medstar Health of Columbia.
Expected to be finalized in 2013, the merger offers the University of Maryland an opportunity to grab a growing share of the hospital market - and an entry to a county where military expansion is bringing thousands of new residents.
Upper Chesapeake, meanwhile, hopes to provide more specialized clinical services to meet growing demand in oncology, surgery and orthopedic services, and get easier access to capital to cover future expansion.
University of Maryland physicians already help staff Upper Chesapeake's emergency departments, a relationship that started two years ago.
It is part of Maryland's expanding reach. In 2006, it acquired Dorchester General Hospital in Cambridge and Memorial Hospital in Easton, and last year, it consolidated with Chester River Health System in Chestertown.
"Our strategy, our vision, has been to serve the state of Maryland," said John W. Ashworth III, a senior vice president at the University of Maryland Medical System.
While Maryland and Upper Chesapeake have been discussing the merger for years, specifics such as which services will expand, details on staff changes and possible construction projects are still being worked out.
For now, Upper Chesapeake is bracing itself for the military's Base Realignment and Closure process, estimated to add thousands of jobs to Aberdeen Proving Ground and as many as 40,000 new residents to Harford County and nearby.
Upper Chesapeake Medical Center in Bel Air and Harford Memorial Hospital in Havre de Grace employ a total of 3,000 people and have 286 beds.
"We had to ask, how do we position ourselves to respond to what we think will be that increased growth?" said Lyle E. Sheldon, president and CEO of Upper Chesapeake.
The physician shortage in Harford County is as acute as in rural areas on the Eastern Shore and Western Maryland which have trouble attracting doctors, said Sheldon.
Sheldon said a partnership with the University of Maryland, which trains half the state's physicians, can help entice doctors to practice in Harford County.
"We think it allows us to establish relationships with medical school students and physicians," he said. "We think this will open some doors."
While mergers have positive aspects for patients, such as access to large networks of top-notch doctors, not all mergers are beneficial for patients, analysts say. In some communities, new ownership means people may no longer have access to their longtime doctors and some jobs may be lost.
The outcome to patients depends on the hospitals, the location and how the merger is conducted, said Jeff Bauer, a hospitals mergers consultant based in Chicago.
Nevertheless, more hospitals are headed in this direction, as difficult economic times and uncertainties in national health care reform are on the horizon.
As hospitals try to bolster their finances, they are also trying to invest in technology such as electronic medical records and specialized clinical services to help set them apart from the pack, he said.
"Hospitals need money more than ever and small hospitals probably don't have it more than ever," Bauer said.
The financial incentives are on both sides, say merger experts.
Smaller hospitals gain access to more capital for building and expansion projects and technology improvements. And there are cost savings that come when doing business with a bigger organization, from better prices for supplies to the ability to cut redundant back-office services.
The University of Maryland Medical System at a glance
The University of Maryland Medical System, which has several hospitals in Baltimore, also includes these member hospitals:
* Baltimore-Washington Medical Center, Glen Burnie
* The Memorial Hospital, Easton
* Dorchester General Hospital, Cambridge
* Chester River Hospital Center, Chestertown
Source: University of Maryland Medical System