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Consolidation Case Study: Baylor Health and Texas Health Resources

Jim Molpus, for HealthLeaders Media, September 3, 2014

Leaders from Baylor Scott & White Health developed a merger partnership built on cultural fit, clinical alignment, and market growth.

This article appears in the July/August 2014 issue of HealthLeaders magazine.

In 2011, Baylor Health Care System was hemmed in. For an organization that already had 30 hospitals, 180 physician clinics, and $4 billion in total operating revenue, having its growth limited was not an acceptable state of affairs. A merger with another Dallas market giant, Texas Health Resources, had run off track with regulatory hurdles a decade ago, and any similar mergers with local players would likely meet the same result.

Baylor faced a thornier problem: scale. Many health systems across the country have looked to mergers, acquisitions, and other partnerships to grow scale so they can manage a population of patients, whether under contracted agreements with commercial payers or by creating their own payer organization. With scale, or so the thought goes, comes efficiency that can provide higher-quality care at a lower cost. Even as large as Baylor was, it still lacked the clinical and operational scale it needed to meet that bar.

"We were growing. The [Dallas area] metroplex was growing, but so was everybody else," says Baylor Scott & White Health CEO Joel Allison, who at the time was CEO of Baylor Health Care System. "At the same time, we knew that if we really wanted to become a statewide presence that we needed another partner to move forward. We looked at how to improve the footprint to get to population health management. Our ultimate vision was to be able to manage the total care of the population."

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