How $7.7B Baylor, Scott & White Deal Might Affect Healthcare Costs

The announcement on Friday that Baylor Health Care System and Scott & White Healthcare intend to merge changes the landscape for healthcare delivery in the service areas around Dallas and Temple, TX, where the systems are based, respectively.

Even by Texas standards the two health systems are large by themselves. Combined and renamed as Baylor Scott & White Health, the $7.7 billion behemoth would become the largest nonprofit integrated delivery system in the state and possibly in the southwest, and one of the 20 largest health systems in the nation.

While the merger improves the unified system's economies of scale, efficiencies, market share, and negotiating clout with payers, there are questions about whether or not the accelerating trend of hospital consolidations such as this are escalating healthcare costs for consumers.

"This partnership is the right thing for Baylor. It's the right thing for Scott & White. And, it's the right thing for our communities," said Drayton McLane, Jr. chair of the Scott & White board of trustees, in a media release announcing the merger plans.

"Both health systems are well-organized, well-run, best-in-class organizations. We can learn from each other, and I think this only benefits the patients we serve by allowing us to deliver better quality care and increased access to care."

Some observers are not so sure.