Business Roundup: MO Hospitals Join Forces

Hospital and health system mergers, acquisitions and collaborations continue at a brisk pace during the week of October 21-26.

Missouri Hospitals Form Collaborative
Missouri's Saint Luke's Health System of Kansas City, BJC HealthCare of St. Louis, CoxHealth of Springfield, and Memorial Health System of Springfield, IL, have created a joint BJC Collaborative, LLC. The four health systems will remain independent under the collaborative, which will have a combined "footprint" of 4,821 hospital beds in Missouri, Illinois, and Kansas, and combined annual revenues of almost $7 billion.

The health systems forecast that the anticipated savings generated by the collaboration will allow them to deploy clinical programs and services to improve access and quality of care while lowering costs.

Saint Luke's is the largest non-profit healthcare provider in the Kansas City area and includes 11 hospitals and several primary and specialty care practices. BJC HealthCare is a 13 hospital system serving eastern Missouri and southern Illinois.

CoxHealth is Springfield, MO's only locally owned not-for-profit health system, and includes three hospitals and more than 65 clinics in 20 communities. Memorial Health System is a three-hospital, non-profit health care organization serving Illinois patients in a 40-county region.

Illinois' Advocate Health Care Acquires Sherman Health
Also last week, Advocate Health Care announced that it had signed a letter of intent to acquire Elgin, IL-based Sherman Health Systems. The deal is expected to be formalized sometime next summer. No financial information was disclosed in the media release announcing the acquisition. 

Advocate is the largest health system in Illinois with 10 acute care hospitals, the state's largest integrated children's network, five Level I trauma centers, two Level II trauma centers, the state's largest home healthcare company and more than affiliated 6,000 physicians.

Sherman Health Systems includes the 255-bed Sherman Hospital, three immediate care centers, a skilled nursing and rehabilitation facility; and home health services. The system employs more than 2,200 people and more than 600 physicians on its medical staff.
"We're pleased that we will offer our patients the expertise of one of the top 10 health systems in the country," Sherman Health President/CEO Rick Floyd said in a joint announcement. "Through this partnership, Sherman will be able to grow and expand our services at an accelerated pace to become a distinctive, regional destination for care."

St. Joseph's MC, U of MD Medical System Finalize Merger
Baltimore Business Journal is reporting that the University of Maryland Medical Center in Baltimore will finalize its long-expected merger St. Joseph's Medical Center around Nov. 1.

HealthLeaders Media contacted the press office at UMMC on Friday but they said they weren't ready to announce the details of the deal.

The assets only acquisition has been underway since March, when St. Joseph's parent Catholic Health Initiatives announced it would negotiate exclusively with the University of Maryland to acquire the Towson hospital, the Business Journal reported. However, the closing date has been delayed for three months for unspecified reasons.

McKesson Corp. Buys PSS World Medical Inc. in $2.1B Deal
Of course, hospitals aren't the only corner of the healthcare marketplace that is seeing acquisition and consolidation.

Healthcare HIT giant McKesson Corp. announced last week that it will purchase PSS World Medical, Inc. for $29 per share in cash. The total transaction, including the assumption of PSS World Medical's outstanding debt, is valued at approximately $2.1 billion, but is still subject to approval by the PSS shareholders.

"The unified organization will bring extensive distribution capabilities, deep product and technology expertise and a broad portfolio of business services to an expanding industry, helping our customers improve efficiency and productivity, and deliver better care," McKesson CEO/Chairman John H. Hammergren said in a joint media release.

Leonard Green & Partners Acquires CHG Healthcare Services
Salt Lake City-based CHG Healthcare Services, a healthcare staffing firm, was acquired by Leonard Green & Partners, a private equity firm, and Ares Management LLC, an assets manager, the companies announced jointly.

CHG is now majority-owned by funds affiliated with J.W. Childs Associates, LP. The transaction is expected to close by the end of December. Financial terms were not disclosed.

CHG is one of the largest temporary healthcare staffing firms in the nation and is the largest locum tenens staffing firm in the nation. The company has more than 1,400 people in seven offices nationwide.