Bon Secours Health System — the parent company of Bon Secours St. Francis Health System, which operates two hospitals in Greenville — announced plans to merge with another Catholic health system that operates in Ohio and Kentucky, Mercy Health.
The merger will build a network of 43 hospitals across seven states with 57,000 employees and $8 billion in net operating revenue, to create America’s fifth-largest Catholic health system, according to officials.
The entities signed a letter of intent on Feb. 21. Money will not be exchanged in the deal, which is slated to be finished by year’s end. The partnership is not expected to affect local care at the facilities, officials said.
The deal increases the hospitals’ geographic service area and allows for economies of scale with a $293 million operating margin. Neither system is reported to be in financial straits, officials said, noting that Standard & Poors cites Mercy Health as having an A+ rating with Bon Secours at an A.
However, Bon Secours reportedly has been losing money in three major markets that cover low-income and high-cost populations, including Baltimore Health System, Kentucky Health System and its Virginia-Hampton Roads Health System.
According to Christopher Helmrath, managing director of SC&H Capital Group, Bon Secours will benefit from Mercy’s stronger financial footing and better access to capital while Mercy would boost its reputation by its visibility in underserved populations.
“This gives Bon Secours the lifeline for the long run that they need,” Helmrath said. Bon Secours — with headquarters in Marriottsville, Maryland, and more than 24,000 employees — owns, manages or joint ventures 20 hospitals and 23 nursing homes and other post-acute facilities in South Carolina, Florida, Kentucky, Maryland, New York and Virginia.
“This was a deal not to become bigger for bigger’s sake,” Helmrath said. “This was a deal that was about having no overlap, each doing things that the other can learn from, creating a healthcare system that can reduce cost, and continuing to help the needy.”
But according to an independent health policy consultant, hospital mergers usually result in higher costs.
“When two big players are becoming one really big player, that gives them market power and the ability to negotiate a harder line with payers,” said Alwyn Cassil of Policy Translation in Silver Spring, Maryland.