Viewpoint: Baylor, Memorial Hermann breakup may be better for healthcare

Roughly four months after announcing their intent to merge, Dallas-based Baylor Scott & White Health and Houston-based Memorial Hermann Health System decided to end discussions on the planned combination Feb. 5.

"After months of thoughtful exploration, we have decided to discontinue talks of a merger between our two systems. Ultimately, we have concluded that as strong, successful organizations, we are capable of achieving our visions for the future without merging at this time," the health systems said in joint statement.

It is unclear what factors led to the breakup, which would have created a 68-hospital behemoth with a combined revenue of nearly $15 billion per year. However, several industry experts told The Dallas Morning News business columnist Mitchell Schnurman the breakup may prove to be better for the industry in the long run.

When they announced their decision to merge in October 2018, the systems said they aimed to lower healthcare costs for patients. But some experts suggest the opposite would have been true if the merger had been successful.

"I'm surprised the deal fell apart, but I'm glad it did," Vivian Ho, PhD, an economics professor at Rice University in Houston, told the publication. "I thought it would be too much money for the companies to walk away from, but I was concerned it would hurt patients."

"The track record of these large mergers is they don't provide savings or higher quality. More often, they're about raising prices and improving profits. The benefits usually don't go to patients and employers," healthcare analyst Allan Baumgarten told The Dallas Morning News.

However, Britt Berrett, PhD, a professor at the University of Texas at Dallas, told the publication large-scale mergers like the proposed Baylor-Memorial Hermann combination are necessary to make the industry "more efficient, lower costs, improve quality and increase access. There will be many more of these combinations in healthcare."

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