BJC HealthCare, Saint Luke’s Health System reach agreement on $10B merger

Another big hospital merger is moving forward.

BJC HealthCare and Saint Luke’s Health System said Wednesday that they have entered a definitive agreement to merge the two hospital systems. The Missouri-based systems will form a combined organization with 28 hospitals and $10 billion in revenue.

BJC is based in St. Louis, while Saint Luke’s is headquartered in Kansas City. The combined system will serve patients across Missouri, southern Illinois and eastern Kansas. The systems said they expect the merger to expand healthcare opportunities, and estimate the community benefit of the combined system will reach $1 billion.

The systems said the deal is expected to close on Jan. 1. They first signed a letter of intent to come together in May 2023, and BJC and Saint Luke’s said in a news release that they have completed their reviews by regulators.

When the deal closes, Saint Luke’s will join the BJC HealthCare. While they said they are forming an integrated, academic health system, the individual brands will live on. The merged system will operate as BJC in the St. Louis area, while Saint Luke’s will continue in the Kansas City region.

Richard Liekweg, president and CEO of BJC HealthCare, called it “an exciting day for the future of healthcare in the Midwest.”

“Our thorough due diligence review, in partnership with Saint Luke’s, has affirmed the vital opportunities we have to improve health care across the communities we serve,” Kiekweg said in a statement. “As an integrated health system, we will be unwavering in our commitment to provide extraordinary care to our communities, while creating the region’s premier destination to practice world-class medicine, discover clinical breakthroughs and deliver innovative models of care.”

In a letter to the community on BJC’s website, Liekweg wrote, “As two nonprofit academic health systems, we are ideal partners as we look to meet the evolving health care needs of our community. We are taking action from a position of strength, in order to benefit from shared resources to improve the health and well-being of the communities we serve.”

Melinda L. Estes, CEO of Saint Luke’s Health System, hailed the merger as an “important milestone” to improve services for patients and their communities.

“Together, we have the opportunity to improve the health of our communities for decades to come and to establish a new national standard for medical education and research,” Estes said in a statement. “With complementary expertise and clinical care capabilities across our separate markets, delivered by nationally renowned health care professionals, our integrated system will serve patients across the continuum of care.”

• Read more: Saint Luke’s Health System sees success with hospital at home

The systems said the merger will allow the combined organization to invest more in medical innovation, leading to better care for patients. BJC and Saint Luke’s said the merger would help recruit top clinicians.

BJC and Saint Luke’s also said the combined system would work to address disparities in care in underserved communities.

The BJC-Saint Luke’s merger signifies another deal involving systems in separate markets coming together (while both systems are in Missouri, St. Louis and Kansas City sit about 250 miles apart). Atrium Health and Advocate Aurora Health came together in a cross-market merger to form Advocate Health last year.

Healthcare mergers slowed in 2021 and 2022 due to the COVID-19 pandemic, with many systems unable to engage in long-term planning in the constant crisis. But the pace of deal-making has picked up this year, and analysts expect to see more transactions in the coming months.

Through the first three quarters of 2023, there were 53 announced hospital mergers, according to data from Kaufman Hall, the healthcare consulting firm. That already matched the 53 hospital mergers reported in all of 2022.

Novant Health announced this month it has reached a $2.4 billion deal to acquire three Tenet Healthcare hospitals in South Carolina.

Kaiser Permanente said this year it plans to acquire Geisinger Health, the Pennsylvania-based system, and is forming a new organization called Risant Health. Assuming regulators approve the deal, Geisinger will be the first member of Risant Health, and Risant will look to add more hospital systems in the coming years.

Two Wisconsin hospital systems, Froedtert Health and ThedaCare, said in September they reached a definitive agreement to merge. The combined system would operate 18 hospitals. They hope to complete the merger by the start of the new year.

While many analysts say they expect to see more hospital mergers, Moody’s Investors Service said it’s possible the pace could slow down in 2024, due to heightened scrutiny from regulators.

The Federal Trade Commission has stepped forward to oppose a number of hospital mergers under President Biden’s administration, focusing particularly on mergers in the same market.

This month, the FTC announced it is moving to stop John Muir Health’s planned purchase of San Ramon Regional Medical Center from Tenet Healthcare Corporation. The commission says the merger would reduce competition, resulting in higher prices for consumers.