Liberty (Mo.) Hospital aims to partner with a health system to expand its services and capitalize on outpatient migration and value-based care.
"Many independent hospitals are actively seeking strategic partnerships that will elevate their clinical strength, performance and outcomes and help them achieve higher efficiency," Liberty Hospital President and CEO Raghu Adiga, MD, told Becker's. "The current level of inflation coupled with inadequate reimbursements that have not kept pace with rising costs — labor costs in particular — in this post-pandemic period have sped up the timeline for hospital mergers."
The 204-bed independent hospital has 15 primary care and specialty clinics throughout the region, more than 1,900 employees and 330 physicians.
Dr. Adiga said Liberty Hospital will be entering negotiations from a position of financial and operational strength at a time when many hospitals and health systems have taken drastic hits to their bottom lines.
"The Northland region of Kansas City where we are witnessing a remarkable population growth — the highest in the state of Missouri," he said. "Coming from a position of strength, we feel the time is now right for us to explore potential health system partners."
The objective follows a consolidation trend that is continuing to pick up steam across the country, from small rural and community hospitals to large state and regional health systems.
Earlier this month, Kansas City, Mo.-based Saint Luke's Health System and St. Louis-based BJC HealthCare signed a letter of intent to form an integrated academic health system by the year's end.
However, hospitals and health systems looking to consolidate may have to jump through more hoops to finalize such transactions in the near future. The Federal Trade Commission, under the leadership of Chair Lina Khan, is cracking down on deals that it considers potentially anti-competitive and this week proposed sweeping changes to entities seeking mergers.
"Despite the current administration's indication that it will increase scrutiny on health system mergers, post-pandemic realities are likely to force more consolidation activities during the next five years," Dr. Adiga said. "Larger health systems typically outperform independent hospitals on many financial, operational and clinical measures, so independent hospitals will need to consider collaborative models that create economies of scale and leverage a larger market for talent. This trend can only continue to grow as the healthcare industry is still fragmented compared to other mature industries such as pharmaceuticals, airlines and banking."