St. Louis-based BJC HealthCare and Kansas City, Mo.-based Saint Luke's Health System, two financially stable organizations with their own strong brands, intend to form an integrated academic health system by the year's end.
The old adage goes, "if it's not broken, don't fix it." But that doesn't apply here, the CEOs of both systems told Becker's. They see the transaction as proactive: a chance to pool collective resources, share best practices and improve care delivery in the unique markets they serve.
"This is something we have chosen to do," Richard Liekweg, CEO of BJC, told Becker's. "We want to do this. It wasn't because we needed to do this. And those are the best types of relationships, when you come together with mutual admiration and an opportunity to do even more for the communities that you serve."
The two health systems have worked together for nearly 12 years through the BJC Collaborative. Mr. Liekweg and Melinda Estes, MD, CEO of Saint Luke's, have known each other much longer — too long to quantify, Mr. Liekweg joked. They believe that preexisting rapport and financial strength, plus their similar values and approach to patient care, will allow them to enhance their existing services as a single entity.
Why now?
The healthcare industry is at a pivot point, Dr. Estes said. As the pandemic wore on, forces affecting the industry — from the workforce to the supply chain to inflation — began to accelerate. With reimbursement declining and expenses climbing, the two health systems decided they would be stronger together when weathering internal and external headwinds.
"I think the timing is being proactive," Dr. Estes said. "This is a forward-looking transaction because we certainly know our industry will continue to evolve."
The larger scale of a combined organization will allow them to further invest in new technologies — and not just partake, but become developers and innovators of new systems. Both entities are particularly interested in leveraging innovation to improve health equity, the executives said.
There is also an opportunity to share best practices among clinicians and administrators, although day-to-day life won't change much for employees.
Why keep separate brands?
The two are choosing to retain their individual brands from their individual headquarters, operating the organization from an Eastern region — the BJC side out of St. Louis — and a Western region — the Saint Luke's side out of Kansas City.
"It was a very easy decision," Mr. Liekweg said. "These are two very well-respected, high-quality organizations that are recognized nationally for the quality of clinical programs that we offer in our respective geographies. We don't want to lose the value that each organization brings to this relationship."
The public's confidence in the individual brands also played a role in the decision, according to Dr. Estes.
"A lot has been written about trust — and trust in our country in general — but trust in healthcare in particular," Dr. Estes said. "Both of these are well-established, very high-quality brands, but they're also trusted partners in both of our communities and have been for decades. I think that is a currency we don't wish to lose."
They will still retain some unique interests; Saint Luke's will maintain its close relationship with the Episcopal Church, for example. But the new system will be "an inclusive organization that has a shared mission, shared vision and shared value," according to Dr. Estes.
Why will only one CEO stay on?
Mr. Liekweg will head the integrated system, leading a C-suite and board of directors with representation from both parties. Dr. Estes will still be there to support the combined entity, but this time from a distance.
She had initially planned to retire at the end of 2021, but chose to push back and see Saint Luke's through the brunt of the pandemic. If all goes as planned and the deal closes by end-of-year, Dr. Estes will retire, she said.
"I will tell you my immediate plan — as my daughters have both told me — is to do nothing for a little while before I decide what I'll do next," Dr. Estes said.