RED HOT Contributors

 

South Carolina merger will create largest health system in state

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Dive Brief:

  • Two South Carolina health systems, Palmetto Health and Greenville Health System, on Thursday announced a new nonprofit company that will combine the two systems into one 13-hospital company with 1.2 million patients and $3.9 billion in annual net revenue.

  • In the announcement, the two health systems said the merger will “have the potential to invest up to an additional $1 billion over the next five years in programs, technology, facilities and team members.” 

  • Nearly half of South Carolinians will live within 15 minutes of the new health company’s physician practices, hospitals and healthcare facilities. 

Dive Insight:

The merger will result in South Carolina’s largest provider of charity and uncompensated care that will also account for one-third of the state’s Medicaid services. Palmetto Health Chief Executive Officer Charles D. Beaman Jr. said both organizations “are committed to ensuring our community members receive the healthcare they need, regardless of their ability to pay.”

It will also create South Carolina’s largest private employer with more than 28,000 employees and 2,800 physicians.

Palmetto’s facilities include the 649-bed Palmetto Health Richland, 413-bed Palmetto Health Baptist and 301-bed Palmetto Health Tuomey. Greenville’s system includes the 710-bed Greenville Memorial Hospital. The two health services already partner on a joint venture with 109-bed Baptist Easley Hospital.

The two organizations will continue providing separate services during the due diligence, third-party approval and integration planning stages.

Hospital M&A activity remains hot with this latest news. Recent M&A actions have involved health systems shedding hospitals to reduce debt, such as Quorum Health selling two hospitals to UPMC Susquehanna, consolidating services, such as Mayo Clinic’s plans to consolidate two hospitals, or expanding footprints like HCA looking to buy more hospitals

The volume of healthcare M&A was up in the first quarter of this year and there is no sign of the trend slowing. The American Hospitals Association found in a recent analysis that most mergers in the past several years led to cost savings and quality improvement. 

This South Carolina merger is all about scale and expanding footprint. “This new health company will have the scale, scope and resources required to address the serious health issues of the people it serves,” the two companies said in the announcement.

Thad Kresho, U.S. Health Services Deals Leader at PricewaterhouseCooper’s told Healthcare Dive earlier this year hospitals are seeking mergers “in response to the continued call for improved quality, patient engagement and new reimbursement models.” 

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