The Case For A Merger Of Two Boston Hospitals

By Tej Maini, MD, FACS
President, Maini Consulting Group

The announcement that Boston Medical Center (BMC) and Tufts Medical Center (TMC) are considering a merger is welcome news. This assumes additional significance in light of a recent ruling by Judge Janet Sanders who rejected the union of Partners Health Care with South Shore Hospital and Hallmark Health System (Lawrence Memorial and Melrose-Wakefield Hospitals).

TMC as well as BMC have each accumulated sizable debt loads, and in view of their recent financial performance have been forced to enter merger negotiations. Declining outpatient volumes, falling inpatient census, and decreasing reimbursement rates for medical services are among the reasons that have contributed to their poor financial status. In 2014, US News and World Report ranked TMC 6th and BMC 11th in the Boston Metro area.

To place things in perspective, TMC has had several phases in its evolution to its present position. These steps include the somewhat contentious relationship with Tufts University, a merger with Lifespan Hospital Group, which was finalized in 1997 only to be dissolved in 2002, after which TMC became an independent entity, in addition to several changes in its name. More recently, a partnership between TMC and Lowell General Hospital was announced, but it will take a long time to show positive financial results. Collectively, these are symptoms of a troubled and financially struggling entity trying to find its position in a highly competitive marketplace.

In 1996, the merger of Boston University Medical Center Hospital and Boston City Hospital led to the creation of BMC. By contrast, BMC has had a less turbulent time since its establishment, but the pressures on BMC to stay afloat financially in the presence of declining reimbursement rates, appear to have taken their toll. Since BMC is integrated with Boston University School of Medicine and TMC is a stand-alone entity, TMC remains in a weaker position.

However, any merger discussions between TMC and BMC should require the following:

  • Both parties should agree to hire an independent facilitator who insists on complete transparency. Individual hospital representatives, their egos and hubris should not be allowed to interfere in the process. There are lessons to be learnt from the 1999 Mount Sinai School of Medicine’s merger with the New York University and its eventual termination in 2007, as well as the merger of New York Hospital (Cornell University) and Presbyterian Hospital (Columbia University) in 1998.
  • Short and long term plans for consolidation of clinical, research and non-clinical space, so that eventually there is no duplication of facilities. For example, all pediatric care and cardiac surgery could be provided in one location. BMC also has a significant existing problem in that it runs two hospitals within a block of each other requiring many support services to be duplicated.
  • Both BMC and TMC are located within two miles of each other in prime territory, and recommendations need to be made regarding the real estate, sale of which could be directed towards reducing the debt load of the merged entity.
  • Although there are fine physicians and support staff in both TMC and BMC, the merger would, by definition, involve reduction of personnel, providing a winnowing opportunity and associated cost savings.
  • The merged entity’s bylaws should ensure an end to tenure; all faculty appointments would be renewable on an annual basis, dependent on productivity, performance, research contributions etc.; underperforming administrators and poor decision-making would hopefully be a thing of the past.
  • All clinical affiliations with hospitals and physicians should be re-examined and only the ones that make most sense from graduate and post-graduate training and from a financial point of view should be maintained.
  • The Attorney General’s office should be kept abreast at all times. While it is necessary to inform the Boards of Trustees of the two hospitals during the merger process, it is vital that the Boards of the merged entity consist largely of independent Trustees, who bring new vitality and vigor to the new hospital and ensure a heightened sense of accountability by the new leadership.

With health care revenues expected to continue to decline in the coming years, and with TMC and BMC getting more than their share of the poor and indigent patients, it would be wise to move full speed with this merger. This alliance would assure the future of two venerable institutions and will go a long way in ensuring that a fresh generation of physicians is trained and ready to face the new reality of health care in the country. The merger must assure complete transparency in that costs to consumers and insurers are kept under control, while the quality and outcomes of patient care demonstrate continuing improvement. Boston must lead the way, as it always has.

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