BJC HealthCare will join Kansas City-based St. Luke\’s

ST. LOUIS BJC HealthCare announced Wednesday afternoon plans to merge with St. Luke\’s Health System of Kansas City.

The health care systems will retain their names and operate from two headquarters: one in St. Louis serving eastern Missouri and southern Illinois, and another in Kansas City serving western Missouri and parts of Kansas.

BJC chief executive Richard Liekweg will serve as managing director of the integrated healthcare system. The first chairman of the board will come from St. Luke\’s.

Liekweg said the combined health systems will have \”an even stronger financial footing\”.

“In the rapidly changing healthcare landscape, now is the right time to build on our long-standing relationship with St. Luke\’s,” Liekweg said in a press release.

St. Luke\’s chief executive Melinda Estes said coming together as an integrated system was a \”logical next step.\”

If federal and state regulators approve the deal, it will follow the industry trend of consolidation among both hospitals and insurers.

Ge Bai, a professor of accounting and health care policy at Johns Hopkins University, called it a \”growth consolidation game,\” in which both insurers and health care providers scale up to gain an advantage in negotiations.

“The market and regulatory environment are less and less friendly to small players,” Bai said. \”So how can hospitals survive? Become more powerful.\”

Hospitals are struggling to rebuild revenue streams after COVID-19 forced patients to defer elective procedures and kept them out of hospitals. And the recruitment of nurses and doctors has become more expensive and competitive. Streamlining the back office into a larger system could free up money for higher wages.

People in health care systems are looking for efficiencies and trying to figure out how to do the same amount of work with fewer people, said Ryan Barker, a St. Louis-based independent health policy consultant. leverage can be used right now to squeeze every penny.

BJC declined to comment beyond a press release and a spokesman declined to elaborate on the terms of the deal or the structure of any combined system.

Bai, the Johns Hopkins professor, said the deal looks more like a merger than an acquisition: Neither health care system has to give up its name or location.

BJC is among the largest employers in the St. Louis region with more than 30,000 employees. It had revenue of $6.3 billion in 2022 and operates 14 hospitals.

St. Luke\’s has over 12,000 employees, as of 2022. It operates 14 hospitals, with its headquarters in downtown Kansas City. It is not affiliated with the smaller Chesterfield-based St. Luke\’s Hospital system.

St. Lukes in Kansas City is a faith based system. A spokesman said it is associated with the Episcopal diocese.

Both health systems are in the midst of major construction projects. St. Lukes kicked off a $52 million expansion and renovation of its Eastern hospital at Lee\’s Summit in April. BJC is constructing a new building along Kingshighway Boulevard on the former site of the Queeny Tower.

The two systems are likely dealing with many of the same insurers within Missouri, said John A. Romley, a professor at the University of Southern California who studies health care policy and economics.

These are market leaders in their respective metropolitan areas not too far apart. You can imagine there is a strategic partnership that could benefit both, Romley said.

Regulators could consider settling, but the fact that the merger is in another market can help clarify regulatory scrutiny more easily than if it were a merger of two large systems within one area underground, Romley said.

The two health systems are working on a definitive agreement. The operation should be completed by the end of the year.