In a move that will reshape the landscape of the local healthcare market, General Health System, which owns the Baton Rouge General Medical Center, and New Orleans-based Ochsner Health System are planning to join forces in a strategic partnership that will combine the two institutions and create a network with more than 30 local clinics, five acute care and specialty hospitals, and 5,000 employees.
In a prepared statement, officials with both institutions stress that the deal, which is still a letter of intent and not a final agreement, is not a merger or acquisition by either hospital. But the partnership will be a close one, creating a “combined integrated system that includes joint governance, management and financial integration.”
“This partnership is the next step in transforming health care in Baton Rouge,” says Mark Slyter, president and CEO of General Health System/Baton Rouge General.
Under the new arrangement, Slyter will lead a joint operations board that will include representatives from both institutions and oversee the integrated operations.
Both Ochsner clinic physicians and Baton Rouge General physicians will be included in the integrated system and leadership and will be jointly managed, though Ochsner physicians will remain part of the Ochsner group and Baton Rouge General physicians will remain part of GHS. For now, they will retain their independent brand identities, though they will likely be co-branded in the future, according to Baton Rouge General spokeswoman Meghan Parrish.
As for employees who handle so-called back office functions like accounting, marketing and human resources, Parrish says no layoffs are anticipated at this time. But she could not elaborate on how the deal will increase efficiency if there are duplication of services.
Ochsner and Baton Rouge General executives will be available for comment later today.
Talks between the two institutions have been underway for more than a year, and Baton Rouge General is the latest of several hospitals in Louisiana to join the rapidly expanding Ochsner Health Network, which was created last year and includes St. Tammany Parish Hospital, Lafayette General Health, Terrebonne General Medical Center and the six-hospital CHRISTUS Health.
The network enables the institutions to collaborate on patient care, technology and services.
More importantly, it gives them leverage when negotiating with insurance companies—something Baton Rouge General badly needs, according to Nathan Kaufman, a health care analyst with San Diego, California-based Kaufman and Associates. The hospital shuttered its Mid City emergency room last year, citing financial losses of more than $2 million per month, and it has a smaller share of the market than Our Lady of the Lake Regional Medical Center, which is owned by the Franciscan Missionaries of Our Lady Health System and recently launched its own network that includes Woman’s Hospital and the Mary Bird Perkins Cancer Center.
“Bottom line is Baton Rouge General had to do something like this to be sustainable,” Kaufman says. “It is a dispensable hospital in your market, which is to say Our Lady of the Lake and Woman’s have more market share in their respective services, so when the big insurance companies like Blue Cross negotiates with a stand alone like the General, the hospital has little clout. Ochsner can bring negotiating clout.”
With its combined resources, the two institutions will become a formidable presence in the market, with 31 clinics throughout the nine-parish region. Between them they operate two full-service, acute-care facilities—Baton Rouge General’s Bluebonnet campus and Ochsner’s O’Neal Lane hospital—as well as Baton Rouge General’s Mid City campus, which still operates some acute care beds and concentrates primarily on specialty services. Additionally, Ochsner has a freestanding emergency room in Plaquemine, and GHS owns Baton Rouge Rehab Hospital off Essen Lane.
Together, the two institutions will also be much more competitive with OLOL. In 2015, OLOL saw some 170,000 patients in its emergency departments, had 35,000 inpatient admissions and more than 600,000 clinic visits.
Combined, Baton Rouge General and Ochsner in Baton Rouge saw about 141,000 patients in their emergency departments, had roughly 24,400 inpatient admissions and 546,000 clinic visits.
“When you think about it and add the two together, they will become a really big health system in the market,” says Kaufman. “You can’t fault the General for doing this. There are economies of scale and economies of expertise they will get by affiliating with Ochsner. It just makes sense.”
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