Merger of Helix, Medlantic is approved by both boards Marriage to create region's largest health system

May 08, 1998|By M. William Salganik | M. William Salganik,SUN STAFF

The boards of Helix Health and Medlantic Healthcare Group yesterday approved a merger, creating the largest health system in the region, and outlined the management structure of the new organization.

The merger was initially announced in February. When it becomes final -- expected to be July 1 -- the system will have seven hospitals with 2,300 acute-care beds and 100,000 inpatient admissions.

It includes a wide range of other health services, including five nursing homes, physician practices, a medical equipment company, a radiation oncology company, home health care and rehabilitation centers. With 2,100 employees, it will have annual revenue of $1.4 billion.

While Maryland hospitals have been rapidly merging or coming together in looser alliances, Helix/Medlantic is the first to cross the state line into the District of Columbia.

The new nonprofit health system, which does not yet have a name, should be "more attractive" to insurers because it can "provide service over the natural marketplace," said John P. McDaniel.

McDaniel, who has been chief executive officer of Medlantic, will be CEO of the new organization.

Other top leadership will come from both sides of the partnership.

Michael R. Merson, CEO of Helix, will be president of the new company. He said his work would focus on "future growth and development" and on headquarters operations.

Kenneth A. Samet, who has been executive vice president and chief operating officer of Medlantic, will hold the same titles in the merged company.

The new board will have 18 members -- nine members selected by the current Helix board and nine picked by the current Medlantic board.

Patricia K. Smythe, who chairs the Helix board, will chair the new one. Pauline A. Schneider, Medlantic's board chairman, said she plans to remain on the merged board. At least six of the board members will be physicians.

McDaniel and Merson said there will be little immediate impact on patients and on most employees.

A small number of executives will move to new corporate headquarters, located in the Columbia area.

But Merson said the operation will retain "two regional offices," the Helix headquarters at Green Spring Station and Medlantic's in Washington.

"Part of our agenda over time is to seek economic efficiencies where we can, but we're not going to do it by focusing on work-force reduction," Merson said.

McDaniel said Helix/Medlantic could eventually contribute to "rationalization" of the health care system in the region, which has too many hospital beds. However, Merson said, this would likely occur not from closing facilities, but from converting acute-bed space to other uses, such as outpatient programs or skilled nursing facilities.

"Our objective is to grow and be significantly larger, to have other organizations join us in this kind of partnership," Merson said.

McDaniel said other hospitals had approached them to discuss joining, but no talks had reached a serious stage because executives were concentrating on completing the Helix/Medlantic merger.

Besides other hospitals, he said, Helix/Medlantic hoped to grow by offering medical services in more nonhospital settings.

Helix was founded in 1987 by the merger of Union Memorial and Franklin Square hospitals. Over the next decade, three more Baltimore hospitals joined: Good Samaritan, Church and Harbor.

Medlantic was also created in 1987 by Washington Hospital Center, a 900-bed facility that remains its flagship. It also owns National Rehabilitation Hospital in Washington.

Pub Date: 5/08/98

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