In Maryland, where nearly all hospitals are not-for-profit, mergers require no money to change hands. The parent company simply takes over the debts - and assets - of its new affiliate.
There are financial incentives on both sides of a merger. Money for building and expansion projects, which smaller hospitals often find hard to come by, may be more readily available when part of a larger network. And there are opportunities for cost savings that come when doing business as a bigger organization: better prices for supplies, the ability to cut redundant services such as billing or marketing. Up to 60 percent of a hospital's costs are fixed and any way to trim those helps the bottom line.
"This is the classic economies-of-scale argument, that if you put two and two together it makes five," said Joshua Nezmoff, a hospital mergers and acquisitions consultant based in New Hope, Pa.
The financial condition of Suburban Hospital three years ago was strong. But the board of directors of the Bethesda institution was concerned that it could be threatened by health care reform.
"As a country, we spend a lot of money on health care and we don't get the results based on the level of expenditure," said Brian A. Gragnolati, president and CEO of Suburban. "There's going to be less money placed into the system."
Suburban already had a relationship with Hopkins; its cardiac care program opened five years ago as a partnership with the East Baltimore system, and officials were pleased with that program's success. Gragnolati said patients took a chance on the cardiac program from the start mainly because of its link to the nationally recognized institution. And high-quality doctors, nurses and technicians were drawn for the same reason.
He hopes the Hopkins merger will bring the same benefits, and everything else that goes with being connected to the Hopkins brand, to all Suburban patients
Meanwhile, Hopkins - which has two hospitals in Baltimore, one in Howard County and numerous affiliated doctors' offices and surgery centers - gains entry into the Washington region. It gets not just a hospital but a network of ambulatory care centers, doctors' offices and home-care operations. All of this means more patients for Hopkins and, many hope, a seamless transition from one level of care to the next.
"Hopefully," said Thompson, of Hopkins, "we can go through our lives and get the health care we need and never lay in a hospital bed - care that is convenient, safe, less expensive."
