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What We Do and Don't Know About Birmingham's Newest Health System

Jun 23, 2015
Birmingham Business Journal – June 23 – The due diligence process in the merger between Baptist Health System and Brookwood Medical Center's parent company Tenet Healthcare has come to a close, and the two sides have agreed to create a joint venture. 

Although preliminary details have been released – Tenet will take a 60-percent controlling stake in the system and Baptist CEO Keith Parrott will be its leader – there are still a number of unanswered questions. 

Here's a roundup of what we do know and what still needs to be fleshed out in the coming months. 

What we know 

The merger will create one of the largest players in Birmingham's health care scene, based on total beds. 

The new system combines Baptist's four hospitals with Brookwood's facility, freestanding emergency department and vast physician network to create a system totaling 1,700 licensed beds and 7,300 employees. 

Hospital officials said smaller systems will struggle to turn a profit due to a rapidly changing health care industry that has caused costs to increase while Medicare reimbursements and other forms of federal funding have remained relatively flat. 

Industry experts have said the new system could also raise the level of competition between Tenet and Tennessee-based Community Health Systems, which owns soon-to-open Grandview Medical Center on U.S. 280. The two out-of-state providers have clashed multiple times on projects in Birmingham. 

The merger also leaves UAB Health System as the only provider locally owned and operated. 

What we don't know 

Garry Gause, CEO of Tenet's southern region and former leader of Brookwood, said it's still unclear as to how the final leadership structure will be organized. 

He said Parrott will lead the new system and Brookwood CEO Chuck Stark will remain in his role. As far as how the rest of the C-suite will be organized, that will most likely be finalized when the merger officially closes in the third quarter, he said. 

It's also unclear if there will be any layoffs. Parrott said it was still too early to comment on the amount of positions that could be created or eliminated as part of the merger. However, experts have said that it's not uncommon with these types of mergers to have management and staff duplications that could result in layoffs. 

As part of the merger, the new system will receive $250 million in investments from Tenet to fund facility upgrades. Hospital officials have said all five hospitals in the system need renovation work, and Parrott said that injection of cash was a big part in entering into talks, but it hasn't been decided how those funds will be distributed. 

The new system has also yet to be named, but Parrott said they are working on forming a name that suits the system's mission. He did say when the joint venture was announced last year that the name would contain "Baptist."

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