Tufts and Boston Medical Center merger: Why not?

The Boston Globe (Boston Medical Center, Tufts in merger talks) shares the not-very-surprising story of two teaching hospitals thinking about teaming up.

Partners HealthCare and Beth Israel Deaconess (BIDMC) are the leading academic medical centers in town, with Tufts and Boston Medical Center (BMC) both struggling to compete. The financial challenges of Tufts and especially BMC are evidence of their positions in the food chain and the serious challenges of subsisting on government payments from Medicaid and Medicare, rather than the more lucrative commercial market.

Tufts and BMC are close together physically, so it should be reasonably straightforward to combine programs, build scale, and generate savings. The harder challenge will be to determine how to position the combined entity in the market. Partners is the big gorilla, with high spending and two famous hospitals. BIDMC is positioned as the somewhat less expensive, high end Harvard-affiliated choice.

Tufts has a good reputation, too, but has a hard time standing out. BMC is well respected, but the large safety net population makes it hard to invest to compete effectively. And these academic centers will never be as cost-effective as community-based players like Steward.

Let’s see what they come up with.

By healthcare business consultant David E. Williams, president of Health Business Group.

April 10, 2015

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