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CEOs say Baylor Scott & White Health merger made strategic sense

one year old

This is one in a series of blog posts marking the one-year anniversary of the merger of Baylor Health Care System and Scott & White Health.

The former chief executive officers of Baylor Health Care System and Scott & White Health say there was no urgency to merge. It simply made strategic sense for both.

Joel Allison, former Baylor CEO and now CEO of Baylor Scott & White Health (BSWH), said Baylor was seeking a larger footprint in Texas because he could see that payers were imposing more risk management on providers. He said there was a natural fit with Scott & White, given that the two systems were the only two Texas members of a national consortium of U.S. health systems called the High Value Healthcare Collaborative.

“A merger wasn’t something we had to do right now,” Allison said. “At first, our board thought it was a stupid idea. We had to go beyond our region and look at a statewide network. National players were entering the market. We had to respond,” he said.

Robert Pryor, MD, former Scott & White Health (SWH) CEO and now chief operating officer of BSWH, said his system also wanted to grow to practice population health.

Dr. Pryor said Baylor was the top choice. Like Baylor, SWH was not in a hurry.

“Explore."

“The platform wasn’t burning,” Dr. Pryor said. “But we saw the thunderstorm that would bring lightening that could ignite the platform. My job was to create an organization that could respond five years down the line. You can’t wait five years because then it is too late.”

The cultural fit was clear once the combined system agreed on mission, vision and value statements in a matter of minutes.

McKinsey & Company performed a “cultural audit” prior to the merger. McKinsey uses online employee surveys and focus groups to create what it calls an organizational health index (OHI), which it says is a gauge of an organization’s ability to align, execute and renew itself quickly. The index attempts to measure organizational skills such as leadership, coordination and external orientation. The company benchmarks the audit results against its database of more than 900 organizations.

Allison said McKinsey concluded the cultural match was significant.

“It was the first one where (McKinsey) had seen so many more ‘alikes’ than differences,” Allison said. “That was validation that these cultures do match. Both board chairs and CEOs were all Baylor graduates. It didn’t hurt that the football team was doing well during all of this (merger activity).”

Dr. Pryor said Scott & White began as a clinic model that later included hospitals, while Baylor began as a hospital system.

“People said, ‘That (merger) will never work,” Dr. Pryor said. “But a year later, we actually pulled it off. If you have trust in each other, you know everything will be OK. You may have bumps in the road, but trust overcomes that.”

About the author

Steve Jacob
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Steve is a senior marketing and public relations consultant for Baylor Scott & White Health. He spent nearly four decades in newspaper and magazine editorial and business management and is the author of two books on healthcare reform. He was also the founding editor of D Magazine's D Healthcare Daily.

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CEOs say Baylor Scott & White Health merger made strategic sense