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Editorial: Merger has healthy prognosis

As of 12:01 a.m. last Saturday, St. Joseph Medical Center became the University of Maryland St. Joseph Medical Center.

This is not just a name change. It is a defining moment in the life cycles of both institutions and one that promises to benefit patients and health care providers.

There are times in this merger-and-acquisition-driven world of ours that deals are announced that seem to make no sense other than generating short-term financial windfalls, often enabled by crushing debt that brings problems sooner or later — usually sooner.

That does not appear to be the case here.

St. Joseph clearly needed rescuing. The community hospital in Towson, founded in 1864 by the Sisters of St. Francis of Philadelphia, had a distinguished tradition of delivering medical care.

But the hospital has been struggling with legal and financial problems since 2009, when hundreds of patients of St. Joseph’s former lead cardiologist began filing lawsuits claiming they had received unnecessary heart stents.

The hospital agreed last November to pay a $22 million settlement after federal officials concluded that, for more than a decade, St. Joseph paid illegal kickbacks to a medical group founded by its former lead cardiologist and had billed federal benefit programs for the medically unnecessary stents.

As a result of the scandal, patient admissions have plummeted, and St. Joseph has been hemorrhaging money — as much as $3 million in lost revenue each month.

Yet despite its recent problems, St. Joseph has a long, proud history and a modern physical plant with 263 beds in the heart of Baltimore County, making it a very desirable asset.

So why is it a good fit with the University of Maryland Medical System? First of all, UMMS offers financial stability, credibility, a network of facilities and physicians, economies of scale and an academic component — all of which will benefit St. Joseph.

At the same time, St. Joseph has excellent, underused facilities, especially in cardiac care, which will allow the University of Maryland Medical Center downtown to move some of its routine heart surgeries to the Towson facility, which has a lower cost structure. Shifting these surgeries will free up badly needed space at the downtown hospital, enabling UMMS to avoid some costly capital spending.

Also, each hospital has programs that will complement the other’s. For example, the University of Maryland Medical Center has a National Cancer Institute-designated cancer center, while St. Joseph has a National Cancer Institute-designated community cancer center.

St. Joseph also gives UMMS a strong foothold in the Baltimore County community hospital market, making it a good strategic fit in the system’s statewide network of 12 hospitals.

In making the acquisition, UMMS also has acted appropriately in agreeing to maintain the 148-year-old Catholic traditions and identity of St. Joseph. And the naming of former state Sen. Francis X. Kelly, a Catholic and longtime member of the UMMS board, as chairman of the new board of directors for the hospital is a master stroke of good leadership and good will.

All in all, this looks like a good deal for all parties. And we hope the biggest winners are the health care consumers of central Maryland.