In addition, the partnership will result in one of the 50 largest health care systems in the nation, netting $3.96 billion in annual revenue.
The agreement, announced Thursday, follows about 10 months of discussions and analysis by both organizations and unanimous votes by both boards to pursue this partnership.
However, the as-yet-unnamed company has been years in the making as the two not-for-profit, locally governed health care systems worked to find ways to trim expenses and collaborate on health care services.
“Both organizations are committed to ensuring our community members receive the health care they need, regardless of their ability to pay,” Palmetto Health CEO Charles Beaman said. “We will create a culture that attracts, retains and develops the highest quality and diversity of team members, and continue to teach the next generation of physicians and other caregivers.”
Palmetto Health chair Beverly Chrisman noted that the partnership ensures that an S.C.-based, not-for-profit health care system will be available for patients to choose.
“We are building this new health company based on our prior collaborative successes, which demonstrate the promise of our partnership,” Chrisman said.
The Palmetto State’s rates of obesity, diabetes, stroke, and cardiovascular and pulmonary disease are among the highest in the nation, Beaman said. The partnership is expected to improve patient experience, clinical quality and access to care, and address rising health care costs, officials said.
Reasons for the merger include the fact that as health care continues to evolve, labor costs and other expenses continue to rise at a faster rate than patients’ ability to pay, Beaman said.
The new company will have the “scale, scope and resources required to address the serious health issues of the people it serves. It also will continue to be a not-for-profit, mission-driven organization committed to caring for our community members, and making health care more affordable and accessible,” according to a press release.
Because of its size, the new company will have the potential to invest up to an additional $1 billion over the next five years in programs, technology, facilities and team members, the release said.
“Greenville Health System and Palmetto Health are joining together from individual positions of strength,” said Greenville CEO Michael Riordan. “We have a long history of successful collaboration, as well as a strong cultural fit and mutual commitment to make South Carolina healthier.”
A newly organized 16-member board with equal representation from boards affiliated with Greenville Health System and Palmetto Health will oversee the new company. Riordan and Beaman will serve as co-CEOs and share leadership responsibilities.
During the next phases of due diligence and planning, both health care systems will seek necessary third-party approvals, including an OK from federal authorities that the partnership won’t violated U.S. anti-trust laws.
Locally, the deal still needs approval of the Richland County Council, which must sign off on a lease agreement for Richland Memorial Hospital, Beaman said.
Palmetto Health was created in 1998 through the merger of Richland Memorial Hospital, which was owned by the county, and Baptist Medical Center, which was owned by the Baptist Healthcare System. Under that agreement, Richland County agreed to lease Richland Memorial to the Palmetto Health company.
Beaman said he expects the merger plan will be presented at next week’s council meeting.
In 2015, Palmetto Health acquired Tuomey Healthcare System in Sumter County and a year earlier opened Baptist Parkridge, a 76-bed hospital near Irmo.
Since 2009, Palmetto Health has partnered with the Greenville system in operating Baptist Easley Hospital.
Once completed, the partnership will result in the creation of the state’s largest provider of charity and uncompensated care with hundreds of millions of dollars provided annually and nearly one-third of the state’s Medicaid services.
It also will be the largest private employer in South Carolina with more than 28,000 employees and 2,800 physicians. And nearly half of South Carolinians will be within 15 minutes of the new health company’s physician practices, hospitals and other health care facilities.
Beaman said the deal is expected to close Jan. 1. In the meantime, Greenville Health System and Palmetto Health will continue to offer care and services as two separate, independent organizations.