September 26, 2019

Lafayette General Health and Ochsner Health System on Wednesday announced their intention to merge, which would form the largest health system in the Gulf South.

Report: How to prepare for mega-mergers

Details on the merger

The deal would expand on an existing clinical affiliation between the two health systems.

Under the agreement, Lafayette General would "anchor services as the regional health care hub in Southwest Louisiana for the statewide health system," according to a release. Meanwhile, Ochsner would invest $365 million in the Acadiana region, where Lafayette is located, over the next decade, including over $50 million to expand health services such as pediatrics, women's health, and cancer services, as well as launching new behavioral health services.

The deal would also create a $10 million Community Support Fund that the Lafayette General Board would oversee to promote wellness in the Acadiana region.

The two health systems also said about 48 residency programs will be added at Lafayette General Medical Center and the minimum pay across the health system would increase by $2 per hour to $12 per hour.

Once completed, the merged system would have 33 hospitals and 139 clinics across southern Louisiana.

Lafayette General would retain its name after the merger. However, according to David Callecod, Lafayette General's president, the two systems would work on a co-branding strategy.

The merger, which is subject to regulatory approval, is expected to be complete by spring 2020, according to a release.

Comments

Callecod noted that Lafayette General is facing "industry headwinds" that required more resources and said that "[n]ow is absolutely the time for us to make bold decisions and proactive decisions in order for us to fulfill our mission." He added that the merger "allows us and will provide us an opportunity to invest capital in a number of our key service lines in order to grow those service lines and increase the number of specialists we have."

David Wilson, Lafayette General Health Board of Trustees chair, said that last year, Louisiana ranked as the least-healthy state in the country, and that with this merger, "we will be able to provide better access to health care here in Acadiana and to continue growing our local economy."

Warner Thomas, president and CEO of Ochsner, said the two health systems "have the responsibility to improve quality and safety, increase access and make healthcare more affordable." He added that Louisiana faces "a number of critical health issues" and that, with the merger, "we can tackle these issues to improve health care much faster than we can by working alone" (Daily Advertiser, 9/25; KATC, 9/25; Bannow, Modern Healthcare, 9/25).

Learn how mega-mergers could impact your organization

Health care mergers and acquisitions are hardly new, but many recent transactions involve vertical integration: new-in-kind combinations of major players resulting in unprecedented scale and scope.

Use this research report to plan for integrators' possible moves, forecast potential effects on your organization, and create a plan to defend against or capitalize on the changes.

Download Now
Download Now

Topics