Wow! This morning’s Houston Chronicle announces that Texas Children’s Hospital has joined the merger talks between Baylor College of Medicine and Rice University. Admittedly, I didn’t see that coming. I knew Leebron was serious when he said he didn’t want to run a hospital, so I was expecting them to sell it off.
My first impression of the deal is positive. TCH is one of the best children’s hospitals in the country and has been growing. So it brings experienced hospital management to the table and gains room to grow out of its current land-locked location.
What makes me nervous is the complexity of a deal like this. Three separate institutions–three agendas, three cultures, three sets of books–coming together has many more opportunities for failure than the merger of two institutions. Imagine how much effort would be required to merge Daimler-Chrysler-Toyota successfully. Two was difficult enough! Risk isn’t linearly proportional to complexity. It’s more like complexity-squared.
Fortunately, the existing relationships between the three institutions can mitigate this risk. They are separate institutions, but they aren’t exactly independent. TCH is BCM’s primary pediatric hospital; they are already working closely together in so many ways. Similarly, BCM and Rice have been collaborating on the research side for a while through collaborations like the Gulf Coast Consortia. So the cultures aren’t entirely foreign to each other.
There are two final points I want to make. First, the letter from institutions stated explicitly that they intend to strengthen the ties of new institution with the other Texas Medical Center institutions, specifically The Methodist Hospital, St. Luke’s Episcopal Hospital, the Michael E. DeBakey Veterans Affairs Medical Center and Ben Taub General Hospital. (Note that Methodist was mentioned first.) I’ve written about this before, but it’s absolutely critical that institutions of the TMC work together. All of them derive competitive advantage from each other because of their colocation in the largest medical center in the world.
Finally, this latest development takes the deal to a whole new level. It was a big deal before, but now it’s huge. It’s going to get some attention, not just in Houston or Texas, but worldwide. That’s a good thing. Our institutions in the TMC often don’t get the recognition they deserve because we’re not Boston or San Francisco. Until now, M.D. Anderson has been the only 800-pound gorilla in the medical center. Now maybe we’ll have two very large gorillas.
So, I wish I could have been a fly on the wall in some of the meetings that lead to this announcement. I’m thoroughly enjoying watching this play out.
Post a comment and let me know what you think about TCH joining the party!
