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Baylor University Medical Center in Dallas. Photo: Baylor Scott & White Health

Leaders of Baylor Scott & White Health and Memorial Hermann Health System said Monday they are discussing a potential merger that would create a behemoth not-for-profit system across Texas with 68 hospitals and almost $15 billion in annual revenue.

Why it matters: Hospitals have been consolidating rapidly, as executives argue bigger scale will lead to better care and lower costs. But research shows hospitals with more market power raise prices, and these deals do not guarantee better, less expensive care.

The details: Baylor Scott & White mostly operates throughout central Texas, with a heavy presence in Dallas, while Memorial Hermann is based in Houston. Both systems also own their own health insurance companies.

  • Baylor Scott & White itself is the product of the merger between Baylor Health Care System and Scott & White Healthcare five years ago.
  • Baylor Scott & White has above-average profits, recording a 7% operating margin and 10% total margin in the first nine months of its latest fiscal year. Memorial Hermann is profitable, but has struggled in the past 18 months in the competitive Houston area.
  • The two systems expect to close a deal by next year and did not say whether there would be layoffs. Baylor Scott & White CEO Jim Hinton would be the CEO of the combined system.

Go deeper

Biden signs order overturning Trump's transgender military ban

Photo: Tom Brenner/Getty Images

President Biden signed an executive order on Monday overturning the Trump administration's ban on transgender Americans serving in the military.

Why it matters: The ban, which allowed the military to bar openly transgender recruits and discharge people for not living as their sex assigned at birth, affected up to 15,000 service members, according to tallies from the National Center for Transgender Equality and Transgender American Veterans Association.

GOP Sen. Rob Portman will not run for re-election, citing "partisan gridlock"

Photo: Drew Angerer/Getty Images

Sen. Rob Portman (R-Ohio) announced Monday he will not run for a third term in the U.S. Senate in 2022, citing "partisan gridlock."

Why it matters: It's a surprise retirement from a prominent Senate Republican who easily won re-election in 2016 and was expected to do so again in 2022, creating an open Senate seat in a red-leaning swing state.

Dan Primack, author of Pro Rata
1 hour ago - Economy & Business

Merger Monday has been overrun by SPACs

Illustration: Aïda Amer/Axios

Five companies this morning announced plans to go public via reverse mergers with SPACs, at an aggregate market value of more than $15 billion. And there might be even more by the time you read this.

The bottom line: SPAC merger activity hasn't peaked. If anything, it's just getting started.