TidalHealth says it doesn’t anticipate Delaware job losses in merger
This story was produced by Spotlight Delaware as part of a partnership with Delaware Online/The News Journal. For more about Spotlight Delaware, visit www.spotlightdelaware.org.
The CEO of TidalHealth, the company that owns the main hospital in western Sussex County, says he will not lay off health care workers as a result of a planned merger with a nearby Maryland-based hospital system.
The comments to Spotlight Delaware made last month follow years of challenges for hospitals in attracting and retaining physicians to the largely rural area.
TidalHealth and Atlantic General Hospital – a company based on Maryland’s Eastern Shore – signed a contract in December laying out their intention to combine their organizations. And in a press release, they said the merger would “provide capital funding” to expand health care services in Sussex County and Southeastern Maryland.
The claim follows a separate merger in 2020 that formed the TidalHealth company and resulted in service cuts and OB-GYN shortages across Sussex County.
That merger combined multiple Delmarva-area health systems with what was called the Nanticoke Memorial Hospital in Seaford. About two years after the deal went through, TidalHealth threatened to shutter the obstetrics department at the Seaford hospital, if it didn’t improve its finances within the year. The hospital continues to have an obstetrics department today, according to its website.
TidalHealth CEO Steve Leonard said the latest merger comes after years of financial and workforce losses that occurred in the wake of the COVID-19 pandemic. Atlantic General has also said smaller hospitals struggled coming out of the pandemic to manage high costs of labor and drugs.
Furthermore, the two hospital systems said the merger is part of a larger goal to draw physicians to the Delmarva Peninsula.
“It’s hard being a small hospital these days,” Leonard said.
He said the hospitals plan to integrate by May 1. Board approvals from both hospitals are still pending, he said.
What could the merger mean?
A professor who studies hospital mergers and their potential antitrust impacts said when hospitals merge, that loss in competition can lead to reductions in quality, especially in states where prices are regulated, such as Maryland.
Christopher Garmon, an associate Professor of health administration at the University of Missouri – Kansas City, said mergers can lead to lower pay for hospital staff and to higher prices for employees whose businesses pay for health insurance.
“If all of a sudden, hospitals in your area merge, prices go up, then those employers’ health care costs go up,” he said. “What are they going to do? Well, you’re not going to get those wage increases like you would.”
Leonard said he understands the argument that less competition may have an effect on the health ecosystem, but that most hospitals today are part of major health care systems.
He also said his company’s merger with Atlantic General is too small to warrant a review from the Federal Trade Commission, which determines whether mergers will harm consumers. He said his hospital company has notified state regulators.
Leonard added that TidalHealth was approached more than a year ago by Atlantic General after he said it examined what it needed to do to serve its community. Now, Atlantic General is set to join the TidalHealth system in what Leonard unofficially called “TidalHealth 2.0.”
A goal of the merger, Leonard stressed, is to create a health system that’s able to draw young medical professionals to the area.
Sussex County hospitals and clinics have struggled to compete with other medical systems in Philadelphia and Baltimore.
The federal government reported that Sussex County is short 21 primary care physicians for Medicaid-eligible patients, as of 2022. It’s also deficient in dental and mental health professionals.
Leonard said TidalHealth has been able to train and retain multiple physicians in recent years. And those physicians typically take jobs with his hospital system after they finish training.
He said he hopes the merger can show the area is attractive for physicians and specialists due to its proximity to the ocean and Delmarva’s bays.
TidalHealth is also set to open new facilities in Millsboro totaling more than 150,000 square feet, according to a report from the Delaware Business Times. Leonard told Spotlight Delaware he hopes it will hire 400 new employees once the new facilities open.
The final details of the TidalHealth and Atlantic General merger are set to be announced sometime this spring, according to a company press release.
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