Officials expect the merger agreement between MedStar Hospitals and Montgomery General to close by the end of the month.
Olney-based Montgomery General began focusing on MedStar in October, according to spokeswoman Lynne Myers. The hospital had been soliciting potential partners since March of last year.
“This is really going to help us accelerate the growth that we believe we need to make to meet the needs of our area,” Myers said, noting that Olney’s population has been growing rapidly.
Montgomery General’s expansion plans include new outpatient facilities and conversion of the entire hospital to private beds. Construction on the expansion project is expected to begin in the next two months, and take about two years to complete, she said.
The deal was appealing to Columbia, Md.-based MedStar because of its geographic location, said new CEO Kenneth Samet, who took over the position Jan. 1.
“As a $3.1 billion organization, we don’t have to grow for growth’s sake,” Samet said. “What we do need to do is look for strategic partners.”
The trend of independent hospitals merging with larger networks has been picking up steam for the past year and a half or so, according to Steven Eisenberg, a partner with Baker Hostetler who specializes in health care law. Better access to capital and growing competition have driven the trend, he said.
“Larger hospital systems have been trying to compete with the community fiefdom of the smaller hospitals, so rather than trying to beat them off, they join them,” Eisenberg said.
