The Circle Tightens

PUBLISHED FEBRUARY 2025

Onset of the global pandemic in 2020 prompted dire warnings from America’s health-care systems, which rang alarm bells about revenues plummeting as people avoided hospitals for elective procedures.

In some ways, they were right. On the whole? Not so much. While seven of the 25 largest institutions in the Kansas City market recorded marginal revenue decreases—generally on the order of 1 percent or less, and mainly among the smaller facilities—the 18 others eventually posted 2020 numbers that topped the final pre-pandemic year of 2019.

Market-wide, those 25 saw combined revenues increase by more than $1.6 billion, reaching 49.2 billion in 2020. At that point, the growth became explosive: Combined revenues jumped to $49.3 billion in 2021, then $54.2 billion in 2022. The most recent full year of stated revenues, 2023, saw another $6.3 billion bump, crashing through the $60 billion barrier for the first time at $60.48 billion.

Those data points reveal the strength of the acute-health-care sector, but they do nothing to reveal the real change agents in a network of facilities serving a metro population of 2.2 million people.

Far more significant than COVID’s temporary impact is the realignment of ownership and operating agreements that have consolidated market share among three large health systems: HCA Midwest Health, The University of Kansas Health System, and what is now the western division of St. Louis-based BJC Health System, Saint Luke’s Health System. 

They account for 14 of the 32 hospitals in the metro area, but generate more than 70 percent of patient revenues. The remaining 18 hospitals, some owned by smaller systems, some by their local municipalities, and some independent, are fighting for less than 30 percent of the market-wide revenue share.

Hospital executives say that there are good reasons for the consolidations, which mirror trends among health-care systems nationwide, and that patients can expect benefits from those alliances.

“The Kansas City hospital market is going through consolidation similar to what other larger markets went through prior to COVID,” says Charlie Shields, president and CEO of University Health. But he added a cautionary note: “While the stated goal is always improved quality, lower cost and improved access, experiences in other metropolitan markets indicate this is seldom achieved.”  

As for consumer impact, Shields said, “You will likely see the number of independent physician practices continue to dwindle—I don’t think you can blame this totally on merger and acquisition activity, but it is a factor. Also, you may see closer alignment between specific health plans and hospital systems. In other words, not all hospitals will be in all health plans.”  

Recent activity in the metro area has seen KU Health, which operates the largest single institution in The University of Kansas Hospital, add Olathe Health System and Liberty Health to its organizational structure since 2023. 

Saint Luke’s, with the massive Saint Luke’s Hospital campus near the Country Club Plaza, is now part of a statewide system serving all 6.2 million Missourians; BJC retained the BJC HealthCare brand with its operations on the eastern side of the state.

“The integration between BJC and Saint Luke’s was more about the opportunities ahead and a vision for the future of care than just responding to the market conditions of the moment,” says Julie Quirin, the western region CEO. “As we lower costs through shared efficiencies and greater purchasing power, that provides the flexibility to invest in our teams and new models of care. It provides the scale to expand access to the latest technologies, treatments, and clinical trials, and to enhance research and innovation opportunities. And it gives us the foundation to increase our investment in our communities.”

HCA Midwest Health, with six facilities in the immediate metro area, has basically held serve as consolidations have taken place around it. Samuel Hazen, CEO of the local division’s parent company in Nashville, HCA Healthcare, said last year that the 188-hospital system was “built to be bigger.” Opportunities to do so, however, haven’t been plentiful, he said in comments to an analyst that were reported in Becker’s Hospital Review.

“I don’t know if we’ll deviate from our model,” Hazen said. “Our model is more centered on making our local system work better. Work better for the community, better for our patients, and work better for other stakeholders that are connected to it.”

Deviating from that model, he said, is not the best answer for the company.

Executives from other hospitals and systems in the region didn’t respond to requests for comment or decline to weigh in.

For Quirin, the integration with BJC yields advantages of scale without sacrificing the ability to tailor a go-to-market strategy to Kansas City and the surrounding communities.

“We have the benefits of efficiency and of being able to react more quickly to disruptions with concentrations of expertise and talent on both sides of the state, and we are still just as locked in on the needs of our home market as we’ve always been,” she said.

Case in point, she said: Saint Luke’s hired 2,622 new team members in 2024, and 77 new physicians. 

“Given the talent shortage in health care, that is a great result that speaks to Saint Luke’s being a place where people with options want to work. And the financial stability we have now as an integrated system gives us the ability to continue investing for the future. It’s really the best of both worlds.”