Saturday, January 23, 2010

One View on Why the Rice-BCM Merger Failed

Last Thursday, I was at the Jones School to watch the new documentary Haynesville (which was excellent and about which I may blog later). While there, I got into a conversation with one of my old professors. I'll call him Professor X to preserve his anonymity (he does not, as far as I know, have psychic powers, and he is definitely neither bald nor confined to a wheelchair).

We got to talking about the failed BCM-Rice merger. He was really, really bummed about it. He didn't claim to be an insider to the negotiations, but he knew some insidery stuff. Specifically, he blamed Baylor University for the breakdown of negotiations (which jibes to a certain extent with what has been reported elsewhere). I asked him about BCM's debt load and risk. Professor X said that on the BCM side, there were philanthropists lined up to make them whole if the merger happened. I argued that that money, given now, is money that wouldn't be given later (say in the form of estate giving). His argued that this money was money that was going to BCM, not Rice, and that if they didn't give it now, they would possibly never give it at all because BCM might cease to exist. In either case, Rice was never going to see that particular pool of philanthropic money. (Not that Rice doesn't have its own supply, obviously.)

Furthermore, Professor X talked about good things that would have happened had the merger succeeded. BCM foolishly burned many bridges in the past few years. In retrospect, it's insane what they did. But the merger with Rice would have been a new day. Institutions who were alienated from BCM were willing to come back on board if Rice was running the show. Specifically, Professor X suggested that Methodist might renew their partnership with BCM. (It was BCM's split from Methodist Hospital that triggered BCM's current downward spiral.) One worry about the merger was that Rice would be joining with an unloved institution that had no teaching hospital. Professor X basically said that being part of Rice would erase the old acrimony.

So what happened? All along, Baylor University had veto power. According to Professor X, they were informed at every step what the merger would mean. This was a process that was started over a year ago, recall. Then at the last second, Baylor U. stood up and started making noises, adding conditions. This was after a year of careful negotiations between Rice and BCM, lining up unprecedented financial help, mending fences with previously alienated partners, etc.

Evidently, the Baylor U. conditions and interference became too much. Professor X dropped a bombshell. It was Leebron himself that ended the negotiations. I can only imagine that he concluded that Baylor U. was trying to sabotage the merger, and that there was no way it could progress. His frustration must have been immense.

Why did Baylor U. do it? Perhaps they believe that they can essentially take all the work Rice did and proceed. After all, Rice apparently has lined up hundreds of millions of dollars to rescue BCM. The reason those people are giving this money is because they believe that it would be a tragedy for Houston to lose BCM. So Baylor may be thinking, even if we elbow Rice out of the picture, the motivation of the philanthropists remains the same--rescue BCM.

We'll see if it works. But in the meantime, I would like to say this to the leadership at Baylor University: thanks a lot, assholes. That was real "Christian" of you.

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Anonymous Anonymous said...

Haynesville. My neck of the woods, Boyd. I spent the first 25 years of my life less than 20 miles from there.

Betcha a case of beer the film is at least 95% BS. Which would be OK, if it's GOOD BS.


12:56 PM  
Blogger  Robert Boyd said...

Why don't you watch the film before drawing conclusions. In any case, the name Haynesville doesn't refer to the town in northern Louisiana, but to the shale formation that covers a large area in Louisiana (and East Texas), including Shreveport. In any case, I do plan to write a short review.

(By the way, my family on my Dad's side is from Louisiana--near Natchitoches. We lived in Shreveport for a while when I was a kid, and I still have lots of relatives living up there right smack dab in the Haynesville Shale. And I work for a shale gas producer. So despite the fact that I am a nerdy artsy liberal city dweller, I think I'm pretty well-equipped to judge this movie as non-bullshit.)

2:22 PM  
Anonymous Anonymous said...

Professor X should have pointed out to you that Leebron has made a major mistake by not having a written agreement with Baylor U.

Also, the story about Methodist's being ready to renew its relationship with BCM is an urban legend. Methodist refused to make any commitment prior to a Rice-BCM merger.

8:00 AM  
Anonymous Anonymous said...

What remarkably poor insight. I have seen the the political powerplays that the leadership engages in behind closed doors. From the Research department, Medical School and the School of Allied Health there is always something unfortunate happening to students, fellows, residents and faculty. This instition is a dying breed of old school mentality. Its fragility is brought on by narcissistic leadersip, educational in-breeding, posturing, failure to realize the hospitals rule not the school, poor leadership, greed, political manipulation just to name a few. Not too mention that they owe investors of hundreds and hundreds and hundreds and hundreds and hundreds of millions of dollars. Good luck Baylor College of Medicine, aka Failure College of Medicine, you remind of a boat....a big boat....oh yea, The Titanic. I hope you have enough rafts.

3:58 PM  
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

4:04 PM  
Anonymous Anonymous said...

This comment has been removed by a blog administrator.

4:08 PM  
Blogger  Robert Boyd said...

Are you suggesting that I have poor insight, or Professor X? Because although my insight may indeed be awful, I certainly don't absolve BCM of its bad, fundamentally self-destructive decisions, which were clear for anyone to see. Nonetheless, Leebron, others at Rice (including Professor X), and many of the elite of Houston decided that despite its mistakes, BCM should be saved. (Obviously this is an arguable point.)But after a year of negotiations, it seems doubtful that anyone at Rice involved in the negotiations had any illusions about BCM.

In any case, if it was Baylor's plan to step in and replace Rice with themselves, they failed miserably, as could be expected. BCM told them no thanks.

4:09 PM  
Anonymous Anonymous said...

Why delete the comments, Is it unsavory to your palate? What a remarkable and surpising maneuver. I stumble upon this blog site, make a reply and a rhyme and it doesnt seem to sit well.

Baylor College of Medicine aka, Failure College of Medicine is exactly what it is now. There are lots of things that people find worthy to save. Do they act? Talk is cheap. A pledge is not the furniture cleaner, it is hard cold cash.

They are a very poor financial risk, they have limited revenue centers, the NIH who pays for the reserachers from abroad, its like slave labor. The Harris County Hospital District supplementing the residents, their tiny, insignificant medical clinic on a few floors that is owned by St. Lukes Episcopal Hospital, few benefectors, the medical students, the allied health students, those poor people in the nurse anesthesia program etc. etc.

I would hope that you would reconsider the deletion of my previous comments and repost them.

4:28 PM  
Anonymous Anonymous said...

Rice U fly High and Fast!!!Fly as fast as you can. Cheers to Leeebron!!! CHeers to the Rice Board of Directors!

4:31 PM  
Blogger  Robert Boyd said...

I deleted them because they are repetitive--they didn't add anything factual (or any new shades of opinion) to your first comment.

(By the way, whatever the merits of your opinion, calling BCM "Failure College of Medicine" makes you look dumb. Calling BCM "Failure College of Medicine" over and over makes you look dumb and mean.)

4:33 PM  
Anonymous Anonymous said...

Dumb. No. Mean, maybe. Calling Baylor University, "ass" "What a Christian university" now thats mean. Their relationship has been severed over 43 years ago, per a report I read.

Let others have an opportunity to read it, chime in and say something otherwise.

How is Methodist Hopsital and St. Lukes Episcopal Hospital refusing to budge with their relationship with a defunct BCM, repetitive. Their albatross near the VA stands as a shell. 10 comment blog.(at the time of this writing, more than half is mine.)

Since I am "dumb and mean" i guess you need someone else to participate and who can answer the question, "Wha't'Happened"

Take care

5:02 PM  
Blogger  Robert Boyd said...

Baylor University and BCM did split--except that Baylor retained some veto power over BCM decisions--for instance, the decision to merge. It is a matter of public record that they exercised this power sometime in December or early January, scuttling the merger between Rice and BCM.

I have nothing against Baylor per se, but I think this move deserves condemnation. Hence my comments (which appeared at the end of a long, fact and conjecture-filled post).

I have nothing against BCM, either. I would rather they survive than fail, but with new leadership.

I think my previous posts are pretty clear that I was opposed to the BCM-Rice merger. My primary worry was financial risk. The reason I gave voice to Professor X's opinion was because he seemed to have some inside knowledge and he is a person I respect a lot. Nonetheless, I am glad the merger didn't go through. (My concern over this issue derives from the fact that I am an alumnus of Rice. I have no personal connection with BCM--or with Baylor for the matter.)

You are welcome to comment or not. You are even welcome to call misbehaving institutions unchristian or even assholes. Just don't be so repetitive.

5:19 PM  
Anonymous Anonymous said...

What about the role of Texas children's Hospital (TCH)? TCH did not find it inappropriate to negotiate simultaneously with Rice and Baylor U.

1:09 AM  
Anonymous Rishi said...

Going back to the comment which labeled Baylor Med as the "Failure College of Medicine"... I'd love to know if the commentator has or currently is a student at the school. You're sure missing out on how much "failing" we've accomplished over the past year in light of the media's coverage of our darkest hours. -_-' It's easy to exaggerate what's going on in the media, but as you said Robert, clueless accusations make one look ridiculously dumb. Good thing he/she elected to remain anonymous.

From BCM's end, I'm also glad that the merger did not go through for several reasons. Guess everyone's happy. :-)

11:20 PM  

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