Menninger, Baylor Finally Tie Knot After Calling Off Earlier Wedding

Menninger won’t be in Kansas anymore. More than two years after the renowned psychiatric facility announced a controversial decision to leave Topeka, where it has been based since its founding 77 years ago, Menninger’s trustees and directors voted on December 4 to finalize the proposal to move to Houston and merge with Baylor College of Medicine and Methodist Hospital of Houston (Psychiatric News, November 7, 2001; November 3, 2000).

Facing mounting financial pressures in America’s heartland caused by a shrinking patient base, reduced reimbursements, and shorter inpatient stays, Menninger had begun relying on its endowment to make up budget shortfalls.

In September 2000, Walter Menninger, M.D., then the president and CEO, announced that the future of the facility that bears his family’s name lay in Texas in the form of a merger with Baylor and one of its teaching facilities, Methodist Hospital. He emphasized at that time that the infusion of capital the merger would bring was only one factor in Menninger’s decision to relocate. He said that Baylor and Menninger shared “a simpatico philosophy and vision about dealing with the health care situation and making a difference in the world.”

Kansas’s governor and other state officials offered an incentive package of about $100 million to keep Menninger in that state, but the facility stuck to its guns about moving to Texas.

The Baylor psychiatry department was to be renamed the Menninger department of psychiatry, and Menninger would have the funds to expand its research endeavors greatly.

Then, in July 2001 Walter Menninger surprised observers by announcing that negotiations over the merger and move had come to an end, noting that while negotiations were “amicable,” Baylor and Menninger were unable to resolve certain key differences. The explanation given for the differences was an inability to agree on money and control issues.

By the time the parties decided to go their separate ways, 13 Menninger adult and child psychiatry residents had relocated to Baylor, as had several of Menninger’s most prominent psychiatrists.

Then last month Menninger released the news that its boards of directors and trustees unanimously approved a revitalized agreement to move to Houston after all.

The move is scheduled to take place in the spring and be completed by early June, according to a Menninger press release.

John McKelvey, who replaced Walter Menninger as president and CEO, noted that Baylor and Methodist Hospital are the perfect match for his facility.

“They fulfilled the required criteria, which included an internationally recognized medical center; compatibilities in cultures, treatment, and education concepts; and a strong research center with a top-ranked medical school,” McKelvey said. “All of these lead to the ability to recruit world-class clinicians and researchers, and fulfill our mission. . . .”

The chair of Baylor College of Medicine’s board of trustees, Corbin J. Robertson, said the board “is confident that these three leading institutions will result in the best possible research and treatment programs.”

The new partnership will be accompanied by the creation of a new board of directors, with 50 percent of the representation coming from Menninger, 25 percent from Baylor, and 25 percent from Methodist Hospital. In addition, a new charitable foundation will support the clinical activities of the new Menninger Clinic and the research and educational activities of the Menninger Department of Psychiatry at Baylor College of Medicine, according to a Menninger press release.

All of Menninger’s assets in Topeka will be sold, including its 500-acre campus. Menninger’s current staff will not lose their jobs as long as they are willing to relocate to Houston. The staff had already been pared from about 650 employees when the merger was originally announced to 250 today. There has also been a major restructuring of Menninger’s management and operations in the intervening two years. The greatly reduced staff and restructured management appear to have been critical factors in arriving at the final agreement.

All parties agreed that they would not release details of the financial arrangements. ▪