Baylor College of Medicine - Rice University Merger records

In October 2008 Rice University and Baylor College of Medicine announced in a joint statement that they were “exploring the possibility of a closer affiliation” and that “preliminary talks” were underway. It was thought that such a merger would bring Rice reputational enhancement and greater strength in drawing biomedical research funds, and that B.C.M., one of only nine stand-alone medical schools, would gain the security of a university affiliation. There had been previous considerations of such a merger, but they had not reached a serious stage, mostly because of resistance on Rice’s part. In 2008, however, the president of Rice, David Leebron, was notably receptive to the idea and began scheduling meetings with key faculty to gauge their interest.

The difference in size of the endowments of the two institutions emerged as a basis of controversy early in the conversation period. As of June 30, 2008, Rice’s endowment was $4.6 billion, and as of September 30, 2008, that of B.C.M. was $954 million. There was concern at Rice that financial needs of B.C.M. would weaken the university’s endowment.

In March 2009, the governing boards of the two institutions took the step of signing a memorandum of understanding, typically considered the first stage in the formation of a formal contract. A complicating issue continued to be the involvement of B.C.M. in construction of a hospital, which had begun in 2007.

Uncertainties at Rice about the overall wisdom of the merger led to a convening of Rice faculty in April to discuss the proposal. The outcome was creation of a faculty committee chaired by a professor to prepare a report on the potential benefits, costs, and risks of the proposed merger. By November of 2009, the work of this 15-member Faculty Merger Review Committee, combined with discussions with the board of trustees and other representatives of Rice’s schools and departments, led to development of a set of preconditions for any merger. They included a strong private adult hospital partnership for B.C.M. and significant philanthropic resources. It was also required that B.C.M. be on a path to eliminating its operating deficit, since use of Rice’s resources to subsidize future B.C.M. deficits was not to be allowed.

When the Rice Faculty Senate met in November to vote on the merger, the outcome was a resolution opposing the merger which had 59 votes for it and 61 against. If four administrators had not exercised their right to vote, the faculty conclusion would have been in opposition to the merger.

January 31, 2010 was the date set for expiration of the memorandum of understanding signed in March 2009. In mid-January a joint statement by the presidents of Rice and B.C.M. announced that discussions of a merger of the two institutions had been terminated. No reasons were given in the statement. It said, “With the MOU due to expire this month, the leadership of both institutions decided it is in the best interests of both B.C.M. and Rice University to strengthen the existing relationship without a formal merger.”