When hospitals merge (it happens more frequently than you might think), sometimes the physical buildings might remain the same, and usually most of the lower end staff remain, but upper end staff might become redundant. Certain programs, such as internships, might also get cut. (This would explain why Lexie looked particularly apprehensive).
It appears that the chief might have offered the suggestion to his own hospital board as an economic consideration (remember, he was concerned about spending money on tests)--knowing Mercy had similar concerns. Merged hospitals means, for example, no need for two MRI set ups, when one between the two hospitals might be just fine. (Of course, that would also mean some of the radiology staff would become redundant.)He might have offered to oversee the transition, thus securing--at least temporarily--his position. The board would not want a less experienced chief (such as Derek) in that position.It will be interesting to see this play out, and to watch the residents jockeying for positions.   See 4 other replies