The leaders of Rhode Island Hospital and Miriam Hospital have regional competition on their minds as they seek to consolidate into a tertiary-care and physician-training force to reckon with in Providence, R.I.
The two hospitals in late December announced an intent to consolidate by creating a new holding company. Each hospital will operate as subsidiaries and elect an equal number of directors to the parent board.
The agreement, forged by board members of each hospital, was struck within six weeks of an initial contact between Rhode Island Hospital's chairman, Scott Laurans, and Miriam's chairman, Maurice Glicksman, said William Kreykes, president and chief executive officer of Rhode Island Hospital.
The union of the two hospitals, both affiliated with Brown University School of Medicine, would create a force of 7,000 employees, 1,500 licensed beds and a projected $400 million in 1994 revenues.
The combination of a strong board dynamic, quick agreement and parent/subsidiary structure parallels the particulars of the deal struck by Massachusetts General Hospital and Brigham and Women's Hospital, both Boston af-filiates of Harvard Medical School, just weeks earlier (Dec. 13, 1993, p. 3).
Those who molded the Providence deal had academic medical centers such as Harvard's in mind. "I believe we're going to be looking at a more regional market for tertiary care," said Steven Baron, Miriam's president and CEO.
Mr. Baron said the consolidated organization would try to work with the dozen other hospitals in Rhode Island, mobilizing the state's healthcare capacity for the larger battle with such academic centers as Boston, New Haven and Hartford, Conn., and Worcester, Mass.
The president and CEO of a suburban Providence hospital agreed that the merger would help the two hospitals compete more strongly for tertiary care and added it was "a very bold move" considering what he observed as dramatic differences in size and culture. Rhode Island, with 980 licensed beds, is non-sectarian, while 526-bed Miriam has a strong Jewish religious tradition.
"They were able to see through that and have the vision to recognize that in the era of reform, the state of Rhode Island cannot afford to duplicate tertiary services," said H. John Keimig, CEO of North Providence (R.I.) Hospital.
Rhode Island Hospital posted a 2.67% total profit margin in 1992 but lost $4 million on $254 million in revenues from operations, according to HCIA, a Baltimore-based healthcare data firm. Miriam Hospital's total margin in 1992 was 2.99%, including an operating profit of $2.8 million on operating revenues of $97.5 million.
The regional battle extends to competition for the best medical residents, said Mr. Kreykes. Brown University's medical school, at 20 years old, is a relative newcomer, but the combination of Rhode Island Hospital and Miriam could increase the ability to compete for residencies with longstanding programs such as Harvard's, he said.
Mergers & acquisitions