The U.S. Justice Department is conducting an antitrust probe of a partnership agreement between the only two hospitals in Dubuque, Iowa, MODERN HEALTHCARE has learned.
The boards of 320-bed Mercy Health Center and 124-bed Finley Hospital want to form a partnership called the Dubuque Regional Health System that would form a fully integrated healthcare delivery system. Both hospitals insist the partnership isn't a merger.
"This is an effort by the hospitals to achieve efficiencies and better control costs through a structure that will allow them to do that while preserving their separate identities," said David Ettinger, a Detroit lawyer representing both hospitals. "Lots of people do business in a corporate form, and lots of people do it in a partnership form."
Mr. Ettinger described the Justice Department investigation as "routine" and predicted the probe would end with the government clearing the agreement.
A partnership agreement was signed last month by the parent corporations, Sisters of Mercy Health Corp. of Farmington Hills, Mich., and the Finley Tri-States Health Group of Dubuque, that would allow each hospital to maintain its own assets and individual identities. Dubuque is a city of about 86,000 people on the Mississippi River in northeast Iowa.
"We're looking at the proposed transaction," said Gina Talamona, a public affairs agent with the Justice Department in Washington. The Justice Department wouldn't elaborate on the investigation or when it would be completed.
Finley and Mercy had combined assets of $110 million in 1992, according to HCIA, the Baltimore-based healthcare research firm.
Under the agreement, the hospitals would use a formula to calculate how to share future profits or losses. The hospitals have hired the Cleveland-based firm of AIM Executive to search for a president and chief executive officer for the new regional system. Top executives at each hospital would answer to that executive, the search firm said.
The new board will have 18 members, consisting of board members from both hospitals as well as physicians and community leaders.
In 1992, Finley had net income of $3.5 million on net revenues of $37.5 million, HCIA said. Meanwhile, Mercy reported net income of $4.6 million on net revenue of $68.2 million, HCIA said.