Sarasota (Fla.) Memorial Hospital is discussing a possible lease of 512-bed Manatee Memorial Hospital in neighboring Bradenton with owner Baptist Hospitals and Health Systems, Phoenix.
Talk of a possible affiliation with 952-bed Sarasota Memorial has caused an uproar among some Manatee Memorial physicians, who view their neighbors to the south as competition. However, Sarasota Memorial first must gain permission from the Florida Legislature to acquire assets in Manatee County.
Sarasota Memorial executives have drafted legislation and hope to have it approved in a session later this year. Sarasota Memorial is a public hospital with elected board members. Its 1949 enabling legislation prohibits acquisitions outside of Sarasota County.
Baptist Hospitals executives proposed the idea of a 30-year lease of Manatee Memorial in April. Since then, the Sarasota and Manatee hospital boards have voted to explore collaborative options. Manatee Memorial physicians, however, have expressed concerns about a link with Sarasota Memorial.
In response, Sarasota executives issued six promises to Manatee. They included assurances that the medical staffs would remain independent and that Manatee's board would control the mix of services.
But sources close to Manatee Memorial said the physicians most opposed to the deal with Sarasota Memorial are those who also hold privileges at Manatee's chief competitor, 383-bed L.W. Blake Memorial Hospital. These physicians, sources said, would like to see Manatee remain independent or be acquired by Columbia/HCA Healthcare Corp., which owns Blake Memorial.
In 1989, Baptist signed an agreement in principle to sell its hospitals, including Manatee, to Columbia Hospital Corp., then a four-hospital system. But the deal fell through when the Internal Revenue Service questioned whether Columbia could assume Baptist's $140 million in tax-exempt bonds (Dec. 15, 1989, p. 4).
William Hussey, president of Columbia's southwest Florida division, said no discussions have taken place between Baptist and Columbia about a possible acquisition. He added, however, that Columbia would be interested if Manatee became available.
Gerald Wissink, Baptist's president and chief executive officer, said the system is looking to regionalize its healthcare activities in Arizona, where it owns three other hospitals.
"Having a hospital located 2,000 miles away doesn't promote the type of efficiencies you can get with local control," Mr. Wissink said. If the proposed lease with Sarasota falls through, Mr. Wissink said Baptist would assess other options.
In the late 1980s, financial and management problems fueled by excessive expansion plans at Baptist Hospitals nearly bankrupted the system (Oct. 20, 1989, p. 34). But over the past four years, Baptist has become profitable.
As part of its aggressive expansion plans under former President and CEO J. Barry Johnson, Baptist purchased Manatee Memorial, a county hospital, in 1984 for $44 million. The proceeds were placed in a trust fund with a percentage of the interest on the principal earmarked to pay for a portion of Manatee's indigent-care costs. The trust fund has grown to nearly $60 million.
But the interest never has covered indigent-care costs. Manatee Memorial officials recently asked the county to increase its charity-care payments, Mr. Wissink said. In 1994, Manatee Memorial expects to spend $6.7 million on indigent care, compared with trust fund payments of $917,000. It earned net income of $3.3 million in 1993.
Mr. Wissink said increasing indigent-care payments is independent of seeking a lease with Sarasota Memorial or other organizations.
Sarasota Memorial also is continuing its discussions regarding an affiliation with 342-bed Venice Hospital, which is located in south Sarasota County. A decision is expected early this fall.
Affiliation talks by the three hospitals were stimulated, in part, by Columbia's recent acquisition of Sarasota's third hospital, 200-bed Doctors Hospital. Columbia owns a string of 17 hospitals on Florida's southwest coast from Tampa to Fort Myers.