Healthcare reform makes strange bedfellows, but none may be stranger than the budding romance between Roper Hospital and Bon Secours-St. Francis Xavier Hospital in Charleston, S.C.
For years, the hospitals were locked in a classic certificate-of-need battle over a lucrative suburban market west of downtown Charleston, located across the Ashley River.
But last month, the two sides revealed that they had agreed to pursue the formation of a "joint development company" that would oversee the creation of an integrated delivery system serving the Charleston market.
The 90-day memorandum of intent between Bon Secours-St. Francis and Roper's parent corporation, Medical Society Health Systems, expires in mid-October.
In a written statement, the hospitals said, "After that time, a final decision will be made about forming a joint development company based on equal ownership with equal responsibility and rights."
If the resulting company oversees acute-care services, it would control more than 41% of Charleston's 1,800 staffed inpatient hospital beds, according to the latest figures from the American Hospital Association.
In addition to operating 396-bed Roper, Medical Society Health Systems operates 104-bed Baker Hospital, also in Charleston. Bon Secours-St. Francis staffs 243 beds, the AHA says.
James Rogers, president and chief executive officer at Roper, declined comment on the negotiations with Bon Secours-St. Francis. Through a spokeswoman, Mr. Rogers said his comments would be confined to those included in the July 14 statement about the deal.
"We are pleased to begin this dialogue with Bon Secours-St. Francis," Mr. Rogers said. "Working together to form an integrated delivery sys- tem, we can be even more effective in improving the health of the communities we serve while continuing to reduce the cost of those services."
But Mr. Rogers made no bones about his displeasure with Bon Secours-St. Francis when the Roman Catholic hospital successfully thwarted Roper's attempt to obtain certificate-of-need approval to build a $21 million, 100-bed satellite hospital in West Ashley. West Ashley is a growing middle- to upper-class suburb of Charleston that has no hospital.
Roper filed its CON application in 1986, and the dispute didn't end until October 1991, when the South Carolina Supreme Court upheld the state health department's initial decision denying Roper's CON application.
Four months after the state's highest court made its ruling, Bon Secours-St. Francis filed its own CON to build a $25 million, 198-bed replacement hospital in West Ashley. The state approved the CON in 1992, and the replacement hospital is expected to open in early 1996.
Both Roper and Baker hospitals filed appeals challenging Bon Secours-St. Francis' CON approval, but they later dropped them without any further administrative or legal proceedings.
When MODERN HEALTHCARE interviewed Mr. Rogers for an article on not-for-profit hospitals fleeing to the suburbs from their historic urban locations, he accused Bon Secours-St. Francis of pursuing its own economic interests above the interests of patients in Charleston and abandoning its Catholic mission of serving the poor (Aug. 23, 1993, p. 24).
At that time, Creighton Likes Jr., CEO at Bon Secours-St. Francis, described Mr. Rogers' statements as sour grapes, and he said, "A hospital was going to be there, so why not us?"
Mr. Likes also was unavailable for comment on the talks with former archrival Roper.
In the July 14 statement, he said, "We feel good about the possibility of working closely with Roper and Baker hospitals. Although a formal document has not been finalized, this agreement gives us the opportunity to explore how the two systems could work together to provide efficiencies and continuity in the Charleston healthcare environment."
The statement also said the pending agreement between the two hospitals won't affect the construction of the new Bon Secours-St. Francis facility.
Like other markets across the country, the prospect of national healthcare reform is forging dramatic changes among the markets' hospital competitors, and Charleston is no different.
For example, in June, the city's largest hospital, 584-bed Medical Center of the Medical University of South Carolina, eliminated 17% of its 4,500-member work force to reduce its operating costs in anticipation of national healthcare reform (July 4, p. 19). The reduction is expected to shave $13 million from the hospital's annual $340 million operating budget.
The market also includes an aggressive for-profit hospital owned by Columbia/HCA Healthcare Corp., 298-bed Trident Regional Medical Center, also stirring the Charleston pot.
In many markets across the country, the presence of a Columbia/HCA hospital is forging friendships among old competitors who view the nation's largest investor-owned chain as a common enemy.
And Bon Secours-St. Francis and Roper have the financial resources to spend on strategies to protect their market presence in Charleston.
Last year, Bon Secours-St. Francis earned $19 million on total revenues of $83.8 million, according to HCIA, a Baltimore-based healthcare information company. Roper, meanwhile, earned $11.7 million on total revenues of $148.3 million last year, HCIA said.