The U.S. Justice Department is conducting an antitrust investigation of the proposed "partnership" between the only two private hospitals in Asheville, N.C., MODERN HEALTHCARE has learned.
The hospitals, 381-bed Memorial Mission Medical Center and 285-bed St. Joseph's Hospital, voluntarily notified the government of their plans and have yet to file any formal pre-merger notification documents with the department.
The hospitals are the only two private acute-care hospitals in Asheville, a town of 64,000 in western North Carolina. A 535-bed Department of Veterans Affairs hospital is located in Asheville.
Memorial Mission and St. Joseph's also are the only two private acute-care facilities in Buncombe County, N.C.
In March, the hospitals signed a letter of intent to pursue an unspecific partnership arrangement that they said would improve healthcare delivery in the western North Carolina market.
Under the arrangement, each hospital would maintain its corporate identity, governance structure and assets. The hospitals said their plans don't call for a merger (June 20, p. 32).
Although the hospitals compete to provide clinical services, they've been collaborating in a number of nonclinical areas since 1988. Over the past six years, the hospitals have opened a joint child-care center for employees, laundry facility and waste disposal system.
Both hospitals are profitable, according to the latest available data from HCIA, a Baltimore-based healthcare information company.
Last year, Memorial Mission earned $12.9 million on total revenues of $168.8 million, HCIA said. St. Joseph's, meanwhile, earned $4.6 million on total revenues of $92.3 million.
Memorial Mission and St. Joseph's have hired outside consultants to study the possible economic efficiencies that a partnership would create and to conduct an external community-needs assessment, said Jerry Thomas, director of planning, development and communications for St. Joseph's.
Mr. Thomas said the efficiencies study should be completed shortly, but the community-needs assessment won't be ready for at least six months.
Mr. Thomas confirmed that the Justice Department is reviewing the deal for possible anti-competitive effects. He said the agency requested documents from the hospitals in July, and they're gathering the materials with the intention of forwarding them to the department within the next few weeks.
Mr. Thomas said Justice Department investigators have made no personal visits to the hospitals, and hospital executives have made no personal trips to Washington to explain the benefits of the proposed partnership.
Mr. Thomas declined to comment on the nature of the investigation or whether the probe threatens to delay the hospitals' plans.
If and when the Justice Department's inquiry is resolved, the hospitals likely would file their required pre-merger notification documents with the government and receive antitrust clearance.