Cape Coral (Fla.) Hospital last week put its proposed merger with Lee Memorial Hospital in Fort Myers, Fla., on hold, citing delays in the federal court system's resolution of an antitrust challenge.
The move would give Cape Coral, which has been beset by antitrust problems and financial scandal in the executive ranks, the opportunity to explore alternatives that may be more attractive than the merger with Lee Memorial.
For the past eight weeks, the hospitals have been waiting for the 11th U.S. Circuit Court of Appeals in Atlanta to rule on the Federal Trade Commission's challenge of their posed merger. The hospitals won in trial court in May, but the FTC appealed the decision. A federal appellate court heard oral arguments in the case in early September (Sept. 5, p. 4).
At the time, lawyers for the hospitals said they expected a decision in three to six weeks.
"The Lee merger has been delayed too long by court action initiated by the FTC, and we must pursue other options including a different relationship with Lee which would be acceptable to the FTC," said Joseph Zeterberg, M.D., Cape Coral's chairman.
In announcing its decision, Cape Coral's board has asked Lee Memorial for permission to "pursue alternative affiliations, consolidations or mergers" with Lee Memorial and other hospital groups.
A spokeswoman for Lee Memorial said the public hospital's board will vote on Cape Coral's request at its Oct. 28 meeting. The spokeswoman declined further questions.
But a Cape Coral official said the hospital would act to unilaterally terminate its acquisition agreement, effective Oct. 31, if Lee Memorial fails to approve its request.
"The board feels it has a responsibility to consider every legitimate offer," said Bernard O'Neil, a vice president with Quorum Health Resources. Cape Coral hired Quorum last month to help manage the hospital, which has been plagued by financial scandals as well as the FTC antitrust challenge (Oct. 3, p. 18). The facility recently underwent a management purge and laid off other employees.
Several investor-owned hospital chains, including Columbia/HCA Healthcare Corp., have offered to buy Cape Coral. Columbia/HCA owns two of the five hospitals in Lee County. Its proposed merger with Healthtrust would give it a third hospital.
Mr. O'Neil said, however, that Cape Coral and Lee Memorial executives planned to meet last week to discuss alternatives short of a merger.
"If the court rules before (the Oct. 28) meeting, this decision could embarrass us all," Mr. O'Neil said. "But if you could put your (finger on the) pulse of this hospital, you'd know there is a high level of frustration."