Two former hospital competitors in Charleston, S.C., were all smiles last week after four months of negotiations ended with the signing of a partnership agreement.
Roper Hospital and Bon Secours-St. Francis Xavier Hospital agreed to create a "joint development company" to operate an integrated delivery system serving the Charleston market.
The new entity will coordinate existing outpatient-care services offered by the hospitals and develop additional healthcare services.
"By combining our experience and pooling our resources, we will now provide more convenient access to services, and by taking advantage of economies of scale, we will also help to lower costs for the community," hospital executives said in a statement.
Combined, the hospitals control 64% of Charleston's 1,112 staffed private inpatient hospital beds, according to the latest figures from the American Hospital Association.
In addition to operating 422-bed Roper, its parent, Medical Society Health Systems, owns 104-bed Baker Hospital in Charleston. Bon Secours-St. Francis staffs 188 beds.
The deal will eliminate competition among Charleston's private not-for-profit hospitals and divide the market along three ownership lines: not-for-profit, for-profit and government.
The other hospitals in the market include 298-bed Trident Regional Medical Center, owned by Columbia/HCA Healthcare Corp.; a 160-bed U.S. Navy hospital; a 117-bed county hospital; a 265-bed Veterans Affairs Department hospital; and a 534-bed university hospital.
The Medical Center of the Medical University of South Carolina is discussing an affiliation with two for-profit hospital chains, Columbia/HCA and American Medical International (Nov. 7, p. 4).
Last year, Bon Secours-St. Francis earned $19 million on total revenues of $83.9 million, according to HCIA, a Baltimore-based healthcare information firm. Roper earned $11.7 million on total revenues of $148.3 million in the same period, HCIA said.
A 10-member board will govern the new not-for-profit development company, called the Lowcountry Health System. Bon Secours-St. Francis and Roper will have equal board representation.
A spokeswoman for the hospitals said no antitrust clearance was necessary because the deal is structured as an affiliation, not a merger or acquisition.
Just three years ago, a legal challenge by Bon Secours-St. Francis thwarted an attempt by Roper to obtain certificate-of-need approval to build a satellite hospital in West Ashley, a Charleston suburb.
Bon Secours-St. Francis then turned around and filed for CON approval to build a replacement hospital in the same place. The state approved the second CON in 1992, and the replacement hospital is expected to open in early 1996 (Aug. 23, 1993, p. 24).