Two hospitals in adjacent states came a step closer to consolidation last week after executives approved plans to merge their financial operations.
But they'll face a number of obstacles-including state regulatory approvals, federal antitrust clearance and ownership issues-before they can fulfill their long-term goal of merging.
Last week, the boards of directors at Gritman Medical Center in Moscow, Idaho, and Pullman (Wash.) Memorial Hospital voted to create a company that will oversee financial services at both hospitals.
The rural facilities are eight miles apart and are the only hospitals in an area of 100,000 people (See map).
The new company, called Palhouse Cooperative Health Services, is a not-for-profit Idaho corporation that will eliminate duplication and improve services, said J. Steve Perry, its new chief executive officer. The cost of forming Palhouse was not disclosed.
Mr. Perry is chief financial officer of Gritman Medical Center, a not-for-profit community hospital managed by Quorum Health Group, of Nashville. Pullman Memorial is operated by a rival hospital management company, Brim Healthcare, Portland, Ore.
Another issue is which hospital management company-Quorum or Brim-would get the hospital contract if the facilities merge.
"I think that both Brim and Quorum would have to decide what their priorities would be (in the event of the merger). But we're a ways from that," Mr. Perry said.
The affiliation proposal originated in April, when the hospitals considered fully integrating their services and examining the idea of shared governance, Mr. Perry said.
Physicians from both hospitals took the first step in July by forming a physician-hospital organization called Palhouse Health Care Network. About 50 of the hospitals' 95 doctors belong.
Antitrust problems could deter a full merger, Mr. Perry said. "We've sent in a letter to Washington's attorney general's office to get their opinion (of the deal)."
Gritman Medical Center recorded a 1993 net income of $1.3 million on total patient revenues of nearly $15 million, according to HCIA, a Baltimore-based healthcare information company. Pullman Memorial Hospital's net income was $462,652 on total patient revenues of more than $11 million.