The proposed merger of two of the three hospitals in Portland, Maine, has entered the home stretch with the last hurdle being the Federal Trade Commission.
The FTC has been conducting an unofficial antitrust investigation of the deal for several months following a decision by the hospitals to voluntarily notify the FTC of their plans.
"Everyone's known about our plans for some time," said Donald McDowell, president and chief executive officer of Maine Medical Center in Portland. "It's not like we're invisible."
"We thought if we could address the FTC's concerns up front, we'd have a much easier road to travel later," said James Donovan, president of Brighton Medical Center, also in Portland.
The journey began on Feb. 7, when after months of informal discussions with the FTC, the two hospitals filed their required pre-merger notification documents with the agency.
The FTC has 30 days after the filing to clear the deal, file suit or request additional information about the merger.
But the fact that the hospitals made their formal filing after talks with the agency suggests that they feel confident about receiving clearance.
"We're optimistic. We hope we satisfied the FTC's concerns during the pre-review," Donovan said.
A merger of 598-bed Maine and 120-bed Brighton would give the two not-for-profit hospitals control of 68% of the staffed inpatient beds in Portland, a city of 65,000 located on the southeast coast of Maine.
The city's third hospital is 174-bed Mercy Hospital.
A proposed three-way merger among Maine, Brighton and Mercy broke down over Roman Catholic medical directives last year before antitrust issues became a concern (March 28, 1994, p. 6).
However, the hospitals at that point were well aware that federal antitrust investigators were intensely interested in the three-way deal, prompting them to seek an expansion of a state law that gives antitrust immunity to healthcare joint ventures. The law, which was the first of its kind in the country when it was adopted in 1992, didn't cover hospital mergers.
The hospitals dropped their lobbying effort after the original deal fell apart, but Maine and Brighton continued to negotiate.
The threat of a monopoly evaporated when Mercy pulled out of the deal, but the two remaining hospitals still will control more than two-thirds of the Portland acute-care market.
Both hospitals are profitable, indicating the demand for acute-care services in the Portland market can sustain three hospitals.
Maine earned $5.5 million on total revenues of about $227.3 million in 1993, according to HCIA, a Baltimore-based healthcare information company. Brighton earned $2.7 million that year on total revenues of about $42 million, HCIA said.
The executives, though, say market share isn't a problem because Maine Medical is and will continue to be the dominant hospital in the area whether or not it links with Brighton. And, the hospitals are facing regional rather than local competition, extending their market well beyond Portland.