Three were too many, but two are just right, according to the Federal Trade Commission, which last week cleared a two-hospital merger in Portland, Maine.
The merger will give 598-bed Maine Medical Center and 120-bed Brighton Medical Center control of 68% of the staffed beds in Portland, a city of 65,000 on Maine's southeast coast.
The city's third acute-care facility is 174-bed Mercy Hospital.
All three hospitals had been discussing a merger since October 1993, but differences over Roman Catholic medical directives forced Mercy to drop out of the deal a year ago (March 28, 1994, p. 6).
But before Mercy pulled out, the hospitals discovered that federal antitrust investigators were sniffing into the three- way deal, and they sought special legislation from the state to insulate them from federal antitrust laws. They dropped their lobbying effort after the original deal fell apart, but Maine Medical and Brighton continued to talk.
Several months ago, the two hospitals voluntarily notified the FTC of their merger plans and supplied documents about the deal to the government. After they were satisfied that the FTC wouldn't object, they filed their required pre-merger notification documents with the FTC on Feb. 7.
That gave the agency 30 days to approve the deal, ask for additional information or file suit. Last week, the FTC approved the deal without comment.
The FTC apparently bought the hospitals' argument that a Maine Medical-Brighton merger wouldn't change the market much because Maine Medical was and still would be the dominant acute-care provider in Portland. The hospitals also argued that they're facing regional rather than local competition, saying their market extends well beyond Portland (Feb. 27, p. 6).
With the FTC's blessing in hand, the two hospitals will form a new corporation to govern both facilities. The hospitals will become subsidiaries of the Maine Medical Center Foundation.
A spokeswoman for the hospitals said each hospital's current chief executive will remain at his respective institution, and discussions are under way to appoint a chief executive officer of the new foundation. Donald McDowell is president and CEO of Maine Medical. James Donovan is president of Brighton.
The hospitals also will develop a transition plan that will specify which clinical and administrative services will be combined or eliminated.
The hospitals said the plan should be completed by mid-April and implemented over the following 12 months.
The hospitals have not done an economic efficiency study to estimate how much a merger will save. But in a vision statement adopted by the hospitals last week, they said: "The hospitals will be committed to reducing the overall cost of healthcare in the community, by eliminating all possible duplication of clinical and administrative services. Resultant savings in operating and capital costs will accrue to the benefit of the community."
Both hospitals are profitable. Maine Medical earned $5.5 million on total revenues of $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 $42 million, HCIA said.