Sacred Heart Hospital and Baptist Health Care, two Pensacola, Fla., hospitals with more than 875 total staffed beds, have formed a joint venture company called Covenant Health Services.
The partnership is expected to help the two not-for-profit hospitals eliminate duplicative services, combine resources, conduct managed-care contracting and cut costs. Sacred Heart operates 391 beds and Baptist staffs 484 beds.
The hospitals compete in Pensacola with 526-bed West Florida Regional Medical Center, a for-profit hospital owned by Columbia/HCA Healthcare Corp.
"With the growth of managed care and the deep cuts we expect in funding from Medicare and Medicaid, it makes sense for us to cooperate in the delivery of some services," said James Vickery, Baptist's president and chief executive officer.
"We do not plan a full merger nor do we envision that happening in the future," said Sister Irene Kraus, Sacred Heart's president and CEO. Sacred Heart is part of Daughters of Charity National Health System, St. Louis.
Sister Kraus said the hospitals will incorporate Covenant with the state of Florida in August and seek antitrust approval from the state and with the U.S. Justice Department in late September.
Vickery said several committees are identifying services and programs that could be combined. He also said the new company would be able to negotiate managed-care contracts on behalf of the two hospitals.