Muskegon (Mich.) Mercy Community Healthcare System, owner of Mercy Hospital, and Muskegon General Hospital have entered a 10-year joint operating agreement.
The facilities will consolidate staff and share a financial bottom line and a governing board but retain separate assets.
Inpatient services will be consolidated at 176-bed Mercy, while Muskegon General, with 137 licensed beds, will close its emergency room and evolve into an outpatient and women's-care facility.
The facilities expect to save $6.8 million a year on operating costs after three years and $4.5 million on capital over the first five years.
Muskegon General is an osteopathic facility that reported net income of $853,194 in 1994 on net patient revenues of $30.3 million, according to HCIA, a Baltimore-based healthcare information company. Mercy is a Roman Catholic, allopathic facility. Its financial information wasn't available from HCIA, but the system said it had gross annual revenues of $100 million; it wouldn't disclose net income figures.
The hospitals' combined share of the greater Muskegon market of 241,000 people is 53%, with the remainder at Hackley Hospital in Muskegon.
They opted for a joint operating agreement after merger talks failed.
Muskegon Mercy Community Healthcare System is a member of Farmington Hills, Mich.-based Mercy Health Services.
Sandra Bennett Bruce, who had been president and chief operating officer at Mercy Hospital, will serve as chief executive officer of the joint operation. Roger Spoelman, who was president of Muskegon General, will become COO.