A county hospital system in South Carolina has joined a developing hospital network after its proposed partnership with its main competitor fell through.
The network, if successful, would place control of the dominant acute-care providers in the three largest markets in northwest South Carolina under one not-for-profit corporation.
The spurned county system is 444-bed Spartanburg (S.C.) Regional Medical Center. Its new partners are the seven-hospital, 1,174-bed Greenville (S.C.) Hospital System and 459-bed Anderson (S.C.) Area Medical Center.
Left out of the mix is 189-bed Mary Black Memorial Hospital in Spartanburg, whose on-again, off-again courtship with Spartanburg Regional ended for good in late August.
Mary Black, a private, not-for-profit hospital, and Spartanburg Regional became the only acute-care facilities in Spartanburg a year ago when Spartanburg Regional bought the city's third hospital, Doctors Memorial, and converted it into an outpatient surgery center.
Mary Black and Spartanburg Regional subsequently began working on a partnership arrangement in which they would consolidate or eliminate competing clinical services, and develop centers of excellence at one site or another. Previous merger talks had not gone anywhere. Under the new plan, a newly formed not-for-profit corporation would operate any consolidated service and sell it back to each hospital.
According to local press reports, after months of study, Spartanburg Regional concluded that a full merger, not a partnership, would be in the best interest of both sides. In August, the county system offered to merge with Mary Black or acquire the competing hospital for $70 million. Mary Black rejected the proposals and began courting outside suitors, the reports said.
Executives of Spartanburg Regional were unavailable for comment. Executives at Mary Black didn't return repeated phone calls.
A month later, Spartanburg Regional jumped into the arms of the Greenville Hospital System and Anderson Area Medical Center, which are developing a network in northwest South Carolina.
Under the model being discussed, the three systems would form a new not-for-profit operating company, said Kirk Oglesby Jr., president of Anderson Area Medical Center. The systems would lease their facilities to the new corporation, he said.
"We're talking about something close to a merger," he said. "The new organization would act as one operating entity."
The board of the new organization would have representatives from each system, but the apportionment of the board seats among the systems is still being worked out as is who the board will appoint as the consolidated systems' chief executive, he said.
Oglesby said the systems hope to have a final plan in place by year-end.
In a statement, Greenville Hospital System President Frank Pinckney welcomed Spartanburg Regional to the negotiating table: "One of the benefits of such a network is that employers would be able to contract with one organization for healthcare services in Spartanburg, Greenville and Anderson. Regional services are especially important to employers with employees living in more than one area."
The deal would link the major hospital systems in the three largest cities in northwest South Carolina under one parent corporation, but Oglesby said he didn't see an antitrust problem because of the geographic spread.
"There is some overlap, but we really serve different marketplaces," he said.
That's a slightly different tune than the two Spartanburg hospitals were singing when their partnership deal was alive. The deal would have given them a monopoly in Spartanburg, but they said antitrust wasn't a problem because they competed in a wide geographic market that included Greenville, some 30 miles to the southwest, and Charlotte, N.C., some 60 miles to the northeast (April 17, p. 26).
If antitrust becomes a barrier, Oglesby said the three hospital systems would seek relief under the state's year-old antitrust exemption law protecting collaborative ventures among healthcare providers.