Expanding its West Virginia network, Columbia/HCA Healthcare Corp. agreed to a joint venture with St. Joseph's Hospital in Parkersburg and also agreed to be an exclusive managed-care provider for Mountain State Blue Cross and Blue Shield.
The two-pronged strategy will strengthen Columbia's clout in the West Virginia/Ohio market, where the chain now owns nine hospitals and three surgery centers.
St. Joseph's would be the sixth Roman Catholic hospital to join Columbia, and the partners apparently learned from Columbia's previous deal with Sisters of Charity of Saint Augustine Health System, Cleveland.
"Rome has already signed off on it," said John Warnock, vice president of St. Joseph's, last week about Vatican approval to sell a 50% stake in the Catholic hospital to a for-profit hospital company. The deal also garnered approval of the local bishop.
In the Cleveland deal, Columbia completed a 50% purchase in the four-hospital Catholic system, but not before it raised the ire of a Youngstown, Ohio, bishop and the Catholic Health Association. Eventually, two other local bishops and the Vatican approved the sale (Nov. 6, 1995, p. 3).
This time, the Catholic system and Columbia received the approvals before announcing the deal. St. Joseph's is the only hospital owned by Sisters of Saint Joseph of Wheeling, W.Va. The system sold its other hospital, St. Francis Hospital, Charleston, W.Va., to Columbia in February 1995.
Warnock said hospital officials understood the CHA's opposition to linking with a for-profit provider but that merging with another Catholic system wasn't viable because there weren't any near St. Joseph's.
"It may be a good idea in Chicago or New York, where there are other Catholic hospitals you can join with," he noted.
St. Joseph's had net income of $4 million on net revenues of $63 million in 1995, hospital officials reported.
Meanwhile, the deal with Mountain State will tie Columbia closely with the state's insurer of 250,000 residents. Mountain State is developing an HMO, and in cities where Columbia has hospitals, those facilities will be the exclusive provider, officials said. Terms of the deal, including discounts offered by Columbia, are still being worked out.
However, after talking to other hospitals, Mountain State chose Columbia because "we seem to be able to get on the same page with Columbia more than anyone else," said Gregory Smith, president and chief operating officer of Mountain State.
Mountain State is affiliated with Blue Cross and Blue Shield of Ohio, which has been rumored to be in discussions with Columbia for a joint venture (Jan. 15, p. 6). However, Smith said he was not familiar with the Ohio discussions.