Mayo Health System, which is pursuing a Menomonie, Wis., hospital, faces a legal challenge from a resident who fears the deal will hurt his town.
John Joyce, a hospital board member and a Menomonie attorney, is seeking to overturn the corporate membership vote that cleared an affiliation between 55-bed Myrtle Werth Medical Center and Mayo. He filed a lawsuit Feb. 7 in Dunn County Circuit Court in Menomonie after the corporate membership appeared to approve the deal.
Joyce argues that there's no evidence the necessary majority existed because the vote was taken by voice instead of ballot.
Under corporate membership arrangements, which are common among rural hospitals, individuals pay a fee for the right to vote on hospital ownership issues. A separate board governs hospital operations. In Myrtle Werth's case, the board already had approved the Mayo deal.
The affiliation, which in effect amounts to a merger, will give the regional system of Rochester, Minn.-based Mayo Clinic a total of 11 hospitals. It's scheduled for completion March 1 (Feb. 12, p. 4).
The lawsuit illustrates the passion that small communities often feel for their hospitals.
Joyce was the only hospital board member opposing the agreement in a 7-1 October vote.
The corporate membership vote, however, was delayed several months while community members sought concessions from Mayo. Key to their approval was a Mayo promise to endow a foundation with $3 million of Myrtle Werth's reserves and spend the remaining $5 million upgrading local facilities and adding services.
Under Wisconsin law, two-thirds of the voting membership of a not-for-profit corporation must approve ownership changes. Some 197 of the approximately 270 total Myrtle Werth corporate members are eligible to vote.
In a joint statement, Mayo and Myrtle Werth officials called the lawsuit "frivolous" and said, "It was clear that the voice vote was nearly unanimous, with only one or two dissenting votes. Mr. Joyce has exercised his right to participate in the process. We are disappointed that he has now resorted to litigation."
The Myrtle Werth corporation was formed in 1980 at the initiative of a small group of residents to replace a financially troubled public hospital.
The new hospital was a financial success, earning about $1.3 million on revenues of $9.4 million in 1994, according to the Wisconsin Office of Health Care Information. It placed on the 1994 list of Top 100 performing hospitals developed by HCIA, a Baltimore-based healthcare information company, and William M. Mercer, a New York-based consulting firm.
Joyce said he fears Myrtle Werth will stop taking Medicare assignments when Mayo takes over and that patients will be steered to the Mayo Clinic in Rochester for tertiary care.
A Mayo spokesman said that although Mayo Clinic doesn't take Medicare assignments, the local Myrtle Werth board will choose its own policy. He also said Mayo wouldn't interfere in physicians' and patients' decisions about specialty care.
"I've got a couple of letters saying I ought to roast in hell for what I allowed to happen," said Myrtle Werth Board Chairman Ralph Thompson. "But the bottom line we've generated is going to be used for the good of the hospital. I think affiliation of hospitals is the name of the game."