Eight tax-exempt hospitals in New Orleans last week said they have agreed to join forces against two investor-owned systems that have been buying hospitals in the area.
"Our first big step has been accomplished," said Jerry Crawford, chairman of the steering group that created the plan and a member of the board of East Jefferson General Hospital, Metairie, La. Plans to form an alliance among the area's largest not-for-profit hospitals have been in the works since last August.
The eight hospitals overcame financial, governance and ownership hurdles to form a strong bond against Tenet Healthcare Corp. and Columbia/HCA Healthcare Corp. (See related story, p. 42).
The eight institutions in the not-for-profit alliance are Children's Hospital, New Orleans; East Jefferson; Ochsner Foundation Hospital, New Orleans; Methodist Hospital, New Orleans, Slidell (La.) Memorial Hospital and Medical Center; St. Tammany Parish Hospital, Covington, La.; Touro Infirmary, New Orleans; and West Jefferson Medical Center, Marrero, La. While most are private not-for-profit hospitals, three-West Jefferson, East Jefferson and St. Tammany-are parish-owned hospitals.
That public ownership made a full-blown merger of the hospitals problematic. Under the plan unveiled last week, each hospital will keep its own governing board and name but grant certain authority to a new organization referred to as a "modified parent company." Although some of the hospitals are much larger than others, each will receive equal representation on the board of the new parent company.
"The proposed model was chosen because it recognizes that each hospital brings unique strengths to the organization," said Stephen Hales, M.D., Children's chairman. "One hospital might bring strong financial resources, another a geographic location critical to our success in the managed-care marketplace and so on."