The Kirksville (Mo.) College of Osteopathic Medicine, Grim-Smith Hospital in Kirksville and Tenet Healthcare Corp. last week signed a letter of intent to transfer control of Kirksville's other hospital, Kirksville Osteopathic Medical Center, to competitor Grim-Smith.
MODERN HEALTHCARE previously disclosed the pending transaction, which has generated some concern among employees at Kirksville Osteopathic Medical Center, community residents and local businesses (June 10, p. 8).
At the time, employees at both hospitals confirmed that a deal was in the works, but a Tenet spokeswoman said the Santa Barbara, Calif.-based chain didn't comment on "rumors."
The medical college owns 119-bed Kirksville Osteopathic, which is operated by Tenet, a national for-profit hospital chain, under a lease arrangement with the school. Grim-Smith is a 75-bed, for-profit hospital owned by a group of about 35 physicians. The hospitals are the only acute-care facilities in Kirksville, a town of 17,000 in northeast Missouri.
Under the deal being put together by the parties, Grim-Smith would take over the lease of Kirksville Osteopathic from Tenet. Ultimately, all the hospitals' operations would be consolidated at the Kirksville Osteopathic facility. The three players say they hope to reach a final lease transfer agreement by this fall.
In a June 12 statement, the parties said the deal would "benefit the region by creating a regional referral center (that) will allow for the expansion and enhancement of healthcare services." Such a consolidation would eliminate duplicative services, and enhancing services would help the merged facilities attract new physicians and needed medical specialties, they said.
The parties didn't disclose the financial terms of the lease transfer.
Critics of the deal appear to be primarily employees at Kirksville Osteopathic. They fear placing control of both hospitals in the hands of the same physicians who control admissions and set prices for services will lead to higher charges for employers and payers. They say employers and payers will be forced to pay whatever the physicians demand because the nearest alternatives for similar services are hospitals in Columbia, Mo., some 90 miles south of Kirksville.
The deal also may lead to the elimination of jobs as the two hospitals consolidate their services at one facility.
"Consolidation plans do not call for any immediate changes in staffing at either of the current facilities," said the statement issued by the college, Grim-Smith and Tenet.
A group calling itself the Concerned Citizens of Kirksville and Northeast Missouri sent a letter to the Kirksville Chamber of Commerce last month, urging the chamber to actively oppose the hospital lease deal.
But a spokeswoman for the Kirksville chamber said the agency isn't taking a position on the lease transfer.
"Both hospitals are members of ours in good standing," she said. "It's best to stay neutral."