It's like pushing open the door to the neighborhood candy store but having your little sister run under your arm and be first in line at the counter.
Such is the case in Maine, where the state's largest hospital successfully lobbied the state for an antitrust exemption for hospital mergers. But, it appears that two of the hospital's smaller competitors may be the first to take advantage of the new law.
The heavyweight in this hospital consolidation match is 565-bed Maine Medical Center in Portland, the state's largest hospital, which wants to get even bigger. The plucky challengers are 220-bed Mid-Maine Medical Center in Waterville and 179-bed Kennebec Valley Medical Center in Augusta.
At the moment, Mid-Maine and Kennebec don't compete with Maine Medical Center, but regional hospital consolidation sweeping the state likely will cause the hospitals' service areas to overlap in the near future.
Mid-Maine and Kennebec are 15 miles from each other in a market about an hour's drive northeast of Portland in southern Maine. Last month, the boards of the two not-for-profit hospitals approved a plan to merge the two facilities (Sept. 16, p. 18).
A merger of Mid-Maine and Kennebec would give them control of two of the three acute-care hospitals in Kennebec County and 90% of the staffed beds there, according to the latest figures from the American Hospital Association. The county's third hospital is 44-bed Inland Hospital in Waterville.
Luckily for Mid-Maine and Kennebec, their future regional competitor, Maine Medical Center, this year had the state's 4-year-old hospital cooperation act amended in their favor.
In 1992, Maine became the first state in the nation to pass a law exempting hospitals from state antitrust laws for business arrangements that promise to benefit consumers. However, the law only covered hospital joint ventures, and it didn't extend its protection to hospital mergers. Since Maine passed its law, nearly two dozen states have followed suit, adopting a variety of healthcare antitrust exemption statutes covering all types of providers and all types of business transactions.
A year later, Maine Medical Center and Portland's two other hospitals, Brighton Medical Center and Mercy Hospital, unveiled a proposed merger that would have given them an acute-care monopoly in the city. Consequently, the hospitals began lobbying the state Legislature to expand the exemption law to cover mergers. However, the hospitals dropped their lobbying effort after Mercy pulled out of the deal in 1994 (March 28, 1994, p. 6).
Maine Medical Center and Brighton went ahead and merged without Mercy and without the protection of state law but with antitrust clearance from the Federal Trade Commission. The deal gave the two hospitals control of more than 80% of the staffed beds in Portland.
Earlier this year, however, Maine Medical Center was back in the state Legislature lobbying for an expansion of the existing antitrust exemption law to hospital mergers. The effort began shortly after two more hospitals signed letters of intent to merge with Maine Medical Center under the hospital's parent corporation, the Maine Medical Center Foundation (March 11, p. 32).
The hospitals that want to come into the Maine Medical Center system are 130-bed Southern Maine Medical Center in Biddeford, about 16 miles southwest of Portland, and 30-bed Miles Memorial Hospital in Damariscotta, about 47 miles northeast of Portland.
With the help of the Maine Hospital Association, Maine Medical Center got its amendment passed, and in April the state Legislature extended antitrust protection to hospital mergers.
In fact, the Legislature declared the hospital merger issue an emergency and made the amendment immediately effective upon passage-on April 1-rather than waiting 90 days, as is customary under Maine law.
"These hospitals desire to complete all necessary steps to provide hospital services on an integrated basis by Jan. 1, 1997," the Legislature said in accommodating the hospitals' wishes.
But, a funny thing happened on the way to the close. Both proposed mergers appear to have hit snags and have yet to be completed.
"We're still in discussions, and we're not at the point yet (of seeking state antitrust protection)," said Judy Nedeau, a spokeswoman for Southern Maine Medical Center. "The timetable for the merger was unrealistic and overly ambitious."
Southern Maine and Maine Medical Center signed their letter of intent more than a year ago.
Miles Memorial spokesman Scott Shott said discussions between his hospital and Maine Medical Center are ongoing. He said they hope to have a final deal in place by year-end.
Executives of Maine Medical Center have declined repeated requests for interviews regarding the status of the two proposed mergers.
Meanwhile, Mid-Maine and Kennebec intend to file for a state antitrust exemption by Dec. 1 and expect a decision by next March.