The two acute-care hospitals in Reading, Pa., have tentatively agreed to consolidate operations and assets, pending approval by the Federal Trade Commission.
Officials of St. Joseph Medical Center and Community General Hospital said they have notified the FTC of their proposed merger and hope to receive approval later this year. The two hospitals serve 40% of the market, according to Jim Elliott, a spokesman for St. Joseph.
The proposed consolidation calls for St. Joseph, a unit of Denver-based Catholic Health Initiatives, to acquire the assets of Community General. The combined organization would be led by a single board of trustees and a management team headed by Patrick Roche, St. Joseph's president. It has not been determined what role S. Michael Francis, president of Community General, will play in the new organization, Elliott said.
With total assets topping $58.9 million and a 3.9% profit margin on 1995 net patient revenues of $78.5 million, St. Joseph's financial position is clearly stronger than its Reading neighbor. According to data provided by HCIA, a Baltimore-based healthcare information company, Community General lost $586,632 in 1995 for a -1.6% profit margin on net patient revenues of $37.4 million. It had total assets of $42.9 million.
Under the consolidation plan, acute-care and emergency services will be located at St. Joseph. Community General will house outpatient clinics and services, behavioral health and adult day care.
Hospital officials estimated the consolidation will save $35 million in reduced and avoided costs over the next five years.
Separately, local government challenges to both hospitals' property-tax exemptions are pending in court. It's unclear how the merger would affect those cases, Elliott said.