Taking over publicly owned facilities can entangle private hospitals in very unusual financial obligations.
Last week, the city fathers of Lincoln, Neb., gave their blessing to the sale of city-owned 217-bed Lincoln General Hospital to 316-bed Bryan Memorial Hospital in Lincoln, for $37 million with a big string attached.
The city asked Bryan Memorial to help the remaining competing hospital in Lincoln, 208-bed St. Elizabeth Community Health Center, stay in business. St. Elizabeth also wanted to buy Lincoln General but lost out to Bryan Memorial.
The city told Bryan Memorial not to open neonatal and burn-care services that would compete with the programs at St. Elizabeth, among other restrictions on the future behavior of the merged Bryan Memorial and Lincoln General.
As worded, many of the sale conditions appear to be illegal under antitrust law, Bryan Memorial President Lynn Wilson said. But his facility likely will propose several compromises when it returns to the citycouncil next year, Wilson said.
The incident isn't unique. The city of Cedar Falls, Iowa, recently guaranteed itself continued influence on 101-bed Sartori Memorial Hospital in an agreement with Covenant Health System of Waterloo, Iowa.
Covenant will lease Sartori Memorial for 25 years for roughly $11 million with three five-year renewals possible. It now operates three hospitals.
Although Covenant will own some Sartori assets, it can't rename the hospital, close the emergency room or shut down intensive-care beds without city council approval. System executives were uncomfortable about making such a commitment, but they felt it was necessary to win community support, said Michael Schneiders, senior vice president of business services at Covenant.
"If this wasn't in the documents, people were going to say, `(Covenant's) going to close the hospital,'*" he said. "At the point (Covenant wants to close services), we will have the data to show Cedar Falls no longer supports an ICU, and we will have established a relationship with the community."
In Nebraska, Bryan Memorial actually began exclusive negotiations with Lincoln General when city politics interfered. A citizens' committee was appointed to survey residents on their desires for community healthcare. Their effort included a Gallup Poll of 1,011 adults, a 24-hour hot line and an Internet site. Maintaining a choice of providers was very important to residents, according to the committee report. So was stimulating economic development.
That's what gave Bryan Memorial an edge in the race. A sale to St. Elizabeth would link two underutilized facilities, while pairing Lincoln General with Bryan Memorial could create a regional medical powerhouse, the board of Lincoln General said.
The citizens' committee also found the community valued access to reproductive services, which would be prohibited at Roman Catholic St. Elizabeth. Another strike against St. Elizabeth was its membership in Catholic Health Initiatives, a Denver-based chain. Citizens reported distrust for an out-of-state company.