The only two hospitals in Kenosha, Wis., are likely to get their local acute-care monopoly in exchange for $44 million.
In a draft antitrust settlement, the two hospitals have promised the Wisconsin attorney general that their proposed mergerlike partnership will generate that much in cost savings over five years. Additionally, they will guarantee that physicians at competing systems get reasonable access to their facilities, said Bruce Stewart, an attorney for the hospitals.
The hospitals are 115-bed Kenosha Hospital and Medical Center and 170-bed St. Catherine's Hospital. A year ago, they announced plans to give a joint company control over most operating decisions.
As of deadline, a settlement clearing the deal hadn't been filed in federal court in Milwaukee. The hospitals, Stewart and the attorney general's office declined to elaborate on its terms or indicate a time frame for filing.
In other state antitrust settlements with merging hospitals, states have made the hospitals promise to control prices and guarantee cost savings (Feb. 19, p. 26).
For example, Pennsylvania cleared the merger of two Harrisburg hospital systems last year in return for $70 million in savings and limiting price increases to the general rate of inflation plus 2%.
The Kenosha hospitals signed a letter of intent to develop a partnership in September 1994 but didn't file pre-merger notification documents with federal regulators until March 1996.
The Federal Trade Commission didn't take action, which is customary when a state attorney general is investigating a deal.
Kenosha is a city of 80,000 people, seven miles north of the Illinois state line. The hospitals argue that their new company, Siena Healthcare Systems, will compete against facilities in Lake County, Ill., and the Wisconsin counties of Kenosha, Milwaukee and Racine.
At least one system, Milwaukee-based Aurora Health Care, objected to the deal, accusing Kenosha Hospital of already acting in an anti-competitive manner by blocking its effort to open a competing clinic (Dec. 18-25, 1995, p. 26).
Besides its antitrust implications, the Kenosha deal is noteworthy because it ties a Roman Catholic hospital to a private not-for-profit facility.
As the deal was crafted in 1995, a single system board, composed of an equal number of representatives from each hospital, was to make most operating decisions. The hospitals also were to maintain separate boards to oversee current assets and hold some reserve powers.