The only two hospitals in Kenosha, Wis., will form a local acute-care monopoly after promising the state $43.7 million in savings over five years.
The hospitals are 115-bed Kenosha Hospital and Medical Center and 170-bed St. Catherine's Hospital.
The details of the hospitals' seven-year antitrust settlement with the state of Wisconsin became public last week after they were filed with the U.S. District Court in Milwaukee. MODERN HEALTHCARE*last month reported the terms of the preliminary settlement (Dec. 23-30, 1996, p. 6).
The hospitals will consolidate operations through a not-for-profit corporation, Siena Healthcare System.
The mergerlike partnership is expected to result in operational savings of $19.7 million and reduced capital expenditures of $24 million over five years. Siena must pass 80% of operational savings-roughly $17.7 million after adjustments-to consumers through lower prices or additional charity services during that time.
It will provide annual compliance reports to the state attorney general. Siena must document that*it held case-mix-adjusted net patient revenues and net patient operating expenses per equivalent admission to 1996 levels plus changes in hospital price inflation as calculated by the Consumer Price Index. It also must show it's avoiding duplicative capital and services expenses.
If the system hasn't met its targets at the end of five years, it will pay the shortfall in cash to an indigent-care fund under the supervision of the attorney general.
In addition, the agreement places some limits on Siena's relationships with physicians and health plans. For example, Siena must maintain an open medical staff. And it can't hire more than 30% of primary-care doctors or acquire interests in other area systems without state approval. Siena also cannot refuse to contract with health plans solely because they propose capitation or other risk-shifting reimbursement meth-odology. If Siena complies, the agreement could expire two years earlier than the scheduled 2004 expiration date.
The hospitals began planning their partnership more than two years ago, arguing to federal and state authorities that they had competitors in nearby counties.
Wisconsin began an antitrust investigation of the deal in 1996. The Federal Trade Commission didn't carry out its own in-depth review, which is typical when local authorities are investigating.