The planned mergerlike partnership between the only two hospitals in Kenosha, Wis., is dead, and the culprit is control.
Three years in the making, the deal between 170-bed St. Catherine's Hospital and 115-bed Kenosha Hospital and Medical Center was nearly complete when it collapsed last month. Citing irreconcilable differences, St. Catherine's and its owners, Catholic Health Initiatives and Dominican Sisters, broke off talks with secular Kenosha Hospital on June 20.
"We always hoped this experiment would work," said Eleanor Claus, president of the central Midwest region of CHI, Omaha, Neb. "If you don't have trust, it's awful hard."
St. Catherine's and Kenosha had planned to consolidate operations under Siena Healthcare System, a new not-for-profit corporation. The proposed deal had cleared antitrust hurdles late last year and was expected to save almost $44 million over five years (Jan. 6, p.16).
Before the partnership was canned, CHI offered to sell St. Catherine's outright to Kenosha Hospital. But the two sides couldn't agree on a price or resolve differences over the name and level of religious affiliation at St. Catherine's if it were sold.
Since bailing out of its dealings with Kenosha Hospital, CHI has resumed management of St. Catherine's and appointed representatives of the Hunter Group, a St. Petersburg, Fla.-based hospital management company, to run it temporarily. St. Catherine's also immediately began its search for another partner.
Ric Schmidt, Kenosha Hospital's chief executive officer, said he's hopeful his hospital might still buy St. Catherine's.
Before the partnership talks broke down, Schmidt had been running St. Catherine's for a few months. Claus said Schmidt's knowledge of St. Catherine's now puts that hospital at a competitive disadvantage.
The partnership deal had hit rocky times before, and problems couldn't be resolved because of what Claus called "gag communication rules."
Under the partnership rules that Kenosha Hospital pushed, information about St. Catherine's wouldn't be readily available to CHI, Claus said.
"It was the give and take that was not going to be there," she said.
Schmidt wanted the board of the new Siena to have the final say over hospital matters, but CHI wanted the right to "unilaterally interject themselves in any step of the process,"
"The rub became should it be centrally controlled . . . or locally controlled," he said.
CHI also asked St. Catherine's 10-member community board to resign because it didn't support the decision to end negotiations, Claus said.
The board has been reappointed with a minimum of five members-all staff members at CHI.