The post-merger integration of a secular hospital with a Roman Catholic facility in Maryland's Allegany County remains on course, but executives of the hospitals-the only two in the market-intend to move a little more slowly than originally planned.
Officials of parent Western Maryland Health System in Cumberland were knocked off a fast track late last month by a community bent on retaining two hospitals.
So they went with a plan that ultimately will result in much of the consolidation sought when the system was formed in April 1996. They're just not going to move as surely and aggressively as first thought.
"The residents of Cumberland told us they want a more gradual process," said Edward Dinan, system president and chief executive officer. "They want further evidence of the projections we have developed, which tell us that our community can no longer support two full-service hospitals."
Executives figured they could save $33 million during the next five years by eliminating the rampant duplication going on in the town of Cumberland between Sacred Heart Hospital and Memorial Hospital and Medical Center of Cumberland, said system spokeswoman Kathy Rogers.
Located six miles apart in the town of 23,000, the two hospitals serve a rural, mountainous county with a population of 90,000, including a high percentage of elderly people. Medicare makes up 60% of the system's payer mix, Rogers said. The other four counties in the state's panhandle have one hospital each.
Despite becoming the only hospital corporation in Allegany County, federal antitrust officials said the holding company didn't even have to formally file for clearance, said William Roach, the hospitals' antitrust attorney.
Because capital projects and general revenues are state-regulated, the fear of market power from an affiliation wasn't an issue, Roach said (See related story, p. 98).
Both Sacred Heart and Memorial were and are profitable. The system, which also includes a nursing home, earned $6.5 million in fiscal 1997 on revenues of $142 million.
But the average daily census of 277 in that period was a far cry from the daily average of 400 patients the facilities combined for in 1990. And the average so far in fiscal 1998 has slipped to 235, Rogers said.
The health system has combined its finance, purchasing and home healthcare services at one hospital or the other, and it has waded into hospital services issues by consolidating inpatient pediatrics at Memorial.
A planning committee of physicians, administrators and community representatives worked this year on how to combine other services. Eventually physicians proposed a plan to locate inpatient services at one site and make the other a center for outpatient and specialty care, Rogers said.
That plan began to make sense for healthcare professionals. In the long term, perhaps in 10 years, the county was headed for a consolidation of hospital services at one facility, and it didn't seem logical to keep improving services at both sites only to shut one down, Rogers said.
But the plan didn't play well in the community. Opposition broke out among residents concerned about losing emergency services and jobs, as well as access to services that Catholic doctrine prohibits and that might be restricted if the Sacred Heart facility became the only hospital.
After a packed five-hour meeting late October, the system's board decided to keep acute-care services at both hospitals, while integrating selected services and relocating each of them to one campus.
But the board also endorsed the planning committee's long-term vision of combining general hospital services at Sacred Heart and developing specialty services to meet emerging community health needs at Memorial when it becomes economically necessary to fully integrate services.
The timing and speed of that integration will be determined by monitoring patient volumes, revenues, managed-care penetration and other market forces that will chip away at the viability of running two hospitals.
"These trends require us to take costs from the system now," said board Chairman Kim Leonard. "That's what the experts have advised us. However, the community still wants two full-service hospitals."
One goal of the "staged integration" is to avoid employee layoffs. To resolve another objection, the system said it would maintain sterilization services at Memorial, Rogers said.