Although it's been nine months since they announced their plans to merge, two not-for-profit systems in southeastern Virginia have yet to give birth to their new network.
They've spent much of that time explaining to local employers, physicians and businesses why the network's dominance over acute-care services would be in the region's best interest.
In February, Norfolk, Va.-based Sentara Health System and Tidewater Health Care in Virginia Beach signed a letter of intent to merge and form a new system under the Sentara name. The merger was expected to be completed as early as this August or as late as February 1998.
The systems have yet to submit their plans to the Federal Trade Commission for antitrust clearance.
Lisa Burris, a spokeswoman for Tidewater, said the systems are still gathering the information they need to submit to federal regulators. "There is no problem with the deal itself," she said. She said there has been no date set for when the systems will file for antitrust clearance.
The systems have spent the months since their plans were announced completing an analysis of the organizations' financial, human resources and other data, said Deborah Myers, a spokeswoman for Sentara.
They have also been pounding the pavement to drum up community support for the deal. Myers said executives from the systems have met with local medical societies, chambers of commerce and employers to discuss the effects of the proposed merger. She said Sentara President and Chief Executive Officer David Bernd has even appeared on a local cable access show to answer questions from the Norfolk city manager on the deal.
In addition, Myers said, the systems have worked with the accounting firm Coopers & Lybrand to prepare a study of the deal's financial impact and community benefits. She said the findings have not been publicly released but will be part of the systems' FTC filing.
Such efforts may prove to have been time well spent given the concerns raised by some business leaders and physicians about the merger, which would give Sentara a monopoly in four of the eight major cities in the Hampton Roads area of Virginia.
Hampton Roads represents a quarter of the state's population and is about 70 miles southeast of its Richmond hub. It includes the cities of Chesapeake, Hampton, Newport News, Norfolk, Portsmouth, Suffolk, Virginia Beach and Williamsburg.
Sentara would control six of the 15 general acute-care hospitals in Hampton Roads, representing about 41% of the area's acute-care beds, based on American Hospital Association figures.
That compares with four acute-care hospitals, or 27% of the area's acute-care beds, controlled by Marriottsville, Md.-based Bon Secours Health System, Sentara's chief competitor for a share of the Hampton Roads market.
The new Sentara would control the only two acute-care hospitals in Virginia Beach, Va. It already owns the city's 170-bed Sentara Bayside Hospital and it would pick up 274-bed Virginia Beach (Va.) General Hospital from Tidewater.
Its 220-bed Sentara Leigh Hospital and 613-bed Sentara Norfolk General Hospital control 75% of the acute-care beds in Norfolk. Its 214-bed Sentara Hampton General Hospital is the only nonfederal acute-care hospital in Hampton. And it has a shared-equity partnership with 100-bed Williamsburg (Va.) Community Hospital, that city's only acute-care facility.
In addition to its hospital holdings, the new system would also control a chunk of the area's managed-care market. Through its Optima Health Plan and other managed-care products, Sentara already controls about 60% of the HMO market in Hampton Roads, according to the March 1997 Health System Leader. Tidewater, meanwhile, operates its own HMO in a joint venture with Richmond-based Trigon Blue Cross and Blue Shield.
Lynn Sachs, president of the Hampton Roads Health Coalition in Virginia Beach, said the group of local employers has not taken an official position on the deal, noting that representatives of Sentara and Tidewater sit on its board of directors.
However, Sachs said the group has expressed concern about the merger's effects on HMO competition in the market. "We're interested to see how Optima will be treated as a result of the merger," Sachs said.
Sachs said employers would like to see more HMOs come into the area to foster more competition among the carriers and offer more choices.
"We want to make sure that costs stay competitive and are not increasing too quickly," Sachs said. "We don't want the hospitals to take an unfair portion of healthcare dollars."
Myers said the proposed partners are looking at how they will treat their managed-care businesses after the merger. She said they are considering maintaining both Sentara's and Tidewater's HMO plans and opening them up so that enrollees of one plan can have access to the facilities and services covered by the other.
Like the business coalition, local physicians have not taken a formal position on the merger. Steven Warden, M.D., the president of the Virginia Beach Medical Society, said the society is waiting for the federal government to review the deal before taking a formal position.
Warden said the society has questioned whether the merged system's market share in Virginia Beach could reduce patients' choice and accessibility and quality of care.
Warden said physicians at Virginia Beach General have also sought assurances that following the merger the hospital would not lose services and capital allocations for new technology to other Sentara facilities.
Warden said Tidewater President and CEO Douglas Johnson met with Virginia Beach General medical staff in mid-August.
"To some degree, they eased our concerns in the sense that they were at least willing to openly discuss these issues before the medical staff," Warden said. "He reassured us that the merger will protect the hospital's interests and that Virginia Beach General will be an important partner."