When Bergan Mercy Medical Center and Immanuel Medical Center, both in Omaha, Neb., created a joint venture in 1992 to provide health services through jointly run outpatient clinics, they said it wasn't a merger.
By 1996 the two had merged to become Alegent Health, a not-for-profit system that has grown to include seven hospitals and to control more than half of Omaha's acute-care hospital market.
Now, Alegent has another joint venture in mind.
Earlier this month, Alegent announced the signing of a letter of intent to form a joint venture with Creighton Saint Joseph Hospital Regional Healthcare System, a for-profit system that includes 284-bed Saint Joseph Hospital in Omaha, one of only two for-profit hospitals in the state (Jan. 12, p. 4).
The joint venture would coordinate managed care for Alegent and Creighton Saint Joseph as well as an initial roster of services, including behavioral healthcare, rehabilitation and home health.
The deal gives Alegent the opportunity to buy into Creighton Saint Joseph, 74% of which is owned by Santa Barbara, Calif.-based Tenet Healthcare Corp. and 26% by Creighton University.
Is another merger in the offing?
"That's always possible, but at this point it's not anticipated," said Charles Marr, Alegent's chief executive officer.
Alegent is sponsored by Catholic Health Initiatives and an affiliate of the Nebraska Synod of the Evangelical Lutheran Church in America.
Merger or no, the joint venture with Alegent links Tenet's 284-bed Saint Joseph with the major player in the Omaha market.
It also gives Alegent a pipeline to doctors trained at Creighton's school of medicine.
According to the AHA Guide, Alegent controls almost 52% of the inpatient beds in Omaha, excluding a Veterans Affairs and a children's hospital. Controlling Saint Joseph would push that market share past 65%.
The Alegent-Creighton Saint Joseph joint venture is set to be completed June 30. Officials said they don't expect antitrust problems because the deal isn't an asset merger.
"During the definitive agreement process, the parties will follow all federal and state regulations and satisfy those requirements," said Matt Kurs, president of Creighton Saint Joseph.
The systems also have yet to apply for approval from the Internal Revenue Service, which will determine how a deal with for-profit Creighton Saint Joseph will affect Alegent's not-for-profit status. That will be done as the deal moves forward, said Julie Murray, a Creighton Saint Joseph spokeswoman.
It's not clear whether the new joint venture will be a not-for-profit or for-profit company.
The proposed deal also may have to be reviewed under Nebraska's not-for-profit hospital sale act, said Marla Augustine, a spokeswoman for the state Department of Regulation and Licensure. The law imposes public disclosure and state oversight requirements on deals between not-for-profit hospitals and for-profit corporations.