Limestone from the quarries of Bedford, Ind., was used to build such prominent parts of the national landscape as the Empire State Building, the Lincoln Memorial and the Pentagon.
But shaking this city of 14,000 to its bedrock are divisions over a failed merger attempt by its only two hospitals. The failure caused a number of hospital board members to resign, and it has some people concerned about the survival of one facility.
Sixty-bed Bedford Regional Medical Center and Lawrence County-owned 104-bed Dunn Memorial Hospital announced late last month that they had halted merger plans after 18 months of talks.
The announcement marked the end of a deal that derailed on Jan. 26 when the Lawrence County Council -- a seven-member board that is the county's financial arm -- voted 5-2 against the merger. Before the failure, hospital representatives had tried in vain to get the deal back on track.
The deal already had the blessing of both hospitals' boards, the three-member Lawrence County Commission and Clarian Health Partners, the Indianapolis-based system that owns Bedford Regional.
Paul Lambrecht, a local farmer and County Council member, said he was concerned about inequity in the assets the two hospitals were bringing to the merger.
Dunn Memorial had total assets of more than $36.2 million in 1997 compared with Bedford Regional, which had assets of $13.6 million, according to HCIA, a Baltimore-based healthcare information company.
"We didn't see (why) we should put our assets against theirs and make one," said Lambrecht.
According to local news reports, some council members said they favored a one-hospital system for Bedford but didn't believe this was the right deal.
The merger would have created Lawrence Hospital and Healthcare System, a not-for-profit company sponsored by Lawrence County and Clarian, said Dunn Memorial's attorney, Dave Smith. The hospitals told the Federal Trade Commission about the deal, but did not file formally for antitrust clearance because Dunn Memorial is a government-owned facility, said an Indianapolis attorney whose firm worked on the deal.
Feelings about the failed merger ran so deep in Bedford that Smith and four others on Dunn Memorial's 11-member board resigned.
"This was an opportunity to be proactive and try to do the right thing for the community, and I think we lost out on an opportunity to do that," said John Birdzell, Bedford Regional's chief executive officer.
Robert Adamson, a County Council member who voted to approve the deal -- and another Dunn Memorial board member who resigned -- said other competitors already are moving into the Bedford market.
For example, Adamson said, nearby 837-bed Bloomington (Ind.) Hospital has started building a $5 million diagnostic center in Lawrence County. Local news reports said Bloomington Hospital approached the two Bedford hospitals about their becoming partners in the center. They declined because their merger talks had begun.
Adamson predicted times will be tough for Dunn Memorial because Bedford Regional is owned by Clarian, a system with "deep pockets." He said of Dunn, "It'll plug along for a while, but I don't see how they can survive, really."
Dunn Memorial was expected to lose $1.2 million in 1998, Smith said.
Dunn Memorial had net income of $458,379 in 1997 on net patient revenues of $27.1 million, according to data provided by HCIA. That's an 89% drop from 1996, when Dunn Memorial had net income of more than $4 million on net patient revenues of $29.5 million.
Bedford Regional had net income of $12,794 in 1997 on net patient revenues of $24.5 million, a 100% increase over 1996, when it lost almost $2.9 million on net patient revenues of $22.4 million.
Most recently, Birdzell said, the hospital had a net loss of $650,000 on total revenues of $33.5 million for the fiscal year ended Sept. 30, 1998. The CEO said the figures are for Bedford Regional's integrated delivery system, which includes the hospital and a 25-physician group practice.
Retiree Lloyd Davis, a local community activist, lobbied against the proposed deal because he said he believed it was tantamount to giving away community assets. However, he does support the idea of a single hospital system.
"We really need one hospital," Davis said. "The problem was which one and how do we get there."
Davis said he would like to see Dunn Memorial buy Bedford Regional and have Clarian manage the new single-hospital system. Lawrence County would retain ownership.
County officials aren't looking for another deal for Dunn Memorial, said Lambrecht. "The County Council isn't interested in hassling with another consolidation or merger at this time," he said.