A proposed 18-hospital mergerlike partnership between Texas Health Resources and Baylor Health Care System has been put on hold as THR looks for a new buyer for its money-losing HMO.
Previously, the two Texas not-for-profit systems said their partnership wasn't contingent on the sale of Harris Methodist Health Plan.
Last week, THR called off the sale of the 307,842-enrollee plan to Health Care Service Corp., the parent of Blue Cross and Blue Shield of Texas, and Blue Cross and Blue Shield of Illinois, citing a disagreement over the terms of the purchase.
HCSC cut its offering price by $10 million in a revised purchase agreement filed late last month with the Texas Department of Insurance.
Under the original agreement, filed in April, HCSC would have paid $100 million for the plan, which lost $99.1 million last year.
Under the revised purchase plan, which THR board members rejected on June 11, Chicago-based HCSC would have paid $89.5 million for a select portion of the plan's assets. The asset purchase would have excluded liabilities as well as the plan's contracts in 21 outlying counties. The original agreement included those assets.
Hospital executives were not available for comment last week.
When it was first announced in January, the hospital system partnership was expected to be completed as early as July 31. The systems did not say how much of a delay the scuttled sale would cause.
THR, a 13-hospital system based in Irving, will hire an investment banking firm to locate a new buyer for the plan. Five-hospital Baylor, based in Dallas, has the right to review any purchase agreement.
Meanwhile, THR will continue to cover Harris Methodist's losses, which reached $11 million on $162.8 million in revenues in the first quarter of 1999.
Lisa O'Steen, the plan's spokeswoman, said that conflict of mission, rather than plan losses, was driving the sale. "It conflicts with the hospital organization's mission to have a managed-care company," she said THR executives told her.
THR has heard from buyers interested in the HMO, O'Steen said, although she could not name specific companies.