The Massachusetts attorney general told the market leader in a two-hospital city to play nice or else.
Profitable Baystate Health System has locked struggling Mercy Medical Center out of its HMO, helping 564-bed Baystate Medical Center control 62% of the inpatient market in Springfield, Mass. Both hospitals are not-for-profit.
Mercy's parent, Sisters of Providence Health System, based in Springfield, asked the state to force Baystate's HMO, Health New England, to give it a full-service contract. But Attorney General Thomas Reilly said no, for now.
"(Baystate Health System) should carefully consider the actions it takes to further its integrated delivery system, including (Health New England's) contracting practices," Reilly said in a report released Oct. 3. He said if Mercy can't remain financially viable, "government intervention may be necessary."
Sisters of Providence, for which 311-bed Mercy Medical is the only acute-care hospital, lost $6.6 million on $192.2 million in revenue in fiscal 2000. Both systems have pledged to work together in the future. Baystate President and Chief Executive Officer Michael Daly said, "We don't want to see Mercy close."
However, Sisters of Providence President and CEO Vincent McCorkle said the only way to resolve the situation is for Mercy Medical to get a full-service contract with 91,000-member Health New England. Health New England contracts with Mercy Medical for only limited services: inpatient rehabilitation and behavioral health.
Health New England said an offer for Mercy Medical's full participation has been on the table but not at the rates Mercy Medical wants.