In July 2003, the Federal Trade Commission indicated it would not challenge a merger between the only two acute-care hospitals in Waukegan, Ill., a suburb located about 40 miles north of Chicago. The system, called Vista Health, was one of several that the FTC had investigated as part of a lookback review of completed hospital mergers that formally ended this summer.
Last week Vista said it planned to close down one of its two hospitals.
The lookback review was never intended to seek data to spur more investigations but was an attempt to see how mergers were resolved and test FTC assumptions, said Pittsburgh healthcare lawyer Daniel Mulholland of the firm Horty, Springer & Mattern.
"I don't think you can conclude anything about the lookback review's effect on this mer-ger," Mulholland said. "Here you had two financially struggling hospitals. You can't conclude that mergers either help or hurt those financial problems. There could be 100 reasons beyond their merger that these hospitals lost money. ... Two negatives don't make a positive."
Not-for-profit Vista was formed by the 2000 merger between Provena St. Therese Medical Center, a 95-bed hospital owned by Mokena, Ill.-based Provena Health, and Victory Health Services' 142-bed Victory Memorial Hospital. The merged system lost $65.6 million on operations and suffered a net loss of $44.6 million from 2001 to 2003.
Vista's board announced what its officials had predicted for more than a year: The two-hospital system would close St. Therese and consolidate services at Victory Memorial. Later this month, Vista plans to seek permission from the Illinois Health Facilities Planning Board to shutter St. Therese. A question remains as to whether the consolidation and its estimated $1 million-per-month savings from as-yet unspecified job cuts and efficiencies will come fast enough to save the remaining hospital.
Vista Chairman Gerald Pearson said in a news release that the consolidation was the only way to make sure there would be a hospital in Waukegan. "Between inadequate reimbursement and uncompensated care, we have been suffering significant operating losses," he said. "With today's economic environment, if we can't close one hospital, neither will survive."
Vista Vice President Christy Beckmann said the company expects resistance to the closure, in part because of the closing of St. Therese's Level II trauma center. But Beckmann noted the hospitals are located just three miles apart and said Vista will seek permission to operate a Level II trauma center at Victory Memorial.
After obtaining permission to shutter one facility, Vista said it will ask the state planning board for permission to build a 120-bed, $120 million hospital in fast-growing, affluent Lindenhurst, Ill., located northwest of Wau-kegan, where the demographics are greener and the competition is less intense.
"It's one of the fastest-growing areas in Illinois," Beckmann said. "Demographically, it's middle- to upper-class. We believe the community infrastructure is in place to make this an ideal location for a new hospital."
She said Vista will seek Federal Housing Administration funding to build the facility, which is located about 15 miles west of Victory Memorial, but they first need to become financially stable in Waukegan.