Two Scranton, Pa., hospitals have walked away from affiliation plans in the works since June 2006 and backed by Blue Cross of Northeastern Pennsylvania, citing roadblocks from Pennsylvania Attorney General Tom Corbett.
Blue Cross had pledged $50 million to support the alliance of 283-bed Community Medical Center and 227-bed Moses Taylor Hospital, part of $175 million the insurer said it would use from its surplus to support hospitals in the region. In an unusual wrinkle, the plan also called for Blue Cross to fill five seats on a 15-member board governing the combined system. The attorney generals office said the structure as currently outlined would not be allowed to proceed, said John Nilsson, who is serving as Community Medicals interim chief executive officer for outside management company QHR. Nilsson said he referred to the plan as an affiliation rather than a merger because each organization would have retained its assets and debt.
Corbett was troubled by the use of the Blue Cross charitable assets and the potential harm to competition by the consolidation of the two hospitals, said Kevin Harley, a spokesman for the attorney general. Harley said Corbett wondered whether Blue Cross would do more good with its surplus by reducing premiums, and whether its participation in the board would present conflicts of interest. -- by Gregg Blesch