Regional News/South: Mercy to transfer Hot Springs hospital to Catholic Health Initiatives

HOT SPRINGS, Ark.—Four months after dropping a deal with a different suitor because of regulatory hurdles, Chesterfield, Mo.-based Mercy health system plans to transfer its Hot Springs hospital and physician clinic to Catholic Health Initiatives. The two Catholic health systems signed a letter of intent Oct. 11 and, if they come to a final agreement on terms, would complete a transaction by year-end. Mercy Hot Springs would be operated as part of an integrated network with CHI's Little Rock-based St. Vincent Health System. Mercy previously planned to sell its Hot Springs assets to Capella Healthcare, a for-profit chain based in Franklin, Tenn., and the owner of Mercy Hot Springs' only direct competitor in the small city, about an hour's drive from Little Rock. The Federal Trade Commission signaled to the organizations that the government would challenge the transaction, and they walked away from it in June. Mercy Hot Springs, however, has suffered significant losses in recent years, and its Chesterfield parent has argued that it can't compete with the larger players in Little Rock. Those competitors include St. Vincent, anchored by 409-bed Infirmary Medical Center. The biggest by far, though, is seven-hospital Baptist Health. Mercy and CHI said in a news release that St. Vincent would retain Mercy Hot Springs' existing physician relationships and “is committed to creating a strong and integrated regional physician network.” Financial terms were not disclosed. “Mercy and CHI recognize the extremely challenging healthcare environment in Arkansas and agree that enhancing the Catholic health ministry and strengthening access to healthcare is a key objective of the proposed transaction,” the organizations said in the release.

WILLIAMSON, W.Va.—Williamson residents are expressing concern as for-profit Health Management Associates moves closer selling Williamson Memorial Hospital to Appalachian Regional Healthcare. Appalachian, a Lexington, Ky.-based not-for-profit system that operates eight hospitals in Kentucky and two in West Virginia, signed a letter of intent in February to buy the hospital, which serves a coal-mining community on the border of the two states. The city of Williamson depends heavily on taxes the hospital pays, which Appalachian would not have to pay, according to local news reports. Appalachian already runs ARH Williamson Hospital just across the border in South Williamson, Ky. Financial terms were not disclosed for the deal, which the parties expect to complete by February 2014. First, though, the West Virginia Health Care Authority must grant a certificate of need, and Williamson Mayor Darrin McCormick has said he will ask the agency to deny it. The letter of intent precedes Naples, Fla.-based HMA's agreement to be acquired by Community Health Systems, a for-profit system with headquarters in Franklin, Tenn.

MARIETTA, Ga.—WellStar Health System's urgent-care centers and physicians will work with retail clinics in eight Walgreen Co. stores to expand the scope of services available and help manage the treatment of chronic diseases. The system joins a growing number of its peers entering agreements with the Deerfield, Ill.-based retail pharmacy chain and other major retailers, such as Target. “The collaboration extends quality care directly into our communities to provide greater access for patients,” WellStar President and CEO Reynold Jennings said in a news release. The organizations said the relationship will help address the needs of millions of patients expected to seek care as they gain health coverage under the Patient Protection and Affordable Care Act. Walgreen recently rebranded its more than 370 in-store Take Care clinics as Healthcare Clinics. Indianapolis-based Community Health Network and Orlando (Fla.) Health System recently entered similar clinical agreements with Walgreen.

FLORWOOD, Miss.—Health Management Associates is holding firm in a dispute with Blue Cross and Blue Shield of Mississippi that led the insurance giant to drop HMA's 10 hospitals in the state from its coverage network. Although BCBS recently said it would reinstate four hospitals, HMA countered that the insurer attached terms and conditions that do not typically apply to in-network hospitals. BCBS sent termination letters to HMA's hospitals in July. HMA contends the decision was related to a lawsuit the hospitals filed in June alleging that since 2011 BCBS has reduced its payments below contracted rates. Kace Ragan, an HMA spokeswoman in Mississippi, said the reinstatement comes with a number of restrictions that don't apply to other hospitals. For example, patients must go through a five- or six-day precertification process before treatment. “They offered us something that wasn't at all an offer,” she said. “We would love to be reinstated.” BCBS, however, said the reinstatement was “based on the exact agreement that was in place at the time the hospital agreements were terminated” and not contingent on having the lawsuit dismissed. The insurer also said restrictions like prior authorization are part of its efforts to coordinate high-risk care and contends that HMA's hospitals charge “significantly more” than other hospitals in its network—in some cases, more than double. “HMA sued Blue Cross because it wants to be paid more, not because it wants to charge patients less,” BCBS spokeswoman Meredith Virden said. BCBS holds about 81% of the commercial market in Mississippi, Ragan said, but the impact of the termination varies by hospital. At some facilities, as many as 30% to 35% of patients might have Blues coverage, while in others it's only 5% to 6%. But for many of those patients, “this is a serious issue,” Ragan said, because HMA's hospital might be the only one in that market.