Mercy and Capella end sale discussions involving Hot Springs, Ark., hospital

August 1, 2013

Mercy and Capella Healthcare ended their discussions to join together Mercy Hot Springs and National Park Medical Center in Hot Springs, Ark., executives from the two systems said in a statement.

The announcement on June 27 came after the investment of "significant resources" and more than a year of due diligence as part of the efforts to create a new health care delivery system for the region under Capella's ownership, the organizations said.

Mercy Hot Springs includes a 282-bed acute care hospital and the only Level II trauma center in Southwest Arkansas. National Park Medical Center is a 166-bed acute care facility.

The proposed affiliation had been subject to approvals by the Federal Trade Commission and the Vatican. Neither one had officially approved or rejected the partnership, said Mercy spokesperson Barb Meyer. However, there had been concerns raised about the proposed partnership, including from Bishop Anthony B. Taylor of the Diocese of Little Rock, Ark., who said he was concerned about the "possible consequences of such a sale for the poor and for the people of Hot Springs." The sale would have meant Mercy Hot Springs would have converted to for-profit tax status. However, Capella had agreed to continue to follow the Ethical and Religious Directives for Catholic Health Care Services at Mercy Hot Springs for at least five years, according to information put out by the systems.

Richard Feinstein, director of the FTC's Bureau of Competition, said staff with the bureau had been investigating the proposed transaction for months and the bureau had been prepared to challenge the proposed sale. "Staff gathered testimonial, documentary and economic expert evidence that this transaction was anticompetitive and would likely have resulted in higher prices and diminished health care service in Hot Springs," he said in a statement.

In the statement announcing the end of sale talks, Lynn Britton, president and chief executive of Chesterfield, Mo.-based Mercy, said, "Because we anticipate continued challenges — over an indefinite time line — in obtaining the needed approvals, Capella and Mercy have mutually agreed to not renew our asset purchase agreement and will end our discussions at this time. We believe prolonging this uncertain and complicated path is not in the best interest of our local caregivers and the community. However, we remain committed to finding the right solution for enhancing health care in Hot Springs." Dan Slipkovich, chief executive of the Franklin, Tenn.-based, privately held Capella, called the decision a difficult one, especially because of the amount of work and local support to bring together the organizations.

Following the announcement, Bishop Taylor said he had spoken with Charles Thoele, the chair of Mercy's board and reaffirmed the diocese's desire "to work to help Mercy Hot Springs to thrive."

Meyer said Mercy is exploring options for Mercy Hot Springs, one of which would be to transfer the organization to another health care system and the second would be to "reimagine" Mercy Hot Springs under continuing Mercy sponsorship, focusing on what the community most needs from a local health care provider and what is sustainable.

Copyright © 2013 by the Catholic Health Association of the United States

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