HOSPITAL MERGER: QUALITY VITAL TO BUSINESS

Employers will want to know what a merger of Cape Girardeau's two hospitals would mean for them and their employees.

As the administrators of Southeast Missouri Hospital and St. Francis Medical Center begin spelling out details of the proposed merger, business owners will want to know what the bottom line would be for health-care services, said John Mehner, president of the Cape Girardeau Chamber of Commerce.

James Sexton, president and chief executive officer of St. Francis, and James Wente, administrator of Southeast, are taking their merger message to business and community leaders this week. They are meeting with the city's top employers and working to build community support for the proposal.

Wente and Sexton said the hospitals are willing to guarantee the state $44 million in cost savings through the merger. In addition, they promise to freeze charges and rates to consumers and third-party payers for two years and to tie cost increases to the Consumer Price Index for the next three years.

Cost and availability of services will be most employers' big concerns, Mehner said.

"The business community is interested in competitive, wide-range health care for their employees," he said. "They need it to be cost competitive, they need it to be quality competitive and they need it to be available locally."

The fact that advanced-care services are available locally is important to employers who don't want to have to send workers to St. Louis or Memphis, Mehner said.

Employers will want to know if the merged hospital would still offer high-quality, cost-competitive health care, he said.

"If this merger positively affects that end, then I think the business community would be supportive. If it does not positively affect that end, then I think there would be some concerns," Mehner said.

The hospitals are working in cooperation with the chamber to set up meetings with local employers, Wente said.

Wente and Sexton say the merger makes good business sense.

After years of duplicating services, the two hospitals have a chance to strengthen their operations and help control health-care costs by merging, they say.

The promised net-cost savings -- $44.4 million over five years -- would come through eliminating duplication, cutting capital expenses, cutting employees and standardizing operations.

Broken down, the cost savings identified in a feasibility by Arthur Andersen and Co. include $17.2 million saved in staffing expenses, $10.7 million saved through increased operational efficiencies and $19.6 million saved in capital expenditures.

The projected savings add up to $47.5 million, Wente and Sexton pointed out, but the costs of the merger would subtract $3.1 million from that total, for net savings of $44.4 million.

Approximately 100 jobs would be eliminated, Wente said. He and Sexton hope most of those cuts would be made through attrition, but some layoffs may be necessary.

The increased operational efficiencies would come through combined medical and administrative services.

The hospitals plan to eliminate duplication of services by combining high-cost services.

Six "Centers of Excellence" would be set up between the two campuses for neurology-neurosurgery, maternal child-health pediatrics, trauma, orthopedics and joint replacement, cardiology and cardiac surgery and oncology.

Combining services would mean fewer expenses because of fewer employees and less equipment, and less support materials would be needed.

"With one heart program, you wouldn't need as many heart catheters set up in both locations," Sexton said.

In addition, Wente said, the merged hospital would be able to take advantage of consolidating insurance costs and group purchasing power, maintenance contracts and standardization equipment.

Southeast has put its plans to build a new medical office building on hold while the merger is in the works.

There is always the chance additional facilities would be needed in the future if the merger goes through, Wente said, but operating as one entity would limit the need for future construction.

"Those decisions will all be revisited depending on what the need is," he said. "Clearly, if there are Centers of Excellence, there will be a lot of opportunities to eliminate duplication of things that are already here and certainly future expansion that would represent new duplications."

Wente and Sexton said competition no longer exists only in Cape Girardeau. Health-care systems in St. Louis, Memphis, Springfield, Ill., and Southern Illinois are also working to attract patients and their health-care dollars.

Strengthening Cape Girardeau's system would help ensure a wide range of health-care services available locally, they say.