HOSPITALS AWAIT AG's MERGER RESPONSE

Cape Girardeau hospital officials are waiting to hear from the Missouri attorney general's office on their offer of a consent decree to guarantee cost savings from the proposed merger.

James Sexton, president and chief executive officer of St. Francis Medical Center, said he is guessing the state will reply within a month to the offer.

Sexton and James Wente, administrator of Southeast Missouri Hospital, met with seniors Thursday at the Cape Girardeau Senior Center about the proposed merger of the two hospitals.

The attorney general's office held a public hearing to gather input on the merger Sept. 28 in Cape Girardeau.

The hospitals' attorneys will meet with the state's attorneys on the merger proposal. "It's really a negotiation process," Sexton said.

Hospital officials are asking for community support for the merger.

Wente, Sexton and members of their respective boards have met with employers and civic groups throughout the community to outline the merger plan. The two hospitals can't support continued competition and maintain current levels of service, Wente and Sexton say.

Merging would allow for cost savings and continued local control while maintaining high quality health care in the region, they say.

"We can no longer accomplish what we need to do alone," Sexton said. "The days of the medical arms race have got to go by the wayside so that we can effectively use your dollars to continue to supply health care to the people of Cape Girardeau."

Under the proposed merger plan, both campuses would remain operational, with tertiary care services combined into six "Centers of Excellence." Those six centers -- cardiac surgery and cardiology, maternal and child health and pediatrics, neurology and neurosurgery, oncology, trauma and orthopedics and joint replacement -- would be divided up between the two campuses.

Obstetrics services would remain at Southeast, Sexton said. Staff are studying how to divide up the other tertiary care services.

St. Francis would maintain its identity as a Catholic institution if the merger goes through.

Sexton said the hospitals' Joint Study Committee and the Springfield-Cape Girardeau diocese have already addressed the potential that some services might not be available at St. Francis because it is a Catholic institution.

The hospitals have consulted the Most Rev. John J. Leibrecht, bishop of the Springfield-Cape Girardeau diocese, and a church attorney, he said.

Hospital officials recognize "that we have to continue to provide the continuum of health care" while adhering to the directives governing Catholic health-care institutions, Sexton said.

Sterilization procedures would still be offered at Southeast, he said.

The hospitals are also offering to freeze prices for two years and tie any price increases to the Consumer Price Index for the following three years.

Wente and Sexton project net cost savings of $44.4 million over five years from the merger, including savings of $10.7 million in operations, $17.2 million in staffing and $19.6 million in capital avoidance.

As part of the merger, they are also willing to set up a community health foundation to address a number of public health issues and to hire three primary care physicians who would work out of the hospitals to improve access to health care.

The merged hospital would provide about $20,000 a year to the foundation, which could serve to attract grants and other funding to combat health-care problems, Sexton said.

Hospital officials are willing to enter into a consent decree with the Missouri attorney general to guarantee the projected cost savings. As part of that guarantee, any shortfall in the projected $44.4 million in savings would be paid to the new community foundation.

If necessary, Sexton said, the hospitals could cover the shortfall from reserve funds.

"If we don't save a nickel, we could cover the $44.4 million," he said.

Wente and Sexton also promise the merged hospital would retain its not-for-profit status.

Merging would allow the two hospitals to become more competitive against health-care systems outside the immediate area and to expand their service area beyond the existing 10-county region in Southeast Missouri and Southern Illinois, Wente said.

Changes in the health-care industry, including projected cuts in Medicare and Medicaid, mean neither hospital can afford to continue duplicating services, he said.

"These changes are not going to allow anybody to sit on their hands or stick their heads in the sand, because the train is coming," Wente said. "It's moving down the track. We can either get on the train or pretend the train isn't coming, but that is not something that any responsible board is going to do."

St. Francis and Southeast are now competing against health-care systems in St. Louis that have already been strengthened through mergers and consolidations, he said.

"They've gotten their costs down and they're competitive, and that's what we want to do here," he said.

Both hospitals have already been approached by outside health-care systems with buyout offers, Wente and Sexton said.

But, Wente said, acquisition by an outside system would probably mean losing tertiary care services and the loss of specialists who provide those services.