LOCAL OFFICIALS PLAN VISIT TO IOWA HOSPITAL

Cape Girardeau's hospital administrators will head to Davenport, Iowa, next week to learn more about the business of merging.

James Sexton, president and chief executive officer of St. Francis Medical Center, and James Wente, administrator of Southeast Missouri Hospital, and a team of delegates will visit Genesis Medical Center, the hospital formed when St. Luke's and Mercy hospitals merged in 1995.

Sexton and Wente want to learn more about how the Davenport hospitals worked out dividing up specialized services for the merger.

The administrators have proposed six "Centers of Excellence" -- cardiac surgery and cardiology, maternal and child health-pediatrics, neurology and neurosurgery, oncology, orthopedics and joint replacement, and trauma centers -- between the two hospitals.

Sexton said a work group of physicians from both hospitals is studying which campus should get which services.

"We need to get these guys up to Davenport, take a look at how they've divvied up there services, how they're providing clinical care and then come back and have further discussions," he said.

Leo Bressanelli, president and chief executive officer of Genesis Medical Center, said the boards of St. Luke's and Mercy worked on their merger -- Bressanelli calls it a "consolidation" -- for a year before the process was complete.

The two hospitals had originally proposed merging in 1977, he said, but the proposal was rejected by the community.

In deciding how to divide up specialized services like cardiology, neurology and oncology, Bressanelli said, "We went through a real thorough process of modeling. We asked what made sense medically, what made sense economically and what would fit physically. And we used those three variables and we came up with a model of how we could allocate the services."

Wente and Sexton say the regional market will no longer support the two existing hospitals. Continued duplication of services is driving up costs, and neither hospital will be able to keep up its current operations.

Without a merger, they say, there is a risk that one or both of the hospitals could be bought out by a health care system in St. Louis or elsewhere outside the area.

Loss of local control could mean moving advanced care services to St. Louis, Wente and Sexton say.

Bressanelli said St. Luke's and Mercy's boards had to consider those issues in their merger.

When they merged, Davenport was a three-hospital town. Mississippi Medical Plaza is still operating.

In addition, Bressanelli said, Davenport's hospitals were competing with other hospitals in the Quad Cities area.

"If you want to go back to the 1980s, we had seven hospitals, and now we're at four, one of which is part of Genesis now," he said. "There's been a lot of consolidation."

St. Luke's -- an Episcopalian hospital -- and Mercy -- a Catholic hospital -- were competing on several fronts, including obstetrics, pediatrics and cardiology, he said.

"Through the consolidation, we brought about the consolidation of these services," Bressanelli said. "As is typical of a multi-hospital community, there's a lot of duplication of services. In our community, we saw needless duplication."

When the merger process started, the two hospitals projected the merger would result in $75 million in savings over a five-year period.

The projected savings included $47 million in capital avoidance, $16 million in manpower and $12 million in increased efficiencies.

Three years into the merger, Bressanelli said, savings have totalled $70 million.

Wente and Sexton project savings of $44.4 million over a five-year period through the merger.

They say they are willing to enter into a consent decree with the Missouri attorney general to guarantee those savings, including setting up a health care foundation to be funded by any shortfall in the promised savings.

When Davenport hospital officials began pitching their merger plan in 1994, Bressanelli said, "we met with a lot of favorable response. You need to put that in the context that we tried to do this back in 1977 and it fell flat. It did not succeed."

But the health care market has changed considerably in the intervening years, he said, and so has the way consumers feel about health care costs.

"There was obviously a move between 1977 and 1994," he said. "We went through the real competitive 1980s, where there was a lot of investment going on, a lot of duplication. I really think the boards of both hospitals listened to the community and asked the question, is there a better way to deliver health care, and that was really the motivation for the consolidation."

The Davenport merger underwent "a pretty rigorous review" by the Department of Justice, he said, but hospital officials were able to demonstrate the merger would benefit the community.

Since the merger, Genesis Medical Center created the Genesis Health System and acquired a hospital in neighboring DeWitt, Iowa, and a hospital across the Mississippi River in Illinois.

Genesis Medical Center is a not-for-profit hospital and employs about 2,900 people between its two Davenport campuses. The hospital produces about $350 million in gross patient revenues a year.