NIXON: NO MERGER; HOSPITAL COMPETITION VULNERABLE, HE SAYS

Concerned that a planned merger between Cape Girardeau's only two hospitals would harm competition in the local health-care market, Missouri Attorney General Jay Nixon announced his opposition to the proposal Thursday afternoon.

Officials at St. Francis Medical Center and Southeast Missouri Hospital were disappointed by the decision. They received word of Nixon's position through their attorneys shortly before he went public with his opposition at a hastily called press conference at his local office.

"There is not sufficient protection of choice for consumers, employers and physicians in the proposed plan," Nixon said. "The community commitment in this proposal is inadequate, and the one entity to emerge from this merger would not provide the competition for prices and services that two active hospitals can provide."

If the hospitals' leadership continues to pursue the merger, Nixon said he will file suit to halt the action.

Nixon met privately Thursday morning with Cape Girardeau citizens, business representatives and physicians opposed to the merger before making his decision. He said that comments on the topic received by his office over the past four months were solidly against the merger.

"It was not a decision that was made easily, and it was not a decision that was made independently," Nixon said. "But it is one we will back up with court action if necessary."

The attorney general's office reviews proposed hospital mergers and acquisitions to determine if the transactions would have an anti-competitive impact on health-care consumers.

The administrators of both hospitals attended the press conference. Each was surprised by Nixon's decision.

"We are very disappointed," said Jim Wente, administrator at Southeast. "A lot of effort went into this."

Jim Sexton, president and chief executive officer at St. Francis, declined to speculate on what will happen next. Sexton and Wente said that decision is up to the hospitals' respective boards of directors.

The board at St. Francis planned to hold an emergency meeting Thursday night to discuss Nixon's stance. Southeast's board was scheduled to meet Tuesday.

Options include moving forward with the existing merger proposal and facing litigation, reworking the proposal to answer Nixon's concerns and developing a cooperative agreement that falls short of merger.

Supporters said a merger would result in $44.4 million in savings and is necessary to combat rising costs and to prevent one or both hospitals from being bought by an out-of-town conglomerate.

Both facilities are private, not-for-profit organizations and are locally controlled.

Based on his analysis of the proposal, Nixon didn't believe a merger would lessen the chance of a third-party buyout.

Nixon praised the hospitals for their long-term commitment to and involvement in the community.

"They have much broader missions than just making money, and they've used their funds for good purposes in the community in the past," Nixon said. "The hospitals were unable to show that merging -- and thus eliminating consumer choice -- was the only way to continue those efforts."

Nixon made it clear the hospitals are free to cooperate in providing consumers new services.

He said if the hospitals, which pursued the merger in good faith, choose to rework their proposals, he will re-examine the issue.

"I'm always willing to listen. It is important to maintain a good level of flexibility in these matters," Nixon said.

"Today this deal doesn't meet muster," Nixon said.