PROCESS COULD BE LENGTHY

Officials studying the potential "permanent affiliation" between St. Francis Medical Center and Southeast Missouri Hospital say the process will be a lengthy one.

If federal antitrust agencies -- chiefly the Federal Trade Commission and U.S. Department of Justice -- decide to get involved, "lengthy" could be an understatement.

The feds don't get involved every time hospitals decide to affiliate or merge, said Bob Leibenluft, assistant director for health care with the FTC's bureau of competition.

"There are several hundred mergers a year in hospitals," Leibenluft said. "Many of those don't get any close scrutiny because they aren't in the same market or there are other hospitals in that market."

No one has said that the two Cape Girardeau hospitals will merge.

But corporate affiliations of all kinds, and in all industries, can trigger federal scrutiny on a number of issues.

In the case of health care, Leibenluft said it is important to consider what those affiliations will mean for employers who provide health-care benefits and determine coverage, the patients themselves and insurance companies that award contracts based on availability and cost of care.

"We look at who the competitors are; what the market is like; what the geographic market is, such as where patients could turn to alternatives; and how many hospitals there are in that market. If the hospitals were to merge and they were to raise their prices, would there be an alternative to where the patients could really go?" he said.

Managed care companies have become "important buyers" in the health-care industry, Leibenluft said.

"With any merger, one important source of information is, we talk to buyers. We're really looking to see what alternatives buyers have," he said.

Managed care companies may try to play one hospital off against another through competitive contracts or may give patients financial incentives to go to hospitals outside the local market, Leibenluft said.

"It's competition," he said. "We typically ask managed care, have you been able to do this in the past, and will you be able to do it in the future?"

Buyers are also asked if they think affiliating firms' claims of increased efficiency and lowered costs will materialize, Leibenluft said.

"With any merger, there are improved efficiencies. If GM merged with Chrysler and Ford, they would cut down on the number of assembly lines and advertising, but would they pass those savings on to consumers?" he asked.