ST. FRANCIS ABANDONS MERGER; NIXON'S OPPOSITION PROMPTS DECISION

In the wake of opposition from the Missouri attorney general, the board of directors at St. Francis Medical Center has voted to cease merger discussions with Southeast Missouri Hospital.

Thirteen of the board's 14 members attended a meeting that was called after Attorney General Jay Nixon announced Thursday he opposed the hospitals' merger. Nixon's announcement came at a news conference at his Cape Girardeau office.

The St. Francis board unanimously agreed to end the merger talks. The absent member was consulted and concurred with the action, said board chairman Harry Rediger, retired manager of the JCPenney Co. store in Cape Girardeau.

In his surprise press conference Thursday, Nixon said his office opposed the merger on the grounds that competition in the local health-care market would suffer if Cape Girardeau's only two hospitals combined. He promised legal action if the hospitals continue to pursue the merger.

St. Francis officials informed Southeast officials Friday afternoon of its decision to end merger talks. The Southeast board is scheduled to meet Tuesday.

Jim Sexton, St. Francis president and chief executive officer, said the St. Francis board considered three options: call off the merger, put the issue on hold for later reconsideration or move forward to seek U.S. Department of Justice approval of the merger.

"We felt the latter would be a pretty brash step considering what was said Thursday, so we didn't discuss it much," Sexton said.

Placing the merger on hold was considered unattractive since it could hamper the hospital's efforts to hire a new president and CEO, Sexton said.

Sexton announced in December that he will leave St. Francis Feb. 5 to accept a similar position in Mason City, Iowa.

If merger remains a possibility, the potential lack of job security might deter the best candidates from seeking the St. Francis post, Sexton said.

Now that the decision has been made to abandon merger negotiations, St. Francis will devote its attention to a strategic plan for the future, he said. "The plan will address some of the things we didn't do out of respect for the merger discussions," Sexton said.

The plan's first step includes launching a nationwide search for Sexton's successor.

Although there won't be a merger, Rediger said both hospitals gained from the experience.

"I think we learned a lot," he said. "I don't think the last 14 months of joint study were totally wasted. I compliment the Southeast board and joint study committee for their efforts and cooperation during the study process."

The attorney general's position doesn't prevent the hospitals from cooperating to provide new services. One such project was the development of the "hospitalist" effort to care for patients with no local doctor.

"Shutting down the merger talks doesn't preclude us from talking together for the good of the community," Rediger said.

Doug Groesbeck, district manager of AmerenUE, is a St. Francis board member who also served on the merger task force. He said that while chances for cooperation still exist, a merger would have provided more benefits for the community.

"Opportunities remain, but they pale in comparison to the opportunities that would have been available through a full merger," Groesbeck said.

Without the merger, Sexton said it is possible that St. Francis could affiliate with an out-of-town health-care organization in the future.

"While we had hoped to become a hub of a regional health-care network, we could potentially wind up being a spoke," Sexton said.

A merger with Southeast, he said, would have allowed the two hospitals to combine their financial strength.

Aligning with another Catholic-run operation might be an option.

"Before the merger talks we were approached by one entity, and during the merger talks we were approached by another," he said.

However, because of its exclusivity agreement with Southeast, St. Francis declined to enter into any affiliation talks with another organization.

Sexton expressed surprise that the issue of local control sparked considerable negative community reaction during the merger talks, particularly from area businesses that are headquartered elsewhere.

Groesbeck said local control of not-for-profit groups such as St. Francis and Southeast is important to protect the community.

"I think you're talking about something entirely different when you're talking about a health-care facility," Groesbeck said.