THORNY ISSUES REVIEWED: CAPE HOSPITALS FIND ACCORD AS TALKS PROGRESS

Talks aimed at affiliating Cape Girardeau's two hospitals are on schedule, the administrators say, with consensus already reached on some of the thorniest issues.

One of those, agreement on an ethical and religious directive, has been resolved to the satisfaction of Bishop John Leibrecht of the Springfield-Cape Girardeau Diocese of the Roman Catholic Church. Under the agreement, Southeast Missouri Hospital no longer would perform sterilization procedures or therapeutic abortions for women.

"That would have been a deal breaker from the bishop's perspective," said James Sexton, president and chief executive officer of St. Francis Medical Center, a Catholic hospital.

Those procedures still would be available elsewhere in the city, Sexton said.

James Wente, Southeast Missouri Hospital's administrator, said such an agreement would not dictate the hospital's policy in other ways.

"We're not turning Southeast Hospital over to the Catholic church."

In a possible affiliation, Sexton said, "I think the church's role becomes one of mission and values and maintaining an identifiable presence in the community."

He compared the potential relationship to "an interfaith marriage."

Wente and Sexton, along with the presidents of both hospitals' boards of directors, discussed the ongoing talks about the two hospitals during a meeting Wednesday with the editorial board of the Southeast Missourian. The hospitals announced last year that they had formed a joint committee to study a possible affiliation of the two institutions.

The two administrators raised the specter of large health-care providers that might move into town from outside the region if the affiliation does not succeed.

"The day will come when we don't have any choice but to partner with someone else," Wente said.

"I don't think this town has seen that level of competition before," Sexton said.

One result of separate affiliations outside Cape Girardeau would be loss of local control, they said, and it is possible some services now provided locally would be referred to hospitals in St. Louis or Memphis.

Wente and Sexton both used the word "merger" in discussing an affiliation between the two hospitals, but they said other types of combinations are being looked at carefully.

"We have looked at a variety of different models," Wente said.

Governance, Sexton said, is the major question still to be worked out. "We need to get that out up front, because it's a deal killer if we don't deal with it up front."

Arthur Andersen & Co., a consulting firm, has been hired to study how an affiliation between the two hospitals could be accomplished. That feasibility study is due to be completed next month.

Harry Rediger, president of the St. Francis Medical Center Board of Directors, said the two hospitals are trying to work out an agreement that will be acceptable to the federal government.

"We want to do what is most likely to succeed."

Whatever the hospitals and the consultant decide on will be scrutinized for possible antitrust violations.

"The feds will ask why we couldn't reach some economy through joint ventures," Sexton said. "The reason is if we don't have governance, it doesn't matter."

The administrators expect the consultant to recommend narrowing the hospitals' two heart programs to one.

Two helicopters still would be necessary for emergency air ambulance service, because both are continuously busy, they said.

The administrators have been trying to visit hospitals in Clinton, Iowa, and Owensboro, Ky., where Catholic and secular hospitals have merged with success. They have been unable to arrange those trips so far.

Sexton said the rumor mill has been operating full time at his hospital, even though not even the administrators are aware of the consultant's conclusions.

Wente said his staff has been stretched to provide the consultant with all the information needed in addition to performing their regular duties.

Both Wente and Sexton said they have been spending "at least" half their time on issues surrounding the possible merger.

People in management positions at the hospitals realize they are providing the consultant with information that could lead to the unemployment line, Wente said.

Added Sexton, "The entire employee work force recognizes the logic of the discussions."

The two hospitals employ about 2,800 people.

"To compete with St. Louis and Memphis, we have to be more efficient," Wente said.

The two hospitals previously considered combining services in 1993 and 1994 before negotiations broke down. At that time, the affiliation did not have the general support of the medical staffs. But Wente and Sexton said their current staffs back the affiliation.

They said the high cost of providing services to Medicaid and Medicare patients is one of the key issues behind the need to affiliate. The quality of indigent care should improve if the hospitals combine in some manner, they said.

The two Cape Girardeau hospitals are thoroughly modern but can't continue to compete against each other across the board, Wente said. "We're too small to do it."

A managed-care network alone would not eliminate the hospitals' redundant costs, the administrators said. "We did that and lost," Wente said.

He referred to the bankruptcy announcement last December by MedAmerica HealthNet Inc. The physician-hospital organization contracted with St. Francis Medical Center, Southeast Missouri Hospital and more than 200 area physicians to provide medical services.

Robert Erlbacher, president of Southeast Missouri Hospital's Board of Directors, said the local part of the process should be complete by July. But the expected federal objections would require another 12 to 18 months to resolve, he said.