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Published: Wednesday, 1/12/2011

St. Luke's, ProMedica defend plan for merger

In 2009, St. Luke's Hospital considered cutting money-losing services, including obstetrics, cardiac rehabilitation, and even general surgery.

Such cuts and others that were considered would have meant slashing a quarter of the financially struggling Maumee hospital's staff.

Under an agreement to join ProMedica Health System, however, St. Luke's would continue offering obstetrics, surgery, an accredited laboratory, and other community hospital services for at least a decade. St. Luke's also would receive $30 million over the next three years to invest in electronic health records and other technology systems being required under federal health-care reform, as well as in the building itself to improve services.

These are some of the details emerging as St. Luke's and ProMedica defend the agreement forged last year to make the Toledo area's last independent hospital part of the local system. Saying the deal would reduce competition and allow ProMedica to raise prices, the Federal Trade Commission is contesting the agreement, both in U.S. District Court in Toledo and before an administrative judge in Washington on May 31.

St. Luke's would like to remain independent, but it cannot be financially viable alone and probably would have to close, said Jamie Black, chairman of St. Luke's board.

"It would be slow -- it would be painful," Mr. Black told The Blade Tuesday. "It would be downright ugly."

Ultimately, the Toledo area market would have one fewer competitor, exactly what the FTC is looking to prevent by opposing the match, he and others from St. Luke's and ProMedica said Tuesday.

A complaint filed by the FTC and state of Ohio last week in U.S. District Court in Toledo is to be unsealed Wednesday, making more details about the government's case public. A hearing is scheduled for Thursday for both sides to present their arguments about whether the FTC should be granted a temporary restraining order and preliminary injunction so there can be no changes to St. Luke's staff or services until the government's case is heard in Washington.

In court documents filed this week and in a meeting Tuesday with The Blade's editorial board, St. Luke's and ProMedica officials disputed the FTC's contention that the agreement would allow ProMedica to increase prices for obstetrics and other hospital care. St. Luke's does not have large obstetrics and other inpatient volumes, so it is not a "must have" addition, said Jeffrey Kuhn, ProMedica's chief legal officer and general counsel.

And Mercy -- the only other local hospital system with obstetrics -- is a strong, well-funded competitor under Catholic Health Partners that would be an alternative, said Randy Oostra, ProMedica's president and chief executive.

ProMedica, meanwhile, has absorbed St. Luke's $45 million unfunded pension liability and negotiated with the Maumee hospital's bond insurer so it no longer is in default on revenue bonds, according to a court filing from Mr. Oostra. St. Luke's also is receiving more favorable malpractice insurance rates by switching to ProMedica's plan, it said.

Plus, St. Luke's business has increased 8 percent to 10 percent now that it can accept patients covered by Paramount Health Care, ProMedica's insurance subsidiary, said Dan Wakeman, St. Luke's president.

Some changes would be made at St. Luke's to improve efficiency of the hospital and ProMedica overall, Mr. Oostra said in his court filing. St. Luke's doesn't perform many coronary artery bypass graft surgeries, so that service could be moved to another ProMedica hospital, freeing up bed space for obstetrics and other services, according to the filing.

Plans have been made, meanwhile, to consolidate St. Luke's inpatient physical rehabilitation center program into Flower Hospital, according to a court filing from Mr. Wakeman.

St. Luke's, then, will be able to convert rehabilitation beds into medical/surgical beds, allowing the hospital to admit more emergency department patients instead of diverting ambulances to other hospitals, according to the filing.

Said Mr. Oostra Tuesday: "The best way to decrease costs is to integrate care."

As previously known, St. Luke's had talked with Mercy and the University of Toledo Medical Center about forming an affiliation or partnership, according to a court filing from Mr. Wakeman.

St. Luke's also contacted the Cleveland Clinic, which wanted $300,000 to conduct preliminary due diligence; the University of Michigan Health System, and McLaren Health Care Corp. in Flint about forming an affiliation, it said.

Contact Julie M. McKinnon at: jmckinnon@theblade.com or 419-724-6087.



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