Good Samaritan to join Helix hospital network

February 09, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

Good Samaritan Hospital yesterday agreed to join two other hospitals in the Helix Health System, creating the largest hospital network in the state after Johns Hopkins and paving the way for the group to develop a full range of medical services.

In addition to Good Samaritan, Helix includes Union Memorial Hospital and Franklin Square Medical Center, and a panoply of businesses and services ranging from apartments for the elderly to rehabilitation beds.

The new system, which would have estimated 1994 revenues of $420 million, serves an area covering the northern and eastern parts of Baltimore and Baltimore County, Harford County and the southern portion of Cecil County.

"It's going to take us to July to close the details," Robert W. Lindsay, chairman of the Helix board, said yesterday.

In the meantime, he said, the three hospitals would work on "making care more available and,we hope, at a better rate."

James A. Oakey, president and CEO of Good Samaritan, on Loch Raven Boulevard in Baltimore, will head the expanded Helix.

Executives of the hospitals said yesterday that their aim is to be the preferred regional health care provider in Baltimore. Although hospital rates in Maryland are regulated and hospitals can't offer large discounts to insurance companies, the executives said combining forces would make them more attractive to managed-care companies based on size alone.

"Managed-care companies want to deal with one entity," said Michael R. Merson, current president of Helix.

Other pluses: Costs at all three hospitals are in the lower range of the scale. And the combined system has $71.2 million in unrestricted cash to invest in new opportunities, $54 million of it from Good Samaritan. The system now will develop a strategy to tap new opportunities.

These could include developing a "brand name" for certain products across the system, developing a base of primary care doctors and expanding care into the community -- all strategies designed to appeal to managed-care companies.

Nonhospital services -- including two nursing homes, medical equipment and home health care -- account for about $11 million of the estimated $420 million in revenues, but these are expected to grow dramatically as hospitals scramble to offer services for people at home.

The Helix System, which was formed in 1988, decided it needed to expand last summer after undergoing leadership changes and after a conflict over which hospital should submit an application for an open-heart surgery unit. In addition, Union Memorial, on East University Parkway in North Baltimore, has had four consecutive years of operating losses, including $905,000 for the fiscal year ended June 30. It projects a $2.1 million operating loss for fiscal 1994. This is due largely to problems in accounts receivable management, since corrected, and a higher level of charity care, Mr. Merson said.

Franklin Square, in Essex, reported a $4.6 million profit for the year ended June 30.

Good Samaritan is among the most profitable hospitals in the state, earning $4.9 million for the same period. Its board voted yesterday morning to join the system largely as a pre-emptive strike, reasoning that it would do better in bargaining with managed-care companies as part of a system.

"The handwriting is on the wall, and the important thing is to move while you are strong," said Mr. Oakey, who has worked at Good Samaritan for 21 years.

As the new president of Helix, Mr. Oakey will direct strategic planning.

HELIX HEALTH SYSTEM

Member hospitals: Union Memorial, Franklin Square, Good Samaritan

Total hospital beds: 1,080

Nursing home beds: 239

Staff: 7,000 + employees,

1,500 affiliated physicians,

1,500 volunteers and auxiliary staff

Patient volume: 40,000 annual inpatient discharges, 117,000 emergency room visits, 100,000 outpatient visits, 200,000 ambulatory and ancillary procedures

Subsidiaries: Bay Development Corp., Parkway Ventures Inc.

0$ Est. 1994 revenues: $420 million

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