North is north and south is south? End of talks between hospitals doesn't preclude future mergers.

July 31, 1996

THE ANNOUNCEMENT that Glen Burnie's North Arundel Hospital and Anne Arundel Medical Center in Annapolis have called off merger talks came as a surprise. After all, outright mergers or looser strategic alliances are hot trends in health care.

"We have decided that remaining separate organizations will best serve our communities," AAMC President Martin L. Doordan said in announcing the termination of talks. For his part, James R. Walker, North Arundel's president, referred to "a multitude of factors which were Herculean in terms of their overall complexity and difficulty to resolve."

Although the merger of two competing hospitals in different parts of the same county seemed like a logical step, the missions and strategic visions of the two institutions apparently were too divergent to reconcile. This does not mean, however, that either of the hospitals, or both, might not try to seek other merger partners in the future.

The way health care is being delivered is changing dramatically. Hospital stays are getting shorter and insurers are becoming increasingly cost-conscious. To stay profitable, hospitals have to be innovative.

The 320-bed North Arundel Hospital has tried to improve its competitive edge by joining the Atlantic Health Alliance, a seven-hospital group which includes such heavy hitters as Johns Hopkins, Sinai and St. Joseph's. In contrast, the 291-bed Anne Arundel Medical Center has opted to go it alone. One of its strengths is that it provides maternity services -- which North Arundel does not -- and therefore draws from patient markets as far afield as Southern Maryland and the Eastern Shore.

In the long term, though, AAMC has decided that its interests would best be served by a partnership with another institution or group. "We will now regroup and take a look at the marketplace," Mr. Doordan said.

The termination of merger talks does not free the two hospitals from difficult decisions. AAMC, for example, has to decide whether to stay downtown in Annapolis or consolidate its operations into its newer 100-acre Medical Park in Parole. Meanwhile, both hospitals, which have been modestly profitable, are engaged in comprehensive cost reviews.

Pub Date: 7/31/96

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