Howard hospital is considering offers Board mulls whether to sell, enter merger

Health care

September 06, 1997|By M. William Salganik | M. William Salganik,SUN STAFF

Howard County General Hospital, one of a shrinking number of independent hospitals, will consider offers to buy it or to form some other type of "partnership" with it, the institution's president said yesterday.

"About three-quarters of the hospitals in Maryland have substantial collaborative relationships," said Calvin Pierson, president of the Maryland Hospital Association.

It is also in an attractive and growing market, making it a tempting target for other health systems.

Howard County General has been approached 16 times in the past three years to sell, merge or form an affiliation, said Victor A. Broccolino, president and chief executive officer.

"The board felt now is the time we should go to the market and find out how the market values us," he said.

Broccolino said the board would consider a variety of arrangements over the next several months and would decide which, if any, was best for the community, the medical staff and the employees.

"It's not a given that there's going to be any kind of partnership," he said.

"When we sift through all the expressions of interest, we may not find one that meets our needs."

If it did reject all offers, it would be bucking a trend.

Not only are hospitals affiliating, merging with and acquiring each other, but they also are building "integrated health systems" involving physician groups, nursing homes, pharmacies, home health agencies and other health businesses.

"Hospitals want to make sure they're not left out in this merger mania," said Gerard Anderson, director of the Johns Hopkins Center for Hospital Finance and Management.

Hospitals merge or seek other affiliations, Pierson said, as "one of the best ways to reduce cost and reduce fragmentation of services."

"Part of it is reaction to what managed care companies want," he said. "They want fewer contracts with organizations that are broader and more regionally based."

As the only hospital in Howard County, it would not have trouble winning managed care contracts, Anderson said.

"If it really has any sort of natural monopoly, it probably would not need [a merger], but with so many hospitals in Baltimore and Washington, it may not feel it has a natural monopoly."

Beyond the problems of managed care contracting, other Maryland hospital mergers in the past year -- Liberty Medical Center into Bon Secours Baltimore Health System and Mount Washington Pediatric Hospital into North Arundel Health System have included financially troubled hospitals.

But, Broccolino said, "We're having our best year financially, and we're offering more services than ever."

According to the most recent report of the state's Health Services Cost Review Commission, Howard County General posted a surplus of $4 million in fiscal 1996, representing a margin of 5.3 percent.

"We're not saying we need it," Broccolino said. But, he said, with so many feelers, the board felt it should see whether it receives "a proposal that will enhance our ability to do a better job for the community."

Hospitals can work together in many ways besides acquisitions and full-asset mergers, Pierson said.

For example, he said, the five-hospital Maryland Health Network (Greater Baltimore Medical Center, Holy Cross, Montgomery General, Northwest and St. Agnes)does joint managed-care contracting and is merging its home health operations, but the hospitals themselves are not merged.

Some have what Pierson called a "clinical affiliation," such as Johns Hopkins with Suburban Hospital in Bethesda and Kent and Queen Anne's Hospital in Chestertown. "Hopkins gets more referrals," he said, while the smaller hospitals get "training and clinical backup."

The type of affiliation a hospital seeks, Anderson said, depends on its financial condition and its goals: "If it wants to remain a community hospital, it may seek a larger hospital. If it has money to invest, it may want to be the top dog."

Broccolino said he could not discuss the details of the criteria the hospital would use in evaluating proposals, the time frame or the organizations to which Howard County General had indicated its willingness to deal.

He did say of the 16 organizations that had approached Howard County General, four were for-profit companies and three were organizations for which "hospitals are not their primary health care business."

Pub Date: 9/06/97

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