St. Joseph's Faced Layoffs or Cuts, Says Mercy CEO

by Mark Friedman  on Monday, May. 14, 2012 12:00 am  

St. Joseph’s Mercy Health System in Hot Springs would have faced layoffs or cuts in services if it had continued in the Mercy Health System of Chesterfield, Mo., according to the corporation’s president and CEO, Lynn Britton.

To avoid that, Mercy agreed to sell its 282-bed St. Joseph’s hospital to Capella Healthcare of Franklin, Tenn., which owns the National Park Medical Center in Hot Springs. The proposed sale for an undisclosed price was announced April 23.

Several people resigned from Mercy’s local hospital board and from the national board to protest the move. Former board members were concerned about how the poor would be treated under the leadership of the for-profit Capella Healthcare.

The proposed sale also upset the Catholic Diocese of Little Rock. It had “serious reservations about it due to the negative impact this purchase could have on the medical care available to the poor and on the Hot Springs community in general,” it said in an April 24 news release.

Britton told Arkansas Business last week that Mercy had known for years that Hot Springs could support only one hospital. Hot Springs has an aging population, which requires more health care services, and the area competes for medical services with Little Rock, only about an hour’s drive away.

In addition, St. Joseph’s is losing money, Britton said, but he declined to say exactly how much. It gave away $8 million in care at the hospital in 2011 and had to take a loss on a couple of million dollars more because of shortfalls in Medicaid payments, he said.

And in the last several years, 400 positions have been eliminated from the hospital, which has about 2,100 employees.

For about two years, Mercy tried to buy National Park Hospital from Capella. “It was clear that that was not an option that would ever be available to us,” Britton said.

So in November or December, the talks shifted to Capella buying St. Joseph’s.

Mike McCurry, the chief operating officer of Mercy, told Arkansas Business last week that Capella would essentially continue to provide the same services to the poor that Mercy had. And the St. Joseph’s employees would be treated the same.

“For an extended period of time, [Capella is] keeping the employees that are there in their same role and at the same pay,” McCurry said.

The details are still being worked out though. The sale is expected to be final in three to six months.

Board Members Quit

When the announcement was made, several board members quit, including Eric Jackson, who resigned from Mercy’s national board of directors.

“I have a strong conviction” that a faith-based, non-for-profit hospital is the best hos-

pital for Hot Springs, Jackson, general manager of Oaklawn Park, told Arkansas Business after the proposed sale was announced.

Bart Newman, who was chairman of the St. Joseph’s board in Hot Springs, told Arkansas Business last week that he resigned because “it appears to me to be an economic decision and is not based upon what’s best for Hot Springs.”

Britton said he was “saddened” when he learned of the resignations.

“I wish them the very best. We’re sorry that it’s come to this kind of thing,” he said. “But at the same time, Mercy cannot always be the solution for every community.”



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