Cooper Clinic Sues Mercy Over Recruitment Tactics

by Mark Friedman  on Monday, Dec. 2, 2013 12:00 am  

Cooper Clinic CEO Doug Babb, inset, said in letters filed in its lawsuit that the multi-specialty clinic had been in sale talks with both Mercy Health and Sparks Health System in Fort Smith in 2012.

It is unclear from the lawsuit how the relationship between Mercy and Cooper changed between 2011 and 2012.

But sometime in the first half of 2012, Mercy began talking with Cooper officials about the possibility of Mercy buying the Cooper Clinic.

That would have been a tough sell because the Cooper doctors “enjoy the autonomy they have over their practices and our productions-based compensation system and would likely want to remain independent,” Babb said in a July 30, 2012, letter to Kim Day, a Mercy executive who had been involved in the negotiations.

Still, Babb said that under the impending Affordable Care Act, a doctor’s clinic partnering with a hospital would be a necessity.

“In that context, I planned to discuss the Mercy proposal to determine if a substantial majority of our physicians had any interest in a transaction with Mercy,” Babb said.

The talks with Mercy ended there.

Babb was upset about a letter he received from Day just a few days before, on July 25, 2012. Mercy wanted Babb to sign a proposed agreement and if he didn’t, any oral commitments the company had made were off.

And, Day said in the letter, Babb had to stop negotiating with Sparks about a possible sale as long as negotiations with Mercy were continuing.

Mercy agreed it wouldn’t attempt to recruit Cooper’s employees — except for Cooper’s cardiologists and chief medical officer.

Those terms didn’t sit well with Babb.

“We interpret this language as both a threat and ultimatum,” Babb said in his response to Day.

He also said he couldn’t understand why Cooper couldn’t talk to representatives at Sparks, where 37 of Cooper’s doctors had privileges.



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