Capella Healthcare, Mercy Health End Merger Talks in Hot Springs

Capella Healthcare of Franklin, Tenn., and Mercy Health of Chesterfield, Mo., said Thursday that they have "ended their discussions at this time to join together National Park Medical Center and Mercy Hot Springs."

The announcement comes more than a year after the two originally announced the deal, which would have merged Mercy Hospital in Hot Springs with National Park Medical Center under Capella's ownership. The companies said their asset purchase agreement, which had already been extended once, expires this week.

"Because we anticipate continued challenges – over an indefinite timeline – in obtaining the needed approvals, Capella and Mercy have mutually agreed to not renew our asset purchase agreement and will end our discussions at this time," Lynn Britton, Mercy's president and CEO, said in a news release.

"We believe prolonging this uncertain and complicated path is not in the best interest of our local caregivers and the community," Britton said. "However, we remain committed to finding the right solution for enhancing health care in Hot Springs."

The deal faced opposition almost from the start and prompted one director on Mercy's national board, Oaklawn Park General Manager Eric Jackson, to resign. "I have a strong conviction" that a faith-based, not-for-profit hospital is the best hospital for Hot Springs, Jackson said at the time.

Also, Bishop Anthony B. Taylor of the Catholic Diocese of Little Rock expressed uneasiness about the deal, saying he was concerned about the "negative impact this purchase could have on the medical care available to the poor and on the Hot Springs community in general." The Catholic Church had to approve the deal because of its relationship to Mercy hospitals.

The deal also required Federal Trade Commission approval. In January, Arkansas Business reported the FTC had issued at least one subpoena involving an investigation into the deal. The FTC would not comment on its investigation, and Capella characterized the FTC's actions as routine.

On June 14, a Capella Healthcare spokeswoman told Arkansas Business that the company was still providing the FTC with information. She said there had been "several productive meetings" with the FTC "over the past few weeks."

Proponents of the deal say the Mercy system in Hot Springs would have faced layoffs or cuts in services had it continued as part of in the Mercy Health System.

"This is a difficult decision for both Capella and Mercy, especially given the tremendous amount of work and local support to bring together these two organizations," Dan Slipkovich, Capella's CEO, said in a news release. "This has been a complex process – particularly challenging for employees, physicians and volunteers at the local hospitals." 

Slipkovich said Capella and Mercy will "separately explore how to best move forward in the coming weeks."