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UPDATE: Eric Jackson Resigns From Mercy Board in Protest of Sale

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The proposed sale, announced Monday, of St. Joseph’s Mercy Health System in Hot Springs to a Tennessee for-profit hospital chain has already prompted Eric Jackson to resign from Mercy’s national board of directors.

"I have a strong conviction" that a faith-based, not-for-profit hospital is the best hospital for Hot Springs, the general manager of Oaklawn Park in Hot Springs told ArkansasBusiness.com.

Jackson was on the national board of directors of the Sisters of Mercy Healthcare System, as well as its finance, audit and compensation committees. He resigned last week because of the sale.

"And if we’re going to lose Mercy, my preference would be for another faith-based, not-for profit hospital" to replace it, he said Monday afternoon.

The proposed buyer is for-profit Capella Healthcare of Franklin, Tenn., which operates 13 general acute-care hospitals in seven states, including Hot Spring’s other hospital, National Park Medical Center.

On Monday Capella and the 282-bed St. Joseph’s said in a news release that they’ve reached a deal that allows the two organizations "to engage in exclusive negotiations toward a definitive agreement."

But the announcement has caused some uneasiness in the community.

"My biggest concern is for the poor," Randy Fale, who was CEO St. Joseph’s for 19 years before retiring in early 2008, told ArkansasBusiness.com Monday. St. Joseph’s charity care for the fiscal year that ended June 30, 2010, was $23.4 million.

Fale said that he thinks the sale will lead to layoffs because Capella already owns National Park.

"You don’t need two managements," Fale said. "You don’t need duplication of services."

He also said that Capella’s monopoly of hospitals in Hot Springs doesn’t sit well with him. Fale said if there’s no competition, there’s no need to be competitive with cutting-edge technology, services or anything else.

"I worked for 19 years and the Sisters of Mercy organization was very good to me and my family and to Hot Springs," he said. "I just happen to disagree with this decision."

Bart Newman, the chairman of the Mercy System Board in Hot Springs, told ArkansasBusiness.com Monday that he, too, was disappointed to see St. Joseph’s sold to a for-profit hospital.

"For-profits and non-profits have different missions," he said.

He said most people even didn’t know about the move until Monday.

Barb Meyer, a spokeswoman for Mercy, said Monday that the deal wasn’t final.

"We’re still in discussion, so it premature to say at this point what might happen at the point," she said. "I’m not able to provide any information other than what was in our news release."

St. Joseph’s is one of Arkansas’ largest hospitals ranked by revenue. For its fiscal year that ended June 30, 2010, it had $645.8 million in patient revenue and net income of $1.8 million. It also had 1,064 employees at the time.

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