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The Morton Plant-Mease merger

In 1994 two North Pinellas hospitals, Morton Plant and Mease, agreed to be guinea pigs for the U.S. Department of Justice. Denied the full merger they wanted, the two not-for-profits agreed to a unique arrangement that allowed them to collaborate in some segments of their business but forced them to compete in others.

The result has been an awkward, 10-year tango. For example, Morton Plant and Mease have been allowed to collaborate on high-cost, high-tech medical procedures, but they have had to compete in more routine kinds of patient care. They have been allowed to merge their nursing staffs, but not share best practices in patient care that each hospital developed. They could join their accounting and billing departments, but they could not negotiate purchasing contracts as one entity. Their fundraising foundations could merge, but the two hospitals could not do joint long-range planning or share marketing strategy. Administrators meeting to discuss hospital business had to go to separate rooms when the conversation veered onto competitive subjects.

This arrangement the Justice Department called "trend-setting" has turned out to be a pain in the neck for the hospitals. Last week Mease and Morton Plant notified the federal government that they intend to fully merge their operations, and officials said they will fight back if the government again tries to block the merger with an antitrust lawsuit.

Industry experts predicted this outcome 10 years ago, saying the experimental partnership arrangement of which the Justice Department was so proud would prove enormously difficult for the hospitals to execute.

The government's objections to the 1994 merger filing were unfathomable in the first place. The Justice Department opposed the merger of Morton Plant, Mease Dunedin and Mease Countryside because it supposedly would create a health care monopoly in North Pinellas. Yet the government had not raised an eyebrow over the growing number of hospitals owned or operated by Columbia/HCA Healthcare Corp. in the Pinellas market at that time. Also, the feds were calling on the health care industry to find new efficiencies to reduce the cost of patient care, yet would not allow Morton Plant and Mease to pursue the efficiencies that a merger would guarantee.

The 10-year partnership between Morton Plant and Mease has saved an estimated $100-million, hospital officials said. They are convinced a full merger would save even more, reduce the confusion of patients who believe the hospitals already are merged, and eliminate the unwieldy procedures that handicap the hospitals now. They could make smarter decisions if they were able to strategize together, officials said. Mease also could join Morton Plant and six other hospitals in the BayCare Health System, a bay area network, and therefore realize even greater efficiencies. One negative is that Mease, in a concession to the Catholic hospitals in the BayCare network, would quit doing elective abortions. That would leave Bayfront Medical Center in St. Petersburg as the only Pinellas hospital providing inpatient elective abortions.

Morton Plant and Mease are community-minded institutions that provide quality care at a level recognized nationally. They want to do even more, but they need to make every dollar count. Pinellas residents, buffeted by accelerating prices for all kinds of medical treatment, need quality care at the lowest possible cost from these hospitals they have come to trust. The Justice Department should not stand in the way of a full merger.

[Last modified April 25, 2005, 01:04:14]