Beginning today, St. Luke’s Hospital is no longer part of ProMedica.
It will be at least a week, however, before the green ProMedica lights are turned off on the 132-bed Maumee hospital and new signage is put in place, said Dan Wakeman, St. Luke's Hospital president.
The green lights will not be removed immediately out of respect for the partnership with ProMedica over the last six and half years, Mr. Wakeman said.
It will also be more than a year before St. Luke’s begins to operate as a totally independent organization.
For patients and customers entering the hospital it will be business as usual.
But behind the scenes, the two organizations still have work to do to separate departments that integrated after St. Luke’s joined ProMedica in 2010.
“It’s like taking a scrambled egg and trying to separate it,” said Jeffrey Kuhn, ProMedica’s chief legal officer.
Officials at St. Luke’s and ProMedica spent Thursday signing closing documents to bring an end to a merger which was contested from the beginning by the Federal Trade Commission.
In an interview, leaders from ProMedica and St. Luke’s insisted the merger was good for the local community and resulted in major improvements to the hospital, as well as a profitable balance sheet.
The FTC, however, charged it was anti-competitive, and gave ProMedica too much power to set prices in the local market.
St. Luke’s is officially an independent, stand-alone hospital beginning today
■ ProMedica was ordered by the Federal Trade Commission to unwind the merger which occurred in 2010.
■ The federal agency charged the merger was anticompetitive, and gave ProMedica too much power to set medical prices in the local market.
■ ProMedica signage and green lights will not be immediately removed from the 132-bed Maumee facility.
■ St. Luke’s must repay $35 million to ProMedica, over time, for upgrades made to the hospital during the merger.
■ St. Luke’s will continue to accept patients with Paramount health insurance for an unspecified period of time. Paramount is part of the ProMedica system.
■ Over the next 12 to 18 months, the two organizations will work to separate functions and departments such as IT, marketing, food services.
St. Luke’s is officially an independent, stand-alone hospital beginning today.
Source: ProMedica/St.Luke’s
The FTC ordered ProMedica to unwind the merger in 2015, after the U.S. Supreme Court refused to hear the appeal of a lower court’s decision which sided with the FTC.
“The way I would put it is we have a great marriage, an excellent marriage, and the federal government came and forced us to get a divorce,” Mr. Kuhn said.
ProMedica submitted a formal application May 3 to spin off the Maumee hospital. As part of the divestiture agreement approved by the FTC last week, St. Luke’s will continue to accept patients with Paramount health insurance.
St. Luke’s was suffering financial losses before merging with ProMedica. Soon after the number of patients being admitted and treated at the hospital increased some 11 percent, Mr. Wakeman said.
“Paramount had an impact on that volume,” he said.
The FTC insisted that access to Paramount for a certain number of years be a part of the divestiture agreement, Mr. Wakeman said previously. The federal agency was concerned the hospital would struggle financially if it could not accept Paramount insurance, which according to ProMedica financial documents insures more than 220,000 people in Ohio.
ProMedica officials, however, would not provide details on the length of the agreement, stating only that it would be “for a reasonable period of time.”
“It’s a confidential contractual arrangement that is competitively sensitive to other organizations. We cannot sit here and tell you how long the contract is exactly,” Mr. Kuhn said.
The divestiture agreement also provides St. Luke’s with protection for a number of years from direct competition from ProMedica, Mr. Wakeman said previously. He did not specify how long but noted that ProMedica cannot build any surgical center or other competing services within a seven-mile radius of the hospital for a period of time.
“As a senior executive of ProMedica, I can tell you without any equivocation we have no plans to build a hospital in this area,” Mr. Kuhn said.
St. Luke’s will have to repay ProMedica $35 million for the upgrades it made to the facility over the last six years, including improvements to the emergency department and the heart and vascular center.
“They are being very gracious about the process and allowing us to pay that back” over several years, Mr. Wakeman said.
Even after the unwinding is finally complete, St. Luke’s plans to continue to contract with ProMedica to provide services that are too expensive for the hospital to rebuild on its own, he said. Neonatal services for high-risk premature babies and inpatient rehabilitation services are two examples he gave of services the hospital plans to contract out.
The FTC will continue to monitor the process for the next 12 to 18 months and ProMedica must provide monthly reports on the progress.
“We have a stable organization that’s got a solid balance sheet right now, wonderful employees and physicians, good community support at this point in time, and we are going to do our best to service this community's needs going forward,” Mr. Wakeman said.
Contact Marlene Harris-Taylor at: mtaylor@theblade.com, 419-724-6091, or on Twitter @marlenetaylor48.
First Published July 1, 2016, 4:00 a.m.
