Combining Forces For Economic Strength

January 9, 2008
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MUSKEGON — As 2008 opens, Muskegon's two hospitals are continuing their effort to unite into a single health care entity.

Due diligence is proceeding for the proposed merger of Mercy General Health Partners and Hackley Hospital, said Kelly Kurburski, Mercy General spokeswoman. The merger may come before the boards of directors of Hackley, Muskegon General and the latter's parent company, Trinity Health in the first quarter of 2008.

The proposal passed muster with the Federal Trade Commission, when in November the agency allowed its deadline for comment to expire without intervention.

Should the board approve, the merged hospital would be a member of Novi-based Trinity Health.

Cindy Larsen, president of the Muskegon Area Chamber of Commerce, said last fall that the merger proposal came amid a community-wide shift in thinking about local health care.

"The chamber's interest in it was to look at health care as an economic development driver versus as a service," said Larsen, a member of the Unified Health Care Task Force, a group of business and nonprofit leaders, government officials and doctors who met for more than a year to examine ways to bolster health care in Muskegon County.

"If it indeed is an economic driver, then we need to nurture it. What we encouraged was dialogue. Our role was to bring the hospital boards and management together to be proactive instead of reactive to market conditions."

By dividing the Muskegon market, the hospitals waste money by offering duplicate services, don't attract enough market mass to profitably offer certain higher-paying specialties and find it harder to entice those specialists, task force members said.

An analyst and business leaders say the two hospitals also need their combined strength to become a factor in the larger Michigan market, where competition for the most lucrative reimbursements has become fierce.

IRS documents showed Hackley Hospital operating in the black for the tax year that ended in 2005, but falling into the red by $1.6 million in the 2006 tax year. In 2007, Hackley's bond rating was lowered.  Hackley Hospital was a member of Grand Rapids' Spectrum Health for five years, but the relationship was severed in 2005.

Mercy General Health Partners provided a consolidated fiscal statement showing revenue over expenses of $11 million in June 2006 and of $26 million in June 2007.

In the short-term, a hospital merger is likely to result in layoffs, Larsen acknowledged. That short-term pain is necessary for long-term gain, she argued.

"The whole point of it is to create new opportunities," Larsen said. "Overall, it's going to mean growth in health care jobs."    

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