Saturday, May 3, 2008

SPECIAL REPORT TO NEWSLANC: Hospitals' Financial Failures May Lead to Sale

"With chronic revolving door CEOs and poor financials at both Lancaster Regional Medical Center (LRMC) and Heart of Lancaster Regional Medical Center (HLRMC), Health Management Associates (HMA) has decided to sell both hospitals to another healthcare corporate entity*, Tenet Healthcare Corporation (THC).

"A high-ranking HMA corporate executive, who requests anonymity, has stated that both LRMC and HLRMC (both for-profit hospitals) cannot compete in Lancaster County with Lancaster General Hospital (LGH). Case in point, the most recent balance sheets of all three hospitals denote the relative financials in that LGH (a not-for-profit hospital) garnered a $106 million profit while LRMC only garnered $1.5 million and HLRMC had a financial loss of $200,000.

"In regard to Ephrata Community Hospital (ECH), it is apparent to this HMA corporate executive, that the imminent merger of LGH and ECH again reiterates the public appeal of LGH and its many satellite offices. Essentially, ECH recognizes that it is better to 'get in bed' with LGH than try to battle them to eventual financial ruin.

"The recent hiring of Rebecca Brewer as interim CEO of both hospitals is purely for the purpose of appearances of LRMC and HLRMC as the purchase/transition to THC is underway. There is evidence of the imminent purchase to THC exists such as the recent mailing of both hospitals' last three years' Board of Trustees meeting minutes to the THC corporate headquarters in Dallas, Texas.

"What is also beguiling is the recurrent theme of both LRMC and HLRMC merging services and campuses under a one HMA hospital consolidation plan? The Lancaster New Era and the Intelligencer have both reported that this merger was to occur in the near future. However, with the recent transfer of Michael Cowling from the CEO position at both LRMC and HLMRC, it is now being reported that the consolidation of both HMA-owned hospitals will be slowed down under the leadership of CEO Rebecca Brewer.

"In actuality and according to this HMA executive, the consolidation will not take place. According to that executive, 'It was a mistake to enter the Lancaster County market. When you go against a strong competitor like LGH, there has to be multiple joint ventures and employment agreements between Lancaster County physicians and the HMA hospitals.'

"HMA has employed over 80 physicians in Lancaster County, but the great majority of these physicians almost immediately bring their surgeries, lab work and other ancillary services to LGH and its satellite offices. This executive also added, 'We need to divest ourselves from Lancaster County at a loss and that HMA should have never entered the Lancaster County market. HMA does well in small Southern towns in which only one hospital serves the community. We need to remain in these markets only.'"

* NEWSLANC has no second source concerning a sale.