FTC Requests Public Comment on ProMedica Health System's Application to Approve Divestiture of former Rival St. Luke's Hospital
RE: ProMedica Health System's Application to Approve Divestiture of former Rival St. Luke's Hospital Mercy Health (formerly Catholic Health Partners) is a mission-driven, nonprofit Catholic health care ministry providing points of care across Ohio and Kentucky. Mercy Health's Toledo Region serves Toledo with four hospitals and a diverse range of specialty and neighborhood clinics and physician practices, and also operates hospitals in Defiance, Tiffin and Willard. We appreciate the opportunity to submit comments on the above matter. Mercy Health understands and respects the importance of St. Luke's to the community it serves, and appreciates the important role St. Luke's plays in Maumee, South Toledo, and the communities of southwest Lucas County. This impact transcends providing healthcare -- it is also economic, emotional, social and historic. Mercy has long maintained a commitment to the poorest and most underserved areas of our city, with consistent investment at St. Vincent Mercy Medical Center and clinics in many low-income neighborhoods. More than eight years ago, Mercy Health leadership engaged in serious discussions with its peers at St. Luke's to find ways to work together and strengthen St. Luke's ability to benefit all residents of southwest Lucas County, as well as the entire region. We were disappointed when St. Luke's suddenly chose to end discussions in late 2009 and pursue an acquisition by ProMedica Health System. Prior to St. Luke's acquisition by ProMedica, St. Luke's was an important partner in providing care to all members of the community. Although the "competitive" impact of that history and role in functioning as a true, non-profit health care provider may not be one of the Commission's primary concerns, restoring St. Luke's ability to fulfill all of those roles will have a significant impact on the market, community and residents of Lucas County and surrounding areas. The Commission should carefully review the structure of the divestiture agreement to make sure that ample provision is given to provide value across all of the Toledo community, and to restore St. Luke's ability to serve its community. Mercy Health and ProMedica Health System have often differed, and likely will continue to differ, in their philosophies, tactics and strategies to serve the residents of the Northwest Ohio communities. Despite those differences, Mercy Health believes that effectively restoring St. Luke's as a viable, independent provider of health care services, is of greater significance than the individual strategies of Mercy or ProMedica. Consequently, Mercy Health's purpose in providing comments is to assist the Commission in making sure that the restoration of St. Luke's and the competition lost by ProMedica's acquisition of St. Luke's is as successful as possible. Today, we support the goal of the FTC's divestiture order that will return St. Luke's to an independent, and hopefully viable, community hospital. Nonetheless, the devil is often in the details. The public versions of the documents associated with the proposed divestiture provide little detail about how St. Luke's and competition will be restored. Consequently, it is difficult for Mercy Health to provide specific substantive comments. Nevertheless, we believe it is important to point out a number of key issues or concerns that Mercy Health hopes are effectively addressed in the final divestiture plan. St. Luke's condition when the divestiture occurs -- ProMedica claims it is leaving St. Luke's in better condition than when it was acquired: less debt, a better-trained staff and improved facilities, among them. Moreover, Mercy understands that ProMedica will be required to provide transition services for 12 to 18 months following divestiture to assist in re-establishing St. Luke's as a viable, independent provider. However, close scrutiny must be given to management decisions made by ProMedica in the past that may not be able to be completely undone moving forward. For example, To the extent that St. Luke's electronic health record ("EHR") system was integrated with (or connected to), ProMedica's EHR, St. Luke's long-term success could be vulnerable long past the 18-month IT transition services period. It will be important to identify whether St. Luke's EHR is structured as a separate (or stand-alone), installation, or as an "instance" of ProMedica's EHR; i.e., built or structured as one of the locations of ProMedica's EHR. EHR systems are expensive, long-term investments, which require regular maintenance, updating, fine-tuning, etc. If St. Luke's EHR is tied to ProMedica's in its structure, St. Luke's would have no control or ability to participate in the long-term design and maintenance of the backbone of its clinical record system. There are likely other long-term operating or partnership agreements, and other relationships that would be vital to St. Luke's well-beyond 18 months. Moreover, issues regarding pension liabilities, outstanding infrastructure needs, and cost of delivering an acceptable standard of patient care, could have much longer-term impacts. The details about how such functions are transferred to St. Luke's control may be extremely important. One of the most significant long-term issues is the nature and duration of St. Luke's future participation in Paramount managed care and provider contracts. Paramount's size and significance as a payor in the Toledo area should not be underestimated, and it will be important that St. Luke's has the opportunity to participate as a provider in Paramount on an open and competitive basis. Many of these very complex issues must be effectively addressed for the Commission's divestiture order to ensure that St. Luke's is a viable concern at divestiture, and beyond. Status of St. Luke's physician network -- The Commission's divestiture order acknowledges that an important factor in St. Luke's ability to be restored as an independent, viable provider is its ability to assemble and maintain an independent medical staff. Mercy Health agrees that the importance of this factor cannot be underestimated. However, ensuring that St. Luke's has the ability to so do, will require much more than merely declaring that it be so. In its final year as an independent community hospital, the majority of physician providers at St. Luke's were independent or employed by ProMedica; a handful were employed by St. Luke's. In virtually all cases they were participating providers with Paramount. Post-divestiture, patients of St. Luke's and residents of our community will only be well-served if they can access a reasonable number of St. Luke's providers -- either their current physician or new physicians. In addition to ProMedica's size as a hospital provider and payor, ProMedica's employs or otherwise exercises significant control over a large number of physicians. Historically, ProMedica has leveraged its size to exercise substantial control over the physician community. This fact will make it risky for those physicians who might want to be employed by St. Luke's, or join St. Luke's medical staff as independent providers, to do so. Moreover, ProMedica appears to be continuing that historical pattern. For example, ProMedica has entered a relationship with the University of Toledo School of Medicine and/or the University of Toledo Medical Center. Shortly after that relationship began, many of the residency programs that had included ProMedica and Mercy facilities for years, terminated their affiliations with Mercy, and moved to exclusive relationships with ProMedica facilities. These residency programs not only play an important role in providing top-quality care, but also serve as an important "pipeline" for finding and recruiting new physicians to the community and a hospital's medical staff. These, and various other relationships ProMedica has developed, and will likely continue to develop, will make it even more difficult for physicians on St. Luke's medical staff to compete and practice on a level playing field. The Commission should maximize the safeguards built into a divestiture plan to give physicians unfettered opportunities to establish or re-establish relationships with the new, independent St. Luke's entity. The Commission should also ensure that St. Luke's affiliated providers have the opportunity to participate in a Paramount contract on a fair and competitive basis after the divestiture is complete. 1. Reasonable separation from ProMedica -- Public records and anecdotal patient experience suggest a pattern of behavior by ProMedica in many if its local hospital acquisitions in Southeast Michigan and rural Northwest Ohio wherein traditional in-hospital services -- labs, diagnostic testing, and medical records, for example -- are outsourced to a centralized, system-wide service. It is not unreasonable to expect that an independent St. Luke's may find it difficult to provide such in-hospital services after more than six years of centralized service, unless the transition period and St. Luke's resumption of control over such services is done correctly. As we noted previously, the structure of the services provided during a transition period, may be just as important to a successful divestiture as the fact that the services are provided. Mercy requests that the Commission pay particular attention to the operational and strategic implications of how the transition services are provided, and that such structures will facilitate as seamless a transition to St. Luke's control as possible, so as not to tether the newly-independent hospital unnecessarily to the ProMedica system. Â• Mercy Health trusts that the Commission will give appropriate consideration to the concerns detailed here, and appreciates the opportunity to be involved in this process. Mercy Health appreciates the commitment that the Commission has demonstrated to preserving a competitive health care market in the Toledo area for the benefit of this community, and look forward to a final resolution.