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By M. PAUL JACKSON michaelj@leader.net
 Wednesday, December 06, 2000 &nbsp;&nbsp;&nbsp;&nbsp;Page: 1A 





WILKES-BARRE - The hospital merger is off. &nbsp;&nbsp;&nbsp; 
 Unable to resolve financial and religious roadblocks, officials of the
Wyoming Valley Health Care System and Mercy Hospital in Wilkes-Barre called
off their $300 million merger plan Tuesday. &nbsp;&nbsp;&nbsp; Both sides took credit for the decision to end talks, which were made
public in March. &nbsp;&nbsp;&nbsp; 
 The decision means Mercy Hospital in south Wilkes-Barre will keep its
emergency room. &nbsp;&nbsp;&nbsp; 
 According to officials of both facilities, the plan died because neither
hospital was willing to assume the debt of the other. &nbsp;&nbsp;&nbsp; 
 ``For this proposal to be successful, all parties had to fully agree to the
business terms of that proposal,'' said Wyoming Valley system spokesman Jim
Schilling. ``And, we obviously couldn't do that as it relates to the debt that
we would have to assume for Mercy Wilkes-Barre.'' &nbsp;&nbsp;&nbsp; 
 Mercy Wilkes-Barre, a non-profit, Catholic facility, is part of Mercy
Health Partners, a group that includes Mercy Hospital Scranton. The system is
owned by Catholic Healthcare Partners of Cincinnati. &nbsp;&nbsp;&nbsp; 
 The merger called for the Wyoming Valley system to assume the $28 million
in bonds and loans Mercy says it owes its parent organization. &nbsp;&nbsp;&nbsp; 
 Debt was not the only reason the merger failed, officials said. &nbsp;&nbsp;&nbsp; 
 ``Certainly finances played a part in it, but just one part of the entire
mix,'' said Mercy spokesman Jeff Lewis. Lewis said philosophical differences
played a part. As a Catholic institution, Mercy opposes reproductive
procedures performed by the Wyoming Valley Health Care System. &nbsp;&nbsp;&nbsp; 
 Lewis downplayed Mercy's debt, saying Mercy also was unwilling to assume
the Wyoming Valley system's debt. &nbsp;&nbsp;&nbsp; 
 Lewis said the Wyoming Valley Health Care System - which owns Wilkes-Barre
General and Nesbitt Memorial Hospital in Kingston - owes more than $100
million in loans and bonds. &nbsp;&nbsp;&nbsp; 
 ``Both parties would have assumed the other's debt,'' he said. ``Catholic
Healthcare Partners decided there were too many differences that could not be
settled.'' &nbsp;&nbsp;&nbsp; 
 Schilling would not confirm the Wyoming Valley system's debt figures.
Officials of Catholic Healthcare Partners could not be reached for comment. &nbsp;&nbsp;&nbsp; 
 When the plan was presented in September, the proposed merger was touted as
a boon for the Wyoming Valley area. &nbsp;&nbsp;&nbsp; 
 The merger would have created one of the largest, most comprehensive
health-care systems in the state, and included more than 5,000 employees and
net revenues of $300 million a year. &nbsp;&nbsp;&nbsp; 
 General Hospital would have gone from 377 beds to 544, and Mercy Hospital
would have changed to a 200-bed post-acute-care behavioral hospital. Nesbitt
would have been converted largely to administrative use. &nbsp;&nbsp;&nbsp; 
 The combined system would have been able to save about $22 million a year
through consolidating services and discounts on insurance reimbursements,
officials estimated. They said duplication of services and rising costs
prompted both systems to consider consolidation. The systems share many
physicians and maintain similar medical equipment. &nbsp;&nbsp;&nbsp; 
 The Wyoming Valley system's hospitals reported losses of about $25 million
for the 1998-99 budget year last year, and Mercy Hospital reported losses of
about $1 million. &nbsp;&nbsp;&nbsp; 
 The plan angered Mercy doctors, union members and some elected officials.
Many complained the merger would rob South Wilkes-Barre of a much-needed
emergency room. &nbsp;&nbsp;&nbsp; 
 ``We are fortunate to have two outstanding health-care facilities in our
city, and I believe it is in the best interest of the people of Wilkes-Barre
... that they both remain open as full service hospitals, especially to
provide emergency care,'' Mayor Tom McGroarty said in a statement. &nbsp;&nbsp;&nbsp; 
 Schilling said the health system would abandon its plans to increase the
number of acute-care beds at Wilkes-Barre General. It will close much of
Nesbitt Memorial Hospital and will move forward on its new ambulatory surgery
center, he said. &nbsp;&nbsp;&nbsp; 
 The hospital also is continuing to implement cost-cutting measures
recommended by the Hunter Group, a consulting firm hired earlier this year. &nbsp;&nbsp;&nbsp; 
 Despite the failed merger, both sides remained optimistic. &nbsp;&nbsp;&nbsp; 
 ``We're well on the course of a successful turnaround,'' Schilling said.
``It hasn't been without pain and sacrifice, (but) to date, we're confident.'' &nbsp;&nbsp;&nbsp; 
 Lewis said Mercy would take a closer look at purchasing and insurance
contracts. ``We'll go back to looking at where some of our deficiencies are
and trying to correct some of those deficiencies.'' &nbsp;&nbsp;&nbsp; 
 News of the collapsed plan left most Mercy staff members - who had
aggressively argued against the merger - pleased. &nbsp;&nbsp;&nbsp; 
 ``The staff and the employees are thrilled,'' said George Moses, a Mercy
physician. ``It was a nice day over there. The morale is way up at the
hospital.'' &nbsp;&nbsp;&nbsp; 
 ``We think it's the best decision for the community and the employees at
Mercy,'' said Emily Mulheran, a spokeswoman for District 1199P, the union
representing the Mercy workers. &nbsp;&nbsp;&nbsp; 
 The union planned to schedule a town meeting Sunday to rally against the
merger, she said. Mulheran was not certain the meeting would go forward. &nbsp;&nbsp;&nbsp; 
 Lewis said Mercy might consider another merger in the future, but could not
be certain. &nbsp;&nbsp;&nbsp; 
 ``The potential advantages, in the future, may outweigh the negatives. We
think that there are many advantages to an affiliation. &nbsp;&nbsp;&nbsp; 
 ``Is this a setback? That certainly remains to be seen.'' &nbsp;&nbsp;&nbsp; 
 M. Paul Jackson, a staff writer, may be reached at 829-7134. &nbsp;&nbsp;&nbsp; 
 &nbsp;&nbsp;&nbsp;

W-b Hospitals Call Off Merger Consolidation Plan Fell Apart For Many Reasons, Say Spokesmen For Mercy Hospital And Wyoming Valley Health Care System.