The University of Maryland Medical System and LifeBridge Health are among five suitors vying for a partnership with St. Joseph Medical Center, though a deal will likely be complicated by the Towson hospital's poor financial situation.
St. Joseph has had a sharp drop in revenue and patient admissions since 2009, when allegations of unnecessary coronary procedures and a separate kickback scheme were made public.
A deal with St Joseph "would certainly take some serious discussion on how we try to mitigate those losses," E. Albert Reece, dean of the University of Maryland School of Medicine, said Friday.
Others expressing interest in St. Joseph include Medstar Health, which owns five hospitals in Maryland; Greater Baltimore Medical Center; and St. Agnes Hospital, according to people with knowledge of the negotiations.
St. Joseph put out a call for strategic partnerships to a "select group of Maryland health care systems" in October, and asked interested parties to submit detailed proposals by the end of December. Negotiations with finalists will begin sometime in mid-January, according to officials at the University of Maryland system and LifeBridge.
Analysts have said a partnership could range from shared facilities to a merger, but officials at St. Joseph say the hospital is not for sale.
St. Joseph's patient net revenue fell from $361 million in fiscal 2009 to $299 million in fiscal 2011, which ended June 30, according to the Maryland Health Services Cost Review Commission, which sets hospital rates in the state. (Fiscal year 2011 numbers are unaudited.) Patient admissions, meanwhile, dropped from 35,486 in 2009 to 26,942 in 2011.
St. Joseph asked the cost review commission for financial help earlier this year, and the agency credited $5.5 million for administration, information technology and other costs. The hospital also told state health officials it was losing doctors, but the state doesn't track such moves.
Robert A. Chrencik, president and CEO of the 12-hospital University of Maryland system, said that while St. Joseph's financial situation, including the revenue drop, is troubling, he believes his group has the "medical horsepower" to turn it around.
Other problems at St. Joseph are harder to quantify.
The hospital overhauled its management team in 2009 amid a federal investigation into an alleged kickback scheme with a Pikesville cardiology group, MidAtlantic Cardiovascular Associates.
And it pushed out star cardiologist Dr. Mark Midei, a MidAtlantic co-founder, after he was accused of performing medically unnecessary stent procedures, which led to state and federal investigations. Midei has since been stripped of his medical license by the state physician disciplinary board.
The allegations against Midei led to roughly 300 lawsuits seeking millions from the doctor, the hospital and its parent, Catholic Health Initiatives, which is based near Denver.
St. Joseph had to take out a loan late last year for a $22 million settlement with the U.S. government, addressing the kickback claims and repaying federal funds received for Midei's questionable procedures.
The 17-page settlement says that St. Joseph paid MidAtlantic to refer patients for "lucrative cardiovascular procedures" from 1996 to 2006, and that the hospital "submitted false claims for medically unnecessary stent procedures performed by Dr. Mark Midei" in the years afterward.
The hospital admitted no wrongdoing under the agreement. It signed a multiyear "corporate integrity agreement" with the U.S. Department of Health and Human Services to, it said, "ensure that all conduct and activity going forward is in compliance with all regulations governing health care."
The agreement gives the government greater oversight of St. Joseph through 2015 and forces it to follow strict rules designed to prevent fraudulent treatment and billing. It's unclear how the agreement would affect a new business partner.
Still, Chrencik and other Maryland officials said a deal with St. Joseph could be a good fit.
It would allow the University of Maryland to move into a part of the state where it doesn't have a presence, they said. Many Maryland graduates practice at St. Joseph, so there is already a relationship with the system. And Chrencik believes Maryland's strong cardiovascular, orthopedic and cancer practices would fill voids at St. Joseph.
Warren Green, CEO of LifeBridge, said it is too early in the process to tell whether St. Joseph's finances would be a problem. LifeBridge has not determined what a partnership with St. Joseph would look like, he said.
"St. Joseph is a hospital that has been around for long time and has a loyal cadre of patients and staff," Green said. "LifeBridge is successful in the northwest and St. Joseph has a strong presence in the northeast part of the region. The two of them together might make a nice complement."
LifeBridge owns Sinai Hospital of Baltimore, Northwest Hospital in Baltimore County and Levindale Hebrew Geriatric Center & Hospital, as well as a rehabilitation center and a health and fitness center.
A St. Joseph spokeswoman would say only that the hospital has received a number of proposals that are being evaluated by board members.
"Unless or until we reach a formal agreement for a strategic partnership, it would be inappropriate to name the health care systems that responded," the spokeswoman, Vivienne Stearns-Elliott, said in a statement.
GBMC declined to comment on potential partnerships. In a blog posting, John B. Chessare, the hospital's president, suggested the two facilities could work well together.
"Although we are 'competitors' in the healthcare arena, GBMC and SJMC have traditionally been united in our quest to meet the healthcare needs of Towson and neighboring communities," he wrote.
St. Agnes Hospital, which like St. Joseph is a Catholic hospital, declined to comment.
It has a history with St. Joseph, however. In 2007, the hospitals announced a "strategic alliance" that explored the possibility of joint outpatient centers and programs for underserved neighborhoods. They identified cardiology as a key area for collaboration at the time.
The two facilities have similar backgrounds. Both were started by orders of Roman Catholic nuns in the 19th century and are near one another.
Jean Hitchcock, a spokeswoman for Medstar Health, said she could not comment because the company had signed a confidentiality agreement with St. Joseph.
MedStar, which owns Union Memorial Hospital in Baltimore, and St. Joseph were once competitors in vying for Midei. While a partner at MidAtlantic Cardiovascular, he did most of his work at St. Joseph, where he was under contract.
In 2007, MedStar proposed a $25 million merger with MidAtlantic if Midei would move to Union Memorial as part of the deal. But St. Joseph offered Midei a full-time position with a seven-figure salary. The move scuttled the merger plans, and MidAtlantic has since disbanded.