Brian Kelly [KMOX News-Radio] Interviews Dr. Marcinko on Hospital Merger

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Forest Park – St. Alexius Hospital Merger Contentious

By Hope R. Hetico; RN, MHA

[Managing Editor]

Our own Dr. David E. Marcinko was interviewed on February 10th 2010, at 8:45 pm EST, by Brian Kelly of KMOX News Radio, in St. Louis MO.

As most of us were saying good-night, Dave was discussing a recently announced local hospital closure, with associated hospital merger.


The Closure-Merger

According to media sources, hundreds of people lost their jobs at a St. Louis hospital in existence for more than a century. And, up to 300 people who worked at Forest Park Hospital were notified of termination this spring. Success Healthcare, of Boca Raton Florida, the company that owns Forest Park Hospital also owns St. Alexius Hospital in South City.


St. Alexius will take over some of Forest Park’s services, following the merger expected to take effect April 11, 2010.

Video Link:,0,4625691.story

Financial Cause and Effects

A major cause of closure was cited as lost-revenue sources, in the amount of $24 million, from various government payers for the next two years, along with an increase in uncompensated care losses.

Typically, such federal and state governmental payers include Medicare, Medicaid, Indian Health Services, the Prison Health System and related low-income child health care state services [SCHIPs]. Exact payer break-down or financial performance data was not released at the time of the interview.


Mergers and Acquisitions

According to Dr. Marcinko, any merger and acquisition situation has the possibility for business duality; success or failure.

The first thing to consider is the potential for redundant or complimentary services. Redundancy is usually a job killer in the short-term, while complimentary services may jump start job growth in the long-term.

Moreover, acute care as delivered in the ER and OR is usually a revenue-center, while other chronic-need hospital services may be cost-drivers.

Success or failure then, may very well depend on the extent such service-line integration and synergy has been considered by management; and if such projections ultimately prove accurate”.    

Hospitals and Recessionary Best Practices

A related interview with Dr. Marcinko:



Declines in hospital based diagnosis-related-group [DRG] payments, and CPT® code payments for providers via SGR projections, are affecting healthcare institutions and doctors nationally.



Why are many hospitals financially struggling today and how will healthcare reform affect the situation; good or bad? What about the growing and aging population, and advances in IT and genomics; all considered cost drivers.

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5 Responses

  1. Dr. Marcinko

    Interesting post and interview comments.

    Today, I just learned that St. Vincent’s Hospital in Manhattan is laying off more than 300 workers in an attempt to avert a complete shutdown.

    Will this hospital bite the dust?



  2. Even in Hoboken, New Jersey

    Chad – ain’t nothing new to report on hospital layoffs.



  3. Susan and Dr. Marcinko,

    Agreed. For example, the American Hospital Association (AHA) recently reported a number of gloomy statistics for hospitals:

    • Hospitals provided approximately $101.3 billion of uncompensated care between 1997 and 2001 with an average annual increase of 16% during that time period.

    • Technology costs are soaring as traditional technologies such as X-Ray machines, for $175,000, are being replaced by contemporary technologies such as CAT Scanners at $1 million that are in turn being replaced by CT Functional Imaging with PET Scans costing $2.3 million. Even such a “simple” instrument as a scalpel that costs $20, is being replaced by equipment for electrocautery costing $12,000, that is then being replaced by harmonic scalpels costing $30,000.

    • Between 2000 and 2002, 33% of hospitals reported increases in liability premiums of more than 100%.

    A further review in 2007 added more daunting numbers:

    • In 2005, approximately 25% of hospitals had negative total margins.

    • From 1997 through 2005, hospitals saw a small net surplus from government payments from sources such as Medicare and Medicaid deteriorate into a deficit approaching $25 billion.

    • Emergency departments in 47% of all hospitals report operating were at, or over, capacity partially reflecting an approximate 10% decline in the number of emergency departments since 1991.

    • The average age of hospital plants has increased 22.5% from 8.0 years to 9.8 years in just fifteen years.

    • From 2003 through September 2006, hospital bond downgrades have outpaced hospital bond upgrades by 19%.



  4. Atlanta in midst of hospital merger wave

    Mergers involving local healthcare giants WellStar Health System and Piedmont Healthcare have displayed how various patient-friendly industry and policy changes have spurred consolidation and growth.

    Yet, not everyone is looking to merge.

    Emory’s incoming CEO would rather consider expanding the networks of clinics and satellite operations (Modern Healthcare).

    Ann Miller RN MHA


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