Mercy, North Arundel call off merger Hospitals decline to explain why the talks failed; Health care


Four months after announcing they would merge, Mercy Medical Center and North Arundel Health System said yesterday the deal is off.

When merger plans were announced in January, the hospitals said they hoped to work out details -- including a management structure -- by the end of March. When that didn't happen, the talks were extended, but they never reached agreement.

In a terse statement and in interviews, the hospitals declined to say where the talks foundered.

Sister Helen Amos, chief executive officer of Mercy, said the two institutions had agreed not to comment on the break-off beyond a two-paragraph written statement.

The statement said the two had "reached mutual agreement to discontinue hospital merger plans at this time."

Kevin Murnane, public relations director for North Arundel, said the hang-up in the merger talks was "not religious in nature."

Under the merger plan, Mercy was to have remained a Roman Catholic hospital while North Arundel remained nonsectarian.

The Maryland hospital market has seen rapid consolidation over the past few years, but has also seen a number of examples of merger talks that falter near their conclusion.

Within the past year, the two largest systems in the state, Johns Hopkins Health System and Helix Health, came close to an agreement before breaking off negotiations.

Within the past few weeks, St. Joseph Medical Center ended talks with Greater Baltimore Medical Center, after GBMC's board could not reach a consensus on whether to join with St. Joseph or Hopkins.

North Arundel itself went through a long exploration of merger possibilities with Anne Arundel Medical Center of Annapolis, before the two decided in 1996 not to go ahead.

Much in common

The Mercy-North Arundel deal would have brought together two hospitals serving adjacent areas -- Mercy is in downtown Baltimore and North Arundel in Glen Burnie -- and of similar size.

Also, both have attempted to keep up with a rapidly moving marketplace by starting or buying stakes in related businesses.

Mercy owns Stella Maris, a long-term-care and hospice facility, and is an investor in Maryland Personal Physicians Inc., a large physician group.

North Arundel has taken over Mount Washington Pediatric Hospital, which focuses on outpatient treatment and rehabilitation, and, through a subsidiary called New American Health, does managed-care contracting and functions as an HMO for the state Medicaid program.

While calling off the full merger, Mercy and North Arundel said they would combine the home health agencies now serving Mercy, North Arundel, Stella Maris and Mount Washington Pediatric. And Murnane said the two might seek other ways of working together, such as the year-old primary care center they now share in Brooklyn Park.

They'll keep looking

Both also said they would continue to look for partnerships with other hospitals and with other health providers, such as nursing homes and physician groups.

"Everyone's talking to everybody," Murnane said. He said North Arundel had been approached by New Children's Hospital in Baltimore and was considering a deal.

However, he said, he believes that Children's is talking with other potential partners as well.

Amos said Mercy is "continuing to pursue all the strategic moves we've been able to identify."

She said Mercy had a preference for a "merger of equals" rather than joining a much larger system.

Pub Date: 5/20/98

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