Merger In The Works For Camden's Cooper Hospital

Posted: August 06, 1999

CAMDEN — In the end, years of financial losses and numerous layoffs left it vulnerable.

Cooper Health System, the medical center that for more than a century upheld its Quaker-based reputation of treating the area's poor regardless of their ability to pay, lost $16 million last year, and staff cuts were being pursued.

This led to the announcement this week that Catholic Health East, the parent company of Our Lady of Lourdes Medical Center in Camden, is pursuing the purchase of the Cooper system - a merger that employees fear could bring more layoffs and ultimately hinder the quality of patient care.

Talks between the two hospitals, which are on opposite ends of Haddon Avenue, have been in the works for months, leading to speculation about the future of two of the largest employers in South Jersey.

In a statement, the two institutions said they planned the formation of ``one delivery system'' that ``provides new opportunities for improved operation efficiencies and cost-effectiveness.''

Hospital officials also said the proposal would allow the two facilities to ``benefit from joint financing opportunities, joint purchasing, and managed care contracting.''

The agreement is expected to be signed within two weeks. No financial terms have been disclosed. The new entity will be run by trustees from both Lourdes and Cooper, according to the statement.

Because Lourdes is a Catholic facility, services at the 554-bed Cooper hospital such as birth control and abortions may also be affected.

In a statement released yesterday, Lourdes officials said the hospital system is ``extremely sensitive to the topic of access to women's health services'' in Camden, even though a ``portion of our service area's population is not guided by the ethical and religious directives that Catholic health-care facilities follow.''

``The future of women's services at Cooper Health System facilities will be an important part of the discussions that we will have over the next few months with other health-care providers, physicians, patients and the general public,'' Lourdes president and chief executive officer Alexander J. Hatala said in the statement.

Spokeswomen for both health systems declined to talk about what the future landscape of the two hospitals might look like. But the proposed takeover was the topic among staff at both of the hospital's main campuses.

At Cooper Hospital-University Medical Center, the mood was mixed as nurses, doctors and others milled about during their lunch hour, some chatting in packs about the merger and others going about their daily routines.

Pat Chapman is an intensive care unit nurse at Cooper Hospital-University Medical Center and the union representative who was on the organizing committee that helped bring a union to represent the hospital's 800 nurses last month.

``Right now we're optimistic that the two institutions are comparable as far as providing patient care,'' she said. ``I think it will be better for the community.''

Chapman said the nurses formed the union to protect themselves from layoffs. Those who were laid off this year were in outlying clinics or in managed-care areas.

She said she did not think that the nurses' union would be affected by the merger. ``No one is telling us that there's going to be more layoffs.''

Cooper's problems began to escalate in recent years, mirroring economic pressures facing many hospitals today. HMO reimbursements have dwindled, and government payments have declined at a time when patient numbers at Cooper are at record highs.

Last year's failure of HIP of New Jersey, a managed-care plan, prompted losses of more than $6 million for the Cooper system.

Since January, Cooper has laid off 301 employees as part of a plan to trim 400 from its payrolls. There are now just under 4,000 employees in the system.

It was clear from Cooper's financial distress that the company needed a way out, said Milton Leontiades, dean of the School of Business at Rutgers-Camden.

``They couldn't continue to bleed at the rate they were bleeding,'' Leontiades said. ``The only question was how they were going to continue. The option of remaining an independent company didn't seem viable.''

For the 377-bed Lourdes facility, Cooper represents an opportunity to strengthen its operation, Leontiades said. A merger would make sense considering the hospitals' proximity to each other, and because they have complimentary medical specialties, he said.

``Hopefully, in the end, the public benefits in that it's not served by a weak hospital trying to limp along,'' Leontiades added.

The proposed acquisition is part of a national trend of both for-profit and nonprofit health-care systems seeking either to grow or to stop the flow of red ink by seeking merger partners, alliances, or acquisitions, according to Irving Levin Associates, a Connecticut health-care research and publishing firm.

In 1998, there were 144 mergers and acquisitions involving 198 hospitals nationwide.

In December, Lourdes acquired 341-bed Rancocas Hospital of Willingboro for about $45 million. Between the Willingboro and Camden facilities, Lourdes employs 2,600 full-time employees.

Kevin Hill of Camden was waiting to see friends at Cooper hospital yesterday. Born there 43 years ago, he respects the work of Cooper employees. He said he was concerned that they could be downsized. Layoffs, he believes, will hurt patient care.

``It's a great landmark. I'd hate to see anything happen to it as far as more layoffs,'' Hill said. ``It really is a great hospital - the service, the people, the doctors. They're all great.''

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