Mercy and UT Hospital Discuss Joint Operating Agreement

Discussions continue at the highest level on a proposed joint operating agreement between Mercy Health Systems and UT Hospital. The move is designed to reduce costs allowing both entities to compete with Covenant Health, the major player in the Knox County market.

The plan, as outlined, would be to combine administrative, accounting, and other administrative functions to reduce costs and to make the two medical non-profits more competitive. Mercy merged with Baptist Hospital last year in order reduce the number of hospital operations in Knox County, a situation that was financially unsustainable.

The latest talks are still being worked out. Mercy is bleeding money at its Parkside Drive facility, the former Baptist West location, losing $1 million a month. They have let it be known it is for sale.

Both hospitals are cash-strapped and combining some operations, similar to joint operating agreements in the newspaper industry, would allow both of them to concentrate on core missions of providing health care.

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Comments » 1

JohnGalt writes:

"Both hospitals are cash-strapped..."

Compared to Covenant, every entity in Knoxville except Pilot Corp is cash strapped, but I don't believe UT Health Systems (or whatever in the hell their name is) is in dangerous or "strapped" balance sheet position.

Mercy's local balance sheet is in trouble. (Of course, the Pope can always fix that, I suppose.)

Covenant is not in financial trouble, although their cash position has dropped significantly from June 30 '09 to June 30 '10.

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