Steward 'unilaterally withdrew' from Mercy merger

An internal memo acquired by the Boston Globe indicates Steward Health Care System "unilaterally withdrew" from merger talks with Portland's Mercy Hospital after concluding that Mercy misrepresented its finances.

The Portland Press Herald reported that Mercy officials have denied the claim. Representatives from Eastern Maine Healthcare Systems, which is now in merger talks with Mercy, told the Globe that the memo was a "Mercy-Steward issue" and that she would not comment on it.

In that memo, the Globe reported, Steward's director of media relations told the presidents of the network's 11 for-profit hospitals that it began to doubt numbers Mercy presented and "came to the conclusion that, even if Mercy were to give us their hospital for free, we couldn't make the numbers work."

Mercy spokeswoman Susan Rouillard told the Press Herald that Mercy did not misrepresent its finances or the patient volume trends cited in the Steward memo.

In addition to problems with those patient volume numbers, the memo claims that Mercy's parent organization, Catholic Health East, withdrew $9 million in cash from the hospital after Steward signed a letter of intent in August to buy it and that the costs for a new expansion were more than originally estimated.

The Press Herald reported that EMHS and Mercy Health System of Maine have yet to request a certificate of need from the state, a review that would be required for the two hospitals to merge.