Hospital merger plans would not cause reduction in services

Montgomery General in talks with Holy Cross, MedStar

The main reason the 144-bed Olney hospital seeks to be under a larger health care organization is to provide stronger financial stability for future expansion in the fast-growing community, said Lynne Myers, Montgomery General’s vice president for corporate strategy and professional services.

‘‘We want it to give us more resources so we can do more for the community,” Myers said.

The hospital is looking for a ‘‘partnership,” not a sale, she stressed. Board members should decide by this fall whether to merge or remain independent, Myers said.

Montgomery General has seen operating losses the past three fiscal years, according to figures from the Maryland Health Services Cost Review Commission. The hospital’s loss was $1.5 million in 2006, which followed losses of $320,000 in 2005 and $2.35 million in 2004.

But the hospital should see a $2.5 million operating profit this fiscal year, which ends June 30, thanks largely to renegotiated contracts and layoffs, Myers said.

Montgomery General had more than $50 million in net assets in 2005, according to its IRS return. The hospital also has a good A3 bond rating from New York credit agency Moody’s Investors Service and a low debt ratio, factors that make it attractive to join another health system, Myers said.

Since the hospital has a strong financial position, the Greater Olney Civic Association would like to see the center maintain independence if it joins another alliance, said Sharon Dooley, vice president of the community organization.

The group does not want to see ‘‘a future absentee owner” decide whether the facility should be changed or closed down the road, she said.

‘‘Since Montgomery General Hospital has been a vital associate in our area for close to a century, we are hopeful that the decisions the hospital board makes will consider the best interests of the community, its patients, physicians and employees,” Dooley said.

Myers said hospital officials are taking into account the concerns of the community, patients and employees. But joining a partnership could include being under new ownership, although the hospital’s officials seek a partnership with a network that understands the area, she said.

The hospital has been increasing its services lately; it is hoped that will continue, said Virginia Mauk, executive director of the Olney Chamber of Commerce. Despite being unincorporated, Olney has a strong sense of community, she said.

The hospital is in the midst of a $30 million project to transform rooms into all private ones and add to the emergency center. The project is expected to be completed in 2009. Improvements in recent years include a seven-bed pediatric center and a new medical office building.

‘‘We are a growing community so we need the services,” Mauk said.

The Montgomery General system also includes a Medicare-certified home health agency and a magnetic resonance imaging center.

Yolanda Gaskins, a Holy Cross spokeswoman, said she did not have any new information on discussions with Montgomery General.

The 425-bed Holy Cross — the largest hospital in Montgomery County — is a member of Trinity Health of Novi, Mich. Trinity is the fourth largest Catholic health system in the nation based on annual operating revenues of $6.1 billion, Trinity officials said.

Holy Cross posted an operating profit of $4 million in fiscal 2005 and $6 million in 2004, state figures show.

Gaskins declined to say whether Trinity officials would have to approve a merger involving Montgomery General.

John Marzano, a spokesman for MedStar, declined to say anything more than that discussions were still ongoing with Montgomery General. MedStar runs hospitals such as Franklin Square Hospital Center in Baltimore, one of the more profitable centers in the state.

Franklin saw an operating profit of $8.3 million in 2005 and $9.1 million in 2004, according to state figures.