Merger negotiations between Baptist Hospital and St. Thomas Hospital are under way behind closed doors, according to sources familiar with the talks. However, numerous obstacles remain before a deal is cut, the sources add.
This is not the first time either of the massive not-for-profit hospitals has talked about merging with another institution. Earlier negotiations, however, have come to naught.
In late 1994 officials from Vanderbilt University Medical Center began talking with St. Thomas. The two hospitals agreed to put discussions on the back burner in June 1996.
Baptist and Vanderbilt then opened merger talks, only to see them scuttled in late 1996, when, sources say, Baptist Hospital president C. David Stringfield demanded that he be allowed to run the merged operation. Industry observers say that Vanderbilt officials were apparently not comfortable with Stringfield’s management style.
If the current talks should result in a merger between St. Thomas and Baptist, it is not known who would be in charge of the newly created institution. Even if the merger plan does fall apart, however, Baptist may still be in for significant change.
Correspondence obtained by the Nashville Scene indicates that, as early as 1996, Stringfield had considered converting Baptist to for-profit status as a “private, investor-owned institution.”
According to the correspondence, Stringfield was convinced the Internal Revenue Service was “bound and determined to remove Baptist’s tax-exempt status.” An IRS audit of Baptist Hospital, begun approximately four years ago, is still under way. However, it is “winding to a close,” according to Baptist spokesperson Debby Koch. Documents on file in federal court indicate that the audit could lead to revocation of the hospital’s tax-exempt status.
Koch would neither confirm nor deny that merger talks are in progress, but she said the hospital is always looking at long-term options. Baptist has a number of joint ventures with St. Thomas, Koch added, and is in constant conversation with officials there. There are no negotiations or plans for Baptist to become a for-profit institution, according to Koch.
St. Thomas Hospital spokesperson Donna Cheek could not confirm that merger negotiations are under way.
