Hospitals drop plan to merge units

Tufts-New England Medical Center and Children's Hospital have decided against merging their pediatric programs after nine months of intense negotiations, hospital executives said. The institutions have instead agreed to partnerships in certain specialties, including possibly sharing medical residents and students.

Executives said yesterday that they will not pursue a merger between Children's and Tufts-NEMC's Floating Hospital for Children, or any partnership arrangement that would require a change in the hospitals' governing boards or structures.

Last October, Tufts-NEMC chief executive Ellen Zane said the Floating was losing patients and money, and that she did not believe the pediatric hospital could flourish, or possibly even survive, without a partnership that would add resources. At the time, Children's chief executive Dr. James Mandell said his institution, which is financially strong, would consider making major investments in the Floating under a merger or partnership agreement.

But the obstacles to a full merger proved too great. Meanwhile, the Floating's economic standing has improved since last fall, when Zane believed the pediatric hospital would lose $10 million this year.

She said that because hospital executives negotiated higher-paying contracts with health insurers and took other steps, the Floating is breaking even and Tufts-NEMC as a whole has posted profits for the past two quarters. For the most recent quarter, Tufts-NEMC posted an operating profit of $2.4 million, compared to a loss of $5.8 million for the second quarter of 2004.

''As the Floating started to get stronger, it started to get difficult for us to think about so much compromise," Zane said. ''It's a whole different ballgame now."

Zane said a merger with Children's would have made it difficult to preserve the Floating as a full-scale hospital that provides most types of complex care. For example, Children's is much larger than the Floating and if it absorbed the smaller hospital, that could have jeopardized Floating's standing as a Tufts University School of Medicine teaching hospital. Floating doctors are Tufts faculty members, while Children's physicians are on the faculty at Harvard Medical School.

Some Tufts-NEMC doctors believed Children's wanted too many concessions, including a proposal to move pediatric trauma cases and cardiac surgery patients to their hospital, though Zane said that was not a reason why the merger didn't take place.

Children's executives were concerned about the time, expense, and difficulty of merging two different hospital cultures, especially given the high number of failed hospital mergers nationwide. The hospital, which already treats one-third of all hospitalized Massachusetts children, sometimes has to turn away patients. But last year, before it began negotiations with Tufts-NEMC, Children's bought Sterling Medical Center in Waltham for $53 million and has been focused on converting it to a large suburban outpost.

Mandell said that combining the pediatric hospitals would have required a long-term investment of money and personnel by Children's to help the Floating develop technology and other systems similar to Children's, including computerized medical records.

Executives at the two hospitals signed a five-year affiliation agreement that does not require a financial investment by Children's in the Floating. Zane said the 10-page document calls for the pediatric programs to collaborate in certain specialties, including gastroenterology, neurology, intensive care, cardiology, and obesity treatment. Individual departments will work out more detailed agreements, which will be added to the umbrella document, she said. Hospital executives would not provide copies of the agreement.

Earlier this year, doctors at the hospitals worked out schedules that have allowed Children's Hospital's intensive care doctors and neurologists to work part time at the Floating. The agreement is intended to help Tufts-NEMC grow those services, but Children's doctors also stand to benefit from demonstrating their expertise to a new group of patients. The Floating has licenses for 16 pediatric intensive-care beds in its critical-care unit, but had routinely opened eight to 10 because of a lack of patients or staff. Tufts-NEMC also lost several doctors in its neurology department to Boston Medical Center.

The new agreement also outlines plans to rotate medical residents and students in these specialties between the two hospitals, and for Tufts-NEMC possibly to become Children's preferred provider for obesity surgery, which Children's does not offer.

Tufts-NEMC doctors yesterday questioned why the competing hospitals would want to help each other. Mandell said that Children's ''physicians believe if we can improve access and care for kids who need it, that's positive for everyone."

Liz Kowalczyk can be reached at kowalczyk@globe.com.