After months of private negotiations, two Westmoreland County hospitals have agreed to merge and create a new system that will be a major health-care provider in the central and southern portions of the county.
Westmoreland Regional Hospital in Greensburg and Latrobe Area Hospital announced Wednesday that they will form a new entity that will be in operation by July 1, according to David Gallatin, acting chief executive officer and chairman of the board of the Westmoreland Health System, which also includes Frick Hospital in Mount Pleasant.
"We should have the deal done" by next summer, Gallatin said.
Exactly what the new organization will look like and how it will operate has yet to be determined, he added.
The merger would combine assets of more than $182 million and create a single health-care system of more than 700 beds and more than 3,000 employees at the three main facilities in Latrobe, Greensburg and Mount Pleasant, and various diagnostic and treatment centers throughout the county. Employees were notified of the planned merger Wednesday morning.
In a prepared statement, Westmoreland and Latrobe officials said the directors of both institutions agreed "that the integration would be in the best interest of the residents of Westmoreland County ..."
"The evidence is overwhelming that the community would be better served by putting these organizations together," Westmoreland's statement said.
In a memo to Latrobe employees, CEO Douglas Clark and Medical Director Thomas Gessner said details will be explained in a series of "State of the Hospital" meetings scheduled for employees later this month.
Gallatin said the hospitals will hire a third party to develop a model for the new organization. He said it is "way, way premature" to discuss which departments would be consolidated by the merger and at which hospitals they will be based. He added that it is "too early to tell" whether layoffs will be necessary once the final phase of the merger is completed.
Meanwhile, a number of employees leaving their shifts at Westmoreland Thursday afternoon said they hope the merger does not result in layoffs.
Jennifer Knesh, an anesthesia technologist, was reading a letter about the merger as she was walking to her vehicle.
"I think it's OK. I think it will help. I don't think it will affect any of our jobs," she said.
Admissions clerk Carrie Weis also was optimistic.
"If it's going to help this hospital, then it's definitely going to be a good thing," Weis said.
"Now it all begins," said Phil A. Dymond, who chairs the Latrobe Area Hospital Board of Trustees. "Now we start making the hard decisions and working out all of the plans."
After unanimous votes by the hospitals' boards, Dymond said Latrobe officials spent considerable time brainstorming over "questions that were sure to come up." She said they "just don't have any of the answers right now."
"Our bottom line, though, is going to be what is best for health care for the entire county. We hope to become one, unified health system."
Clark could not give any assurances to workers.
"There's always anxiety when people don't know what's happening," Clark said. "But I think a lot of people are relieved to know we've moved forward. They understand the logic, but they also know that just standing still doesn't mean there isn't going to be change.
"There is going to be change. But I still think we can be very confident."
Negotiations between the two sides began in May when the hospitals announced plans to explore a merger after both institutions faced multimillion-dollar operating losses during the past fiscal year.
In May, Westmoreland cut 24 positions and restructured its management team. Hospital officials in July announced that the Westmoreland Health System had an $8.5 million operating loss that included a $4 million hit at its subsidiary, Frick Hospital. A day later, Latrobe announced it was cutting 37 jobs because of a $5 million deficit.
Gallatin said the merger will help the ailing hospitals save money by reducing competition between the two facilities. Specific cost-saving measures have not been determined yet, he added.
This summer, Latrobe opened the Arnold Palmer Pavilion, a cancer treatment center in Unity Township. Latrobe also considered, but shelved, plans for a heart surgery program similar to one already operating at Westmoreland.
Already, Westmoreland has undertaken some consolidation measures. For example, it is closing the maternity unit at Frick Hospital this month. From now on, expectant mothers from the Mount Pleasant area will have to travel to Greensburg to deliver their babies.
Gallatin said more planning must be done.
"We're looking at strategic planning and long-range planning," Gallatin said. "Western Pennsylvania's problem is a need to recruit quality physicians. Physicians are leaving the state rapidly."
He said persuading physicians to practice here and enticing recent medical school graduates to consider working in this state is a problem for many hospitals. He said Westmoreland lost "several key" doctors this year and spent two years trying to recruit a second obstetrician for Frick Hospital.
"We didn't close the unit at Frick because we wanted to. We couldn't find another doctor," Gallatin said.
"This is really about recruiting physicians. We need to find an attractive place for them to work and practice and earn an income for themselves. If we don't do that, there will be no health care in western Pennsylvania."
Dr. Donald Brown, president of the Westmoreland County Medical Society, said the merger will work if true cost savings can be realized. Earlier this year, he urged the two hospitals to avoid competing with each other and begin cooperating on certain services.
"Obviously, this offers some economies if they combine services that are duplicative," Brown said. "We would hope there could be some savings from costly administrative positions."
Gallatin discounted a rumor that the merger would result in immediate construction of a centrally located hospital.
"That might be the ultimate goal of a new organization," he said. "There's no ability to do that now."
Bob Stiles and Dwayne Pickels, with the Tribune-Review, contributed to this story.
