Capella calls off Arkansas deal

Mercy CEO says expected FTC, Vatican challenges 'over an indefinite timeline' put end to talks

Capella Healthcare executives said Thursday that they have ended talks with their peers at Mercy Health about taking over an Arkansas hospital.

Franklin-based Capella in April 2012 said it had signed a deal with Mercy to buy the 282-bed St. Joseph’s Mercy Hot Springs. The proposed transaction needed the approval of both the Federal Trade Commission and the Vatican, which last fall passed the decision to the Diocese of Little Rock. The agreement between Capella — which runs National Park Medical Center four miles from Mercy Hot Springs — and Mercy will expire this week and officials at both companies are now throwing in the towel.

“Because we anticipate continued challenges — over an indefinite timeline — in obtaining the needed approvals, Capella and Mercy have mutually agreed to not renew our Asset Purchase Agreement,” said Lynn Britton, president and CEO of Mercy. “We believe prolonging this uncertain and complicated path is not in the best interest of our local caregivers and the community.”

Capella CEO Dan Slipkovich said the decision to call off the acquisition was especially difficult because the plan had a “tremendous amount” of local support.

“This has been a complex process — particularly challenging for employees, physicians and volunteers at the local hospitals,” Slipkovich said. “We sincerely thank them for their patience and continued unwavering commitment to providing excellent care and service throughout this process.”

Capella runs 14 hospitals in six states. The company lost $5.6 million on revenues of $213 million in the first quarter of this year.