Two Lowell, Mass., hospitals that have been looking to merge to over seven years may see their path made smoother by the state's new budget, according to state Sen. Nancy A. Sullivan.

Sen. Sullivan, who represents the city of Lowell as part of the First Middlesex District, said yesterday that a provision in the proposed fiscal 1992 budget would allow St. Joseph's Hospital and St. John's Hospital to unite. The budget, which has been passed by the state legislature, is awaiting the signature of Gov. William Weld.

The senator explained that Massachusetts hospitals have been unfairly burdened by "cumbersome" paperwork when they wanted to expand, merge, or change services. She added that the budget plan "expedites certain language that had been necessary in a hospital's determination of need."

"Our hospitals were waiting months or even years to get a simple change done, let alone allow for a merger," Sen. Sullivan said. "Basically, we just eliminated paperwork" under the new plan.

Also under this provision of the budget, St. Joseph's Hospital would be forgiven of approximately $6 million it owes the state in outstanding Medicaid payments. The money was to be deposited into the state's uncompensated care pool, which provide payments to hospitals caring for indigent patients.

Sen. Sullivan said the two hospitals' need to merge has become increasingly dire in the past five years because of economic strain.

"The problem in Lowell is somewhat unique," she said. "There are too many beds. Whereas some cities are burdened by a dearth of available beds, we have been hurt by inefficient management and unfavorable state hospital laws."

The planned consolidation of the two hospitals would eliminate over 50 acute-care beds and allow for increased community-based programs using parts of both staffs, according to Sen. Sullivan. An outside committee would assess which personnel would be retained.

Dr. Daniel J. O'Connell, president and chief executive officer of St. Joseph's Hospital, said the facilities include approximately 1,900 employees. But he could not predict the size of a combined staff.

Sen. Sullivan, a first-term Republican living in Lowell, said the hospitals' problems result from laws passed 10 years ago.

"The hospital finance laws passed in 1981 have created a Catch-22 situation for the hospitals," she said. "Funds from the state to hospitals are based on current expenditures instead of future predictions based on expected changes in demographics and health-care expenses."

St. Joseph's and St. John's currently have slightly over $53 million of outstanding long-term public debt. Dr. O'Connell said that financial experts have determined that a single hospital will be able to provide "more-than-adequate" debt service on the bonds.

Dominic Slowey, representative of the governor's Office of Administration and Finance, said that because the provision is an "outside part of the budget, the governor has not yet decided" whether he would knock the proposal out under his line-item veto power.

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