A confidential memo made public on Monday by The Boston Globe shed light on the breakdown of talks between Mercy Health System of Maine and Boston’s Steward Health Care System.

Steward “unilaterally withdrew” from negotiations with Mercy, Chris Murphy, director of media relations for Steward, told presidents of the company’s hospitals in the memo, which was obtained Tuesday by the Bangor Daily News.

“After months of due diligence, we came to the conclusion that many representations made by Mercy about their financial condition, capital structure and business projections were unreliable,” Murphy wrote.

Murphy’s version of events diverged from an abrupt statement issued Friday by Mercy that said the letter of intent was terminated because Mercy and Steward “were unable to come to a definitive agreement.”

Susan Rouillard, Mercy’s chief development and communications officer, disputed Murphy’s account of the negotiations. Mercy approaches all its partnerships in good faith and with full transparency, she said Tuesday.

“Mercy has never misrepresented its finances or volume trends, and we maintain a normal course of business relationship with Catholic Health East,” Rouillard said.

Construction costs for Mercy’s new Fore River campus were “astronomically higher” than Steward was led to believe, and patient volume and trends also proved much worse, Murphy wrote.

His complaints also included that Mercy’s parent organization, Catholic Health East, withdrew $9 million in cash from the hospital after Steward signed the letter of intent to acquire Mercy. Additionally, Murphy questioned a $25 million Medicaid expense on Mercy’s books.

“With each day that passed during the due diligence process, our confidence in the numbers presented by Mercy eroded to the point that we were unable to responsibly submit a bid,” Murphy wrote. “We came to the conclusion that, even if Mercy were to give us their hospital for free, we couldn’t make the numbers work.”

He also wrote that media reports about the deal in Maine gave “the mistaken impression that Steward had lost a competitive bid, blaming “Mercy’s refusal to adhere to our jointly approved public messaging.”

Jackie Farwell

I'm the health editor for the Bangor Daily News, a Bangor native, a UMaine grad, and a weekend crossword warrior. I never get sick of writing about Maine people, geeking out over health care data, and...