Barring federal intervention, Penobscot Bay Medical Center, the Knox Center for Long Term Care, Kno-Wal-Lin Home Care and Hospice, Quarry Hill, and most local physician offices will be under the auspices of the state’s largest health care corporation.

Pen Bay Healthcare incorporators voted 143-6 on Jan. 12 to have the local health care corporation become a subsidiary of MaineHealth, which is the parent corporation of numerous hospitals including Maine Medical Center in Portland, Waldo County General Hospital in Belfast and Miles Memorial Hospital in Damariscotta.

The incorporators gathered Jan. 12 in the Hanley Center at Camden National Corporation to vote on the merger. The vote by people at the meeting was 66-2 with the remaining votes submitted by absentee ballot.

“I’m the last person to want to give up local control,” incorporator Brian Harden of Rockland said, but he added that he would support the merger.

Harden said he feared the federal and state government, facing financial problems of their own, would allow small hospitals to fail but would not let a large corporation such as MaineHealth fail.

The vote was not unanimous, however.

Dr. Karen Backman, an oncologist at the Cancer Care Center at PBMC, said that when the medical staff voted on the proposal, only 51 of the 96 doctors were in favor of Pen Bay Healthcare becoming a full member of MaineHealth. Eleven voted against the proposal and one abstained. Many others did not attend, she said.

Backman said the concerns boil down to the belief that the merger would not change patient care and the local system would pay a lot more money to MaineHealth. She said Pen Bay Healthcare already offers health prevention programs touted by MaineHealth.

“We don’t need to call Portland on how to help patients stop smoking, how to deal with childhood obesity and how to treat cancer,” she said.

She said what MaineHealth does is no different than the national medical standards that are available for anyone through Web sites.

Backman said the incorporators were voting themselves out of existence by approving the merger. When Pen Bay Healthcare becomes part of MaineHealth, the incorporators will not have any legal authority. Currently, incorporators elect the trustees and must approve changes to corporate bylaws.

Under the merger, the Pen Bay Healthcare trustees would be elected by the MaineHealth board. Pen Bay Healthcare would have one representative on a 16-member MaineHealth board. Pen Bay Healthcare Chief Executive Officer Roy Hitchings Jr. said MaineHealth pointed out that it has never rejected a trustee nominated by a local board of any of the local hospitals that are part of its system.

The Pen Bay Healthcare trustees would have authority over the policies of the local health care systems but the MaineHealth board would have authority to set the annual budget, adopt strategic plans and purchase equipment in excess of $500,000.

Hitchings said the MaineHealth board could reject nominations of trustees to the Pen Bay Healthcare board but it could not nominate anyone. The nominations would have to come from a committee of the Pen Bay Healthcare board.

Harden said the Pen Bay Healthcare board — which would continue to operate — should keep incorporators involved in the process including the nomination of local trustees.

Former Board Chairman Frank Muddle agreed. He said the involvement of the incorporators — who represent the communities — would offer stability for the future.

The boards of trustees of both Pen Bay Healthcare and MaineHealth voted earlier for the merger. The incorporators’ vote was the final local step in the change.

The final step before the merger is official approval of the Maine Department of Health and Human Services, the Maine Attorney General’s Office, and the U.S. Federal Trade Commission. Pen Bay Healthcare will file letters of intent Feb. 1 with DHHS for certificate of need approval and with the Attorney General’s Office for a certificate of public advantage. The full applications must be filed by March 15 and decisions by state agencies are expected by Aug. 1.

Once the state approval is received, a request will be filed with the FTC for approval of the merger.

Hitchings and the hospital’s corporate attorney Joseph Kozak said a policy change has occurred at the federal level on mergers.

“The Bush administration was much more hands off with regards to mergers,” Kozak said. “Obama is saying that competition is good in the health care industry.” He said the state’s position is the opposite in that cooperation not competition is needed among health care providers.

If the FTC doesn’t give initial clearance but decides to conduct a more comprehensive review, the process could become longer and more costly.

Hitchings said if that occurs, Pen Bay Healthcare and MaineHealth will need to decide by Sept. 1 whether to move forward with the merger.

Hitchings said the decision by the FTC to seek more information on a proposed merger by MaineHealth and the Goodall Hospital of Sanford came as a surprise to both parties. The two parties expected to get easy clearance for a merger but even after providing additional information, the federal agency made a request of MaineHealth for records of every patient discharge for the past several years. The time and cost — estimated at an additional $1 million to $1.5 million — were considered excessive and MaineHealth and Goodall dropped the planned merger.

Kozak said MaineHealth and Pen Bay Healthcare are trying a different tack by seeking state approval first before going to the FTC. He said he was not sure whether that would make a difference. In response to a suggestion by an incorporator, Kozak said it would not be wise to seek intervention by congressional representatives because the U.S. Department of Justice would consider that to be political interference in a legal issue.

Under the proposed merger, Pen Bay Healthcare could withdraw within two years for any reason. After that, however, Pen Bay Healthcare could only separate from MaineHealth if MaineHealth were to be sold to a for-profit corporation or if Maine Medical Center withdrew from MaineHealth.

Under the agreement, MaineHealth would contribute $3 million to Pen Bay Healthcare for electronic medical records. Another $25,000 to $50,000 would be spent by MaineHealth for communications upgrades so that administrators and health care staff could be in better contact with the Portland headquarters.

Dr. Nadia Ramdin, another oncologist at the Cancer Care Center, questioned whether the money for communications upgrades would be adequate to serve the needs of the cancer care department. Hitchings said he believes it would be sufficient.

If Pen Bay Healthcare withdrew in the first two years, it would have to repay any MaineHealth investment.

Pen Bay Healthcare’s annual dues to MaineHealth would be $675,000 in the first year but Pen Bay Healthcare officials have said that cost would be more than offset by savings in employee benefits and legal and insurance costs.