PCH, St. Joe's reach impasse with state in CRS contract talks. (Phoenix Children's Hospital; St. Joseph's Hospital and Medical Center; Arizona state Children's Rehabilitative Services contract)

When Phoenix Children's Hospital and St. Joseph's Hospital and Medical Center teamed up last year to bid on the state's Children's Rehabilitative Services contract, they expected to break even on the venture. In the past, both hospitals had competed against each other tooth and nail, losing money in the process.

Unfortunately, negotiations between the hospitals and the state have hit some snags. State officials say they aren't willing to pay the $12.7 million bid price, which has come down from the hospitals' original bid of $14.7 million last November. In reply, officials of the Phoenix hospitals say they aren't willing to budge either.

The contract to provide …