North Country Hospitals Affiliation

Frequently Asked Questions

 

I’ve heard that the four North Country Hospitals are planning to merge. What can you tell me about this?

Androscoggin Valley Hospital (Berlin), Littleton Regional Healthcare (Littleton), Weeks Medical Center (Lancaster) and Upper Connecticut Valley Hospital (Colebrook) are close to finalizing an affiliation agreement. This will retain and preserve each hospital and its core services in the community.

This is not an acquisition, it’s an affiliation of the four hospitals that will give us advantages that we don’t have now so that as a four-hospital team we can continue to provide local, high-quality health care to people in the North Country. It’s important to maintain our status as critical access hospitals, and limitations on critical access hospitals preclude an acquisition.

 

Why has this taken so long?

There’s a lot involved in doing this right. The hospital boards and CEOs have been working on this for several years. A non-binding Letter of Intent was approved and thorough due diligence has been conducted on the financial and legal status of each hospital.

Each of the Boards of the hospitals have thoroughly reviewed, negotiated and approved the affiliation agreement. We have submitted it to the NH Attorney General’s Office for its review. We are holding public information meetings in each hospital community in November and these are being widely announced.

We’re confident that people in the communities we serve will like the approach. It’s a distinctly North Country solution to a challenge that’s faced by small community hospitals nationwide, namely how can health care providers continue to serve their communities in an environment in which cost reimbursement is going down and the cost of providing care is going up.

 

Will my hospital be changing its name?

No. All four hospitals retain their names, their individual Boards of Trustees, control of their assets and charitable endowments. All of the hospitals will have executive level administrators who will run the hospital and will report to the hospital board.

 

So what’s new?

A new “parent” organization will be created to coordinate the activities of the existing hospitals. This non-profit organization will be named “North Country Healthcare.” A geographically representative board will govern it and employ a small staff. The new parent organization will handle system-level operations, implementation, quality, medical, human resources, marketing, synergy planning, system integration, business integration and contract negotiation for the four hospitals.

 

What benefits will there be for hospital patients? Will any new services be offered?

Over time, we hope to be able to offer more advanced care closer to home. In the short-term what’s important is that we will be able to keep emergency services available region-wide, better coordinate medical care region-wide, enhance our ability to recruit primary care physicians and specialists, keep good health care jobs in four communities, and with the efficiencies of a four-hospital system we hope to better control the cost of local health care.

 

When you say North Country solution, what do you mean?

It’s a creative approach that allows us to work together in ways we can’t now because of the way in which hospitals are regulated.

What we are working on will help keep quality, locally available healthcare in North Country communities and maintain local control of the hospitals. Our primary goal is to sustain access to quality healthcare in the North Country.

 

What about affiliating with Dartmouth-Hitchcock? Did you consider that?

It’s an option we considered, but each of the hospitals by itself would be a very small player in the Dartmouth-Hitchcock system. We decided to pursue an approach that aligns all four North Country hospitals instead. We may look at an alignment with Dartmouth Hitchcock at some point in the future.

We will still work with DHMC, and other referral hospitals, to ensure our patients have access to those hospitals when tertiary care is required.

 

What are the challenges North Country hospitals face today?

While our hospitals are financially strong today, our bottom lines depend on payments from the two large government health insurance programs Medicare and Medicaid. These programs will see major changes in the next several years with pressure on hospitals by the state and federal governments to reduce costs significantly -- while delivering the same and higher quality services.
 
Insurance companies are also putting pressure on hospitals to reduce their fees and costs, and to move from “fee-for-service” operations to more integrated medical delivery systems with payment based on prevention -- keeping people healthy -- rather than treating them when they are sick. 
 
Small independent hospitals are at risk from being excluded from private insurance company network contracts or will have to participate on the terms established in contracts with aligned systems. Aligned hospitals, because of lower cost and better care management, have a higher likelihood of successfully contracting with insurance companies.

As small hospitals, with dependence on current Medicaid Disproportionate Share payments, Medicare cost reimbursement and “fee-for-service” revenue, our hospitals must look for ways to assure stable service to people in the North Country while reducing costs.
 
As a result, most small, rural Critical Access Hospitals like ours in New Hampshire (and elsewhere) are actively seeking partnerships and affiliations to find ways to focus on delivery of care while reducing costs of operations.

In short, our challenge is to find the best way to deliver the right care, in the right place, at the right time at the right cost.

 

How is Obamacare affecting hospitals?

The Patient Protection and Affordable Care Act, commonly referred to as “Obamacare” went into effect two years ago. The law seeks to get more Americans covered by health insurance, changes the focus of our health care system from treating people when they are sick or hurt to keeping them healthy, and puts a new structure in place to slow upward cost trends in the health care system.

While the Affordable Care Act is firmly established, the details are still in flux. The law makes sweeping changes to the way health care will be delivered by doctors and hospitals throughout the country, and how they will be reimbursed for the care they provide. The current payment system that pays based upon volume, i.e. fee-for-service, will be replaced with a system that pays for the care of a defined population rewarding quality outcomes and lower costs.

Across the country, health care providers, like our hospitals, face significant strategic, economic and regulatory changes as a result of the law and the change it creates.

 

What changes in the delivery of health care are in store?

The new Affordable Care Act model requires health care providers, like our hospitals, to manage care for a defined regional population. Providers will be paid a lump sum payment for each enrolled person assigned to them, per period of time.

Health care providers will be at financial risk if the quality of care, or the cost of that care, is not delivered at expected levels. Success in this new payment system will require all providers in a region to align to most effectively manage the care for the covered population.

Even the size of these population pools are challenging for us to meet since they are in the range of 50,000 people.

 

What other financial threats do small hospitals face?

The national debt, the deficit budget, the national and international economy and the recent recession all indicate that there will be substantial decreases in payment for government funded health care. These will further reduce payment for services below what it costs us to provide care.

Continued government support of small hospitals is uncertain. Congress has already introduced payment reduction initiatives to Critical Access Hospitals. The State’s Medicaid Enhancement Tax (MET) has been ruled unconstitutional and the Legislature has differing views on how to address this. New Hampshire has reduced the support it gives community hospitals (called Disproportionate Share payments) to help make up for the payment shortfalls in the government paid insurance programs. In fact, under the Affordable Care Act, those payments may go away entirely. If we have not positioned ourselves to deal with these payment reductions, our financial viability is questionable.

Commercial insurers are following the government, directing patients to lower cost providers. We’ve already seen the effects of this with Anthem’s new “narrow network” insurance plans offered on the Health Exchange drawing patients away from some of the four North Country hospitals.

 

What unique challenges do we face in the North Country?

Demographics drive growth and sustainability in health care, and our market is not growing. Our challenge is to provide care to the sickest and the poorest population in the state. We need to develop a financially sustainable system to do that, given the odds.

The North Country has a rapidly aging, and an increasing Medicaid-eligible, population which means our hospital is increasingly dependent on government health insurance programs which historically pay less than the actual cost of providing care. We’ve lost much of our large industry, so use of private health insurance is declining. More privately insured North Country residents have high-deductible insurance.

The Robert Wood Johnson Foundation and University of Wisconsin Population Health Institute County Health Rankings 2013: New Hampshire ranked Coos County last in summary health outcomes, weighing mortality (length of life) and morbidity (quality of life) equally.  The same study looked also at “health factors” concluding that Coos County ranked last amongst New Hampshire’s 10 counties in health factors, with Sullivan County ranking 9th.

 

What do these changes mean for us?

This new population-based health care model will require new and highly sophisticated systems to manage patient care, quality and risk with other health care providers (like area Federally Qualified Health Centers, large tertiary hospitals like Dartmouth, mental health providers and private practices).

Small independent hospitals will continue to implement increasingly aggressive programs in cost containment, will seek new sources of revenue, will seek lower cost alternatives for their patient population around chronic disease management and prevention; and will seek to share services with hospitals in the region to reduce cost and increase revenue.

 

What’s the outlook for recruiting doctors to practice here?

The shortage of doctors, especially Primary Care Practitioners, is a trend that may worsen as the demand throughout the country increases. Difficulty in specialist recruitment and retention is well established. All small, rural communities face these challenges. We are optimistic that by affiliating, our four hospitals will become more attractive for physicians, nurses and other clinical staff members.

 

What new information systems are needed?

Requirements for health care reform as part of the Affordable Care Act seek to reduce the cost of care while improving quality. This requires extensive changes to the delivery of care in order to find cost savings. We need to upgrade technology to provide patients access to their health information and to exchange it safely and securely with other hospitals and medical providers.

Coordination of the delivery of patient care across the full range of health care providers a patient may see (primary care doctors, specialists, mental health practitioners, health centers, pharmacies and so on) and control of the cost and quality of care cannot be managed with our current hospital-centric information systems. New systems are obviously costly.

Without better information technology we will not be able to coordinate care effectively across providers. This not only will jeopardize the health of the individual patient but also severely limit the hospital’s ability to meet quality standards that impact payment level.

 

How are other hospitals adapting to these changes?

Across the country, small community hospitals like ours are looking to align or affiliate with partners that can help them meet these new challenges. Memorial Hospital in North Conway, for example, joined the Maine Health System. New London Hospital, Cheshire Medical Center and Alice Peck Day are, or have recently, announced affiliations with Dartmouth-Hitchcock

Aligned hospitals will still have to aggressively manage cost and seek new sources of revenue. A regional system may, however, be more effective in driving down cost through shared savings and effective care management.

Small independent hospitals are at risk from being excluded from private insurance company network contracts or will have to participate on the terms established in contracts with aligned systems. Aligned hospitals, because of lower cost and better care management, have a higher likelihood of successfully contracting with insurance companies.

 

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