The Business Journal: Thanks for taking the time to speak with us. Let’s just begin with an overview of where Wellmont stands in the merger process at this point.
Bart Hove: Since our April announcement, a lot of work has taken place. One of the first pieces of business associated with that was to form our joint board task force and our integration council, which you’ve heard a lot of the descriptions of the makeup of those two groups. The integration council is really responsible for doing a lot of the leg work and overseeing the consultants’ work that’s going on in the area of cultural assessments board, due diligence, cost savings opportunities and validations of those. And so they report to the joint board task force which is receiving the information and also providing guidance back to the integration council of further clarification on work that needs to be done. That’s been ongoing since maybe May.
We have reviewed the emergency rules that were put out by the state of Tennessee and had discussions with the commonwealth of Virginia on the preliminary rules that they’re establishing for our public advantage agreement in that state. We filed a letter of intent Sept. 15 in both states indicating that we would apply for Certificate of Public Advantage in both states. There’s a 45-day waiting period after that filing in Tennessee. We have used that 45-day period to begin the draft development of the COPA for Tennessee and the language in both states is fairly similar although not exactly so. We’re using the same process in Virginia and we’ll modify that slightly based upon the regulations that they ultimately settle on.
BJ: What are you hearing from the various constituencies during the waiting period? What have been the biggest concerns of the various parties from payers to physicians to the business community and the general public, and how are you addressing them?
BH: Well, also along those lines of course we constantly give updates, whether it’s on our webpage or the Chambers of Commerce meetings or any other venues we’re asked to go to provide those updates to keep our community informed of the progress that we’re making. In the meantime, we’ve had the discussion groups where meetings have been held in all of the communities that we’re serving now to gain input, particularly in four particular areas (Mental Health & Addiction, Healthy Children & Families, Population Health & Healthy Communities, and Research & Academics), but also as a barometer for what’s going on in the communities and listening to any questions or concerns that are popping up.
For the most part it’s been very quiet on the opposition front. The insurance companies in our initial meetings with them were receptive to the concept and the idea and expressed a willingness to work with us. In the new environment that’s being created across the country in health care, and you’ve heard us talk about the pay for value vs. paying for volume, structuring some programs that are beneficial to the patient for keeping them healthy, spending less dollars for their health and really trying to convert our whole country into a new approach or a new focus on health care. So part of the importance of our relationship going forward is to focus on those types of areas that we believe can really be affected by our organizations coming together and providing those types of services in a different way and more cohesive way using the community agencies that exist as well and partnering all across the continuum. Interesting enough, places all across the country are looking at similar types of approaches to converting their health systems or hospitals to deal with this changing evolution of health care delivery.
Back to your question, the support that we’ve been receiving has been really positive from our communities. For the most part, the feedback from businesses, from the insurance companies, from the individual consumers and most of the physicians has been very positive along the lines of what we’re trying to do.
It does raise questions in peoples’ minds about the unknown—what is this really going to be like and how is it going to work and function – so it’s really important for us to try to address those questions when they come up or in the presentations that we have in community groups. We always try and make sure we have time for questions at the end of our presentations just to answer anything that might come up.
BJ: Looking at the rules put out by the states, was there anything that struck you as more stringent than you originally thought?
BH: Not particularly, although the devil’s in the details, as the old saying goes, and I think that what may be a practical exercise will be once we file our application. Their request for more details – certainly the state has a right and an opportunity to do that – I think that is where we may get into some other areas that maybe we didn’t expound upon in sufficient detail to meet the inquiry of the state.
The original list of questions and statements were not really any kind of surprise to us and we have had the opportunity to comment in both states on those regulations and we believe that the states listened openly to comments that we wanted to file related to their regulations to begin with. There really wasn’t a whole lot of differential between our comments back to the state after the regulations were proposed.
BJ: For folks who are just coming into this discussion a few months into the process, when you say ‘the states,’ what bodies are you going to be working through to hammer out all these details with both Virginia and Tennessee?
BH: Well they are a little different because in Virginia, the legislation that was passed giving us the public advantage opportunity there is just for southwest Virginia. So the Health Authority Group was created to oversee the work and the process of the public advantage relationship. They will report to the commissioner of health in Virginia and ultimately the attorney general is the one that’s charged with overseeing and monitoring the activity associated with the public advantage.
In Tennessee it’s a statewide legislative process that we’re experiencing and the commissioner of health is charged with doing a lot of the work and working with the attorney general in Tennessee to oversee the effectiveness of the COPA regulations and the parameters with which we’re being asked to operate.
BJ: When we sat down for the roundtable discussion the day you announced plans to merge, one of the questions we didn’t ask, and we’ve been kicking ourselves for not asking, was, ‘So Takoma is out of this and gone forever, right?’ (Ed. note: Wellmont is in the process of acquiring Takoma Community Hospital from Adventist, with whom it at one time partnered to run Takoma, before leaving that partnership, only to return now to acquire Takoma completely). How has the reinsertion of Takoma into Wellmont affected Wellmont and the merger?
BH: Back in 2014, June of 2014, after a lot of discussion, the two health systems decided that it would be in the best interest of Takoma and the community in Greeneville to have one owner rather than two. So we elected to step out and Adventist elected to pick up Takoma 100 percent. They actually were trying to work through their own long-range strategy in the Greeneville market with Takoma, (Ed. Note: off the record rumors of a Takoma merger with, or a sale to Laughlin Memorial Hospital were, for a time, rampant) and they did have some ongoing discussions with Laughlin at the time. When it was apparent that that strategy was not going to be successful for the Greeneville market, in part of the document that was put together for us to bow out of Takoma there was language that said if it appeared that a more regional owner would be better suited to work with the facility rather than Adventist, which is a national party, then there was the opportunity for the hospital to become reengaged with Wellmont.
Indeed, once the strategy didn’t look like it was going to play out to work something out with Laughlin in the Greeneville market, Adventist talked with us about becoming involved at a different level again with the Takoma facility. So we had several conversations with them about what that relationship would look like. Would it be a partnership like we had before or would it be 100 percent ownership? We basically came to the conclusion that it would work best if it were 100 percent ownership and the feeling was that a local ownership would be better than a relationship from afar. That was the deal that we struck at that time and as things go, we’ve been working through that process to get to a point where we could close the transaction. We’re making progress albeit ever so slowly in that arena.
BJ: Do you have an estimated date on which Takoma will become a part of Wellmont fully?
BH: Originally we had a target date of November. That target date is very close to being upon us and we’re not close to making that transaction occur. I would say for a host of different reasons, that transaction is slipping in time, much like we had some earlier goals with our merger and targets we wanted to hit and it’s taken a month or two or a little bit longer than we had anticipated. So we’re behind the November transition date.
BJ: Do you remain confident it will close?
BH: Yes.
BJ: How does the fact that as the two entities, Wellmont and Mountain States are merging, one of them is adding an asset affect the merger?
BH: It really hasn’t. We disclosed early on when it appeared to us, even before we had a final deal with Takoma, that just out of an awareness it looked like that facility would become part of the Wellmont Health System and therefore be part of the COPA application going forward.
Interestingly enough, the attorney general in Tennessee is very familiar with our relationship with Takoma and when we talked with him about that transaction and it being a little bit nebulous about when it would happen, it didn’t cause him any concern at all. He was aware of the previous year’s separation of Wellmont from the hospital and knew fully well that there might be an opportunity for us to become involved again.
It really hasn’t surprised Mountain States in this process either, as we’ve moved ahead at this time. Neither has it surprised the attorney general so it’s really not been an issue.
The real issue is just the timing of, ‘Are they on board whenever the COPA’s granted or do we bring them in after the COPA’s granted as an amendment to the facility?’
BJ: As you do all this merger work, you remain Wellmont Health System, an individual and separate company from Mountain States, and the possibility exists that any number of things could go wrong and the merger not take place – or the merger could happen, but then break apart. So by law, you maintain total independence. Tell us about the process of competing with someone with whom you are merging?
BH: (Smiles) It’s been a little interesting, I guess is a good word to use, as we recognize that we have to remain competitors until such time as we do have a green light from the state to merge our two institutions together.
That being the case, strategically when we look at our business plan and our evolution of care and delivery in our market place, we continue to aggressively pursue our plan as it is established now and to put ourselves in the most effective and competitive position whether we merge or don’t merge. We believe that the business strategy that we’re executing today is a solid business strategy as competitors or collectively together as partners.
And because we are trying to evolve the process of the delivery of care and take a leading edge in that, we’re venturing into areas that here before have really not been well served or weak in our communities and that’s primarily on an ambulatory basis where our urgent care centers and our expansion of our cancer programs and cancer offices are having a very positive effect on the accessibility to care and in more appropriate settings or less costly settings, if you will.
While that strategy has been ongoing, just recently we’ve had a first full-year in Kingsport and Bristol in those two urgent care centers and we opened up one in Lebanon and are soon to open up a few more urgent care centers, one in Rogersville and one in Bristol, Va., all really to put ourselves in a more convenient opportunity for our patients to access their healthcare needs.
Again, we believe not only that but we’re on the verge of launching an e-visit type program for our primary care services within Wellmont Associates and the new technology allows you to do a lot of different things – the Epic implementation – that’s doing extremely well for us. It is continuing to provide benefits and just this e-visit approach is another opportunity where we can connect with the patient and be convenient with the patient so that they can access care when they need it.
BJ: Access is one of the points of the triple aim. From your personal perspective, your thoughts on the overall refocus of health care in America and the opportunities. It’s created a whole lot of work for folks…
BH: First let me say that I believe it’s the right thing to do, from a country standpoint. We have to maintain a high level of quality of care on the acute side, but where we have been weak I believe is in providing access and opportunity for the patients at their convenience at the ambulatory side and providing the education that’s necessary for people to live healthy lifestyles.
Obviously in this region we are in a part of the country that has demonstrated historically very poor health habits. We have high incidents of obesity, cancer, drug abuse, mental health issues, stroke – moreso than the vast majority of the country experiences, and a lot of that is related to the lifestyles that people choose to live in our region.
So we have an opportunity or a challenge to connect more directly with the patient to try to enhance in small increments their lifestyle choices so that we can, over time, reduce the impact of the escalating costs of healthcare to our country as a whole while improving the health of the individual consumer.
We’ve got to get a grip on the spending of health care across the country and we’ve got to broaden out the knowledge of healthy lifestyles to individuals all across the country. That is a major disruption to how healthcare has been delivered in the past. With that transition, it’s really a transition of economics, of consumer values, and trying to instill all of that at one time obviously needs to be done very slowly so that we don’t totally disrupt the economy of health care within the country. But at the same time we’ve got to do it at a pace that makes sufficient progress in a reasonably short period of time in order to start having the impact we need to have not only on the finances side but also on the consumer side and instilling those lifestyles.
Part of the merger piece really is fundamentally geared towards improving the lifestyles of the folks in our region. We believe that because our region is somewhat isolated geographically-speaking, that we can connect, using the local resources that exist, that have been maybe less coordinated than we would like to see them all coordinated… a lot of the agencies do a wonderful job but they do it in such a silo, in such a small area that the agency next door to them might be doing the same thing but slightly different so the impact is not as broad and as impactful as it could be if everything was coordinated. One of the goals we have is trying to envelop all of those programs and agencies. We don’t believe that we can do it ourselves. But we collectively believe that if we can pool all of the resources together that we can have a greater impact on our community.
It’s trying to build an education from very early on in the development of individuals as they’re pre-kindergarten, growing up and going through school. We believe that we can have an impact on adults but that’s years and years of habits that you’re trying to change so concurrently with working on those, we want to also establish a relationship with the pre-kindergartners to start their lives out in a healthier manner than the parents or adults that are raising them.
BJ: That accountable care community concept and the public health piece in general — in the process of putting all this together, it was obvious if you’re going to merge, Wellmont and Mountain States have to agree. It was not as obvious that ETSU would become the third leg. How did that come to be?
BH: One of the aspects of the COPA process itself is to help the economy of the region. Not only are we trying to save wasteful spending that we have within the competition of our two systems going forward, but we want to channel the opportunity of additional economies and resources into our region.
Collectively, we believe that ETSU has not been able to get the momentum going to develop the research components that could bring additional industry into our region. We’ve had a couple of successes in the past with some of the drug companies, Pfizer, King, and others, where they were real economic engines for our communities in a small way but over time they’ve fallen upon hard times.
We believe there are substantial research dollars that are available but helping ETSU to get the momentum going forward takes some seed money. We believe some of the cost savings that we can generate from our collective coming together could be funneled into ETSU to help them kick off some of those research programs.
Once you get their research talent, once you put that kindling out there and light the fire, it kind of takes care of itself over time. But getting the momentum started in the first place has been some of the hard pieces that haven’t happened to the extent that we would like to see and believe can happen in this area.
With those come additional jobs that are really high-end type educational jobs. We think it would be synergetic for other physicians wanting to come for their training at ETSU or for the allied health practitioners that are needed to help support the medical industry and the research industry, then you have other businesses that want to feed off the research that’s going on.
So again, it’s a long vision, a long process that we intend to go through but it’s really to help our economy as a whole rise and grow. And it goes back to again, you’ve got to do better at education so that we have more high school graduates first, then high school graduates going on to colleges and universities, then having the jobs available for them once they finish their college education that are going to help our economy to grow. It’s a long-term vision but we do believe that we would be successful in being able to generate that over time.
So the third leg of the stool if you will, aside from just the obvious of the dependence we have on not only ETSU for our workforce, but Milligan and King and all the other universities, Northeast State, you name it.
We’ve got an aging population. The population that works in our facilities will also be thinking about retirement and we’ve got to replenish those over time too, so we need to continue to work with all our institutions of higher learning. The biggest impact, however, is reserved for the research piece that we really think holds some great promise in improving the economy of our region.
BJ: In speaking of the economy and jobs, neither side has been shy about saying there will be some pain in the form of jobs going away in the transition. What thought is being given to organizing along the lines of, say, centering cancer care in Bristol, heart care in Kingsport and women’s and children’s in Johnson City?
BH: That is a question that a lot of our community residents ask us in this merger process and it’s one of those questions that because of the regulations we’re under and scrutiny we’re under in the merger piece, we have not been able to have conversations with each other about.
Services, and the location of those services, are a protected area from the Federal Trade Commission’s standpoint of strategy so we’re not able to have those conversations. I think it’s natural that the community wants to go to those questions. It’s unfortunate but the reality is that we’re not able to answer the questions at this time because we’re not able to have those conversations.
What we tell the community is we appreciate those thoughts and ideas and if they want to keep those ideas and thoughts coming, they should do so through the public venues that we have. As soon as we receive approval from the states for our COPA applications, that is when we’ll start having those types of discussions and being able to effectively plan for what the future looks like in our region.
BJ: But it’s fair to say that inside your organization, you’re sharing thoughts on exactly how the unnecessary duplication of services we’ve had in the past can be best put aside in the new organization and you’re looking forward to the point at which you can hear theirs, share yours and move forward?
BH: I think that’s one of the opportunities that we are looking forward to in having those types of discussions. Presently we’re having to remain as competitors and as we talked about early on, we are aggressively pursuing our business strategy that we have today for the Wellmont Health System which is to be more available and accessible to the public as it relates to access into the primary care and opportunities for delivering their care in convenient and cost-effective ways.
We think that strategy will serve us well in a merged organization or in a competitive environment going forward. And yes we do look forward to the day when we can have those conversations about how can we go to the next level in efficiencies within the region that we’re serving.
BJ: So what is the current merger timeline?
BH: We still intend to file the COPA applications in the fall, which I guess gets us up until mid-December or so. That’s still the desire of our organization so far. We’re working; our joint board task for integration council’s working on by-laws for the new system, policies about how we would operate in general, reviewing the consultancy reports, some of that information has to be put into the COPA application so that COPA application will be put out for public view and so we look forward to the input that the public would have as we get ready to file that application in the fall.
BJ: And once the application is accepted, the speed of the process depends not just on you but also on two different state governments.
BH: There is an opportunity once we file that application if the state determines that they want questions answered or more information the clock doesn’t start running. But there is a clock once the application is complete and it’s 120 days in Tennessee and 150 days in Virginia. I think it’s natural to expect that since this is the first time in Tennessee and Virginia that this type of request has been filed, there are likely to be questions from the commissioners of health in both states about further information they would like. So sometime after we file I’m sure we’ll get a request for more information before the clock starts running.
