By Dave Ongie
In the wake of Tennessee’s decision last week to approve the Certificate of Public Advantage (COPA) application filed by Mountain States Health Alliance and Wellmont Health System, executives from both systems gathered in Johnson City for a joint press conference.
With only one hurdle remaining – approval from the Commonwealth of Virginia – there was a palpable sense of relief in the room last Tuesday among the folks who have worked since April of 2015 to merge the two competing systems to create Ballad Health. Months of methodical negotiations between MSHA, Wellmont and the Tennessee Department of Health finally led to approval from the state of Tennessee on Tuesday morning, leaving just the blessing of Virginia to seal a deal that would combine 21 area hospitals under one corporate umbrella.
Virginia’s decision is due by Sept. 30. If Virginia approves the COPA, the consolidated Ballad Health could be in operation by early next year.
“The document that is before you today is really the culmination of two years of discussions with the state to help us evolve in the health care system but also to meet the needs of these communities,” Levine said.
The proposal flies in the face of the theory that competition drives down prices for consumers, and therefore has drawn the criticism of the Federal Trade Commission, which said on July 18 that the two systems “fail to provide sufficient additional information or analysis to demonstrate by clear and convincing evidence that the purported benefits of this merger would outweigh the serious competitive harm that would likely result from creating a near-monopoly.”
Even after the State of Tennessee approved the COPA, Tennessee Department of Health Commissioner John Dreyzehner admitted the move was a step into uncharted territory.
“This has been an unprecedented and complex process, and I appreciate the time, effort and resources everyone involved has put into making it a productive one,” Dreyzehner said in a statement. “I also appreciate the legal expertise and guidance of the Attorney General and his staff as we’ve put into place measurable goals and terms and conditions to ensure that in granting approval, there is a clear public benefit to the health and well-being of residents of the region.”
Levine acknowledged the constraints Ballad Health will be operating under if Virginia signs off and the merger is approved. The health system will sacrifice a certain degree of autonomy and accept a great deal of government oversight if the merger comes to fruition. In order to approve the COPA, the state of Tennessee imposed 28 measures on Ballad dealing with access to care along with 25 population health measures.
“The state’s role in this has been to protect the public, and they’ve taken that role very seriously,” he said. “There’s been nothing taken for granted. In terms of the process, it’s been very methodical.”
While state oversight will be a burden, Levine said it was well worth it in order to prevent the two systems from eventually being bought by a larger health system from outside the area. He went on to say that surrendering a small amount of autonomy would produce a much better outcome for the region than ceding total control to outside interests.
“Wellmont was on that path about three years ago when they made the decision to do this instead,” Levine said. “What happens in that model is you’ll lose, by our calculations, close to 1,000 jobs in the region.”
While this merger would be a step into a brave new world, all involved are hopeful the move will provide more efficient healthcare to the region.
“Everyone’s objective is to employ a new idea, a new structure to fundamentally improve the health of the region,” said Herbert H. Slatery III, Tennessee’s Attorney General. “We wish them great success.”