Laughlin Memorial Hospital officials announced Tuesday they have signed a letter of intent (LOI) to become part of Mountain States Health Alliance. The LOI was approved unanimously by both boards of directors, and a due diligence process is expected to be complete by early 2017.
“We’re thrilled to announce our historic decision to join Mountain States,” said Chuck Whitfield, president and CEO of Laughlin.
“Officially becoming part of Mountain States is a natural next step for us. For more than 20 years, we have collaborated together in various ways to enhance healthcare services in Greeneville and in our surrounding communities. This step will allow Laughlin and Mountain States to be more successful as an integrated system devoted to measurably high-value care for our communities.”
The decision comes as Laughlin, similar to many rural hospitals around the country, faces growing financial, demographic and regulatory pressures that pose threats to the hospital’s long-term sustainability.
These pressures, which have led to the closing of more than 70 rural hospitals since 2010, have also led to projections that as many as 30 percent of America’s rural hospitals could close in the next several years.
The pressures leading rural hospitals to this point include declining population growth trends, reduced inpatient hospital utilization, downward pressure on reimbursement and the shift from fee-for-service care to value-based care.
Even as financial pressure mounts on rural hospitals, Laughlin has maintained high scores on patient satisfaction, value-based purchasing and quality. Yet, despite these efforts, Laughlin’s revenue has increased less than 1 percent over the past five years while expenses have risen between 2 and 5 percent each year.
During the same time period, inpatient volumes have declined by approximately 400 patients per year. Outpatient volumes have also decreased. The combination of declining hospital use rates with the demographics of low population growth and slow employment expansion create sustainability issues for rural and non-urban hospitals.
The board of Laughlin determined it was best to make this decision while the hospital is strong and in a position to determine its future rather than having to make the decision in a crisis.
“With the future of Laughlin and our neighbors in mind, our board considered a variety of types of partnerships for our hospital, including those with larger health systems and hospital companies outside of our region,” said Dominick Jackson, Laughlin’s chairman of the board of trustees. “Ultimately, we believe Mountain States is the right partner for Laughlin. It is in the best interest of our hospital and our community to join an organization that is governed locally, is already invested in our community, and most importantly, that shares our hospital’s culture and values.”
Details of the future partnership include:
• Laughlin will maintain a local board of trustees, which will have the responsibility of ensuring high-quality care and good stewardship of the hospital, similar to the boards of other Mountain States hospitals;
• Laughlin’s leadership team will remain in place;
• Laughlin’s employees will join the Mountain States team, gaining access to Mountain States’ benefits and opportunities for professional development;
• Mountain States will make capital investments based on assessed needs to enhance services and to continue the excellent stewardship of the hospital’s fixed assets; and
• Mountain States is not buying Laughlin, and no money is changing hands. Instead, Laughlin is merging into Mountain States, and Mountain States will assume any future liabilities or benefits related to Laughlin.
“We have always had a terrific relationship with the leadership of Laughlin, and we were honored when they approached us to explore this partnership,” said Alan Levine, president and CEO of Mountain States. “Laughlin believes in Mountain States’ vision for the future, and they want to be a part of it. And Mountain States believes in Laughlin. Together, we can both be stronger.”
“The board of directors of Mountain States is committed to our rural partners,” said Barbara Allen, chair. “Laughlin is a special hospital to us because we have always worked in partnership with them to serve the people of Greene County. Laughlin is joining a healthcare system that welcomes them with open arms and that shares their commitment to ensuring Laughlin thrives in the future.”
“The board of directors of Laughlin has long been committed to the success of our physicians and employees,” added Jackson. “We believe this partnership with Mountain States joins two organizations that culturally share a legacy of devotion to our region. Mountain States is committed to ensuring Laughlin thrives in the future, and given the challenges we know exist for rural hospitals, this relationship is an exciting next step for us.”