Ball back in states’ courts on hospital merger bid


By Jeff Keeling

Terry Kilgore

Terry Kilgore

The ball is back in Virginia’s and Tennessee’s courts with respect to the proposed Mountain States Health Alliance-Wellmont Health System merger. The hospital systems submitted lengthy responses July 13 to questions about their merger application to officials with the Tennessee Department of Health (DOH) and the Southwest Virginia Health Authority (SVHA). (Links to both the questions and answers are at the end of this story.)

Officials from both states had asked for significant additional material beyond what was in the Feb. 16 initial applications that requested a “Certificate of Public Advantage” (COPA) in Tennessee and a “Cooperative Agreement” in Virginia. Both designations are designed to appropriately regulate the merger, which would create a less competitive hospital market across much of Northeast Tennessee and Southwest Virginia, in such a way that the benefits produced by the merger outweigh any disadvantages caused by the lack of competition the merger will create.

While the SVHA didn’t send its questions to the systems until late May – more than a month later than the DOH’s last round of questions – the group appears on track to vote on the Virginia application’s completeness in a few weeks. The authority created work groups March 15 to review the application for completeness in five areas: population health, health care cost, health care access, health care quality, and competition. Those groups met with hospital system officials and engaged consultants as they looked for gaps in the initial application with respect to the systems’ operation in Southwest Virginia, finally submitting 68 separate questions in late May.

Several of the SVHA’s five work groups met Monday, SVHA Chairman Terry Kilgore told News & Neighbor Monday evening. Work group members had reviewed the systems’ answers, as well as a lengthy preamble that laid out stark economic, demographic and other challenges facing Southwest Virginia, and how those challenges affect the provision and delivery of health care.

If the questions are answered satisfactorily, the entire SVHA board (minus members with conflicts of interest) is expected to vote on whether to deem the application complete at a meeting in Abingdon, Va. Aug. 26.

“Our experts agreed with them today on the phone,” Kilgore said. Like the DOH, the SVHA has engaged consultants to help it navigate the unprecedented request for a regulated hospital system merger that would create a nearly $2 billion single system.

“Our experts called in and said, ‘listen, you’re in a market in Southwest Virginia (where) they’re going to struggle there, and this merger could be, you know, very beneficial.’ It was very eye-opening.”

After having reviewed them for nearly three weeks, group members were largely satisfied with the answers the systems provided said Kilgore, a Virginia delegate (R-First) who wrote the legislation enabling the cooperative agreement in Virginia.

“There are a few that we’ve got to follow up on,” Kilgore said. “We’re going that over the next couple weeks.”

Should SVHA members vote that the application is complete, a public comment period of 20 business days will commence. A public hearing, set up in conjunction with Virginia State Health Commissioner Dr. Marisa Levine’s office, must be held within 45 business days and no later than 75 days.

“We want to move this ball forward, and we hope we don’t even have to take the full 75 days. We hope we can get it up to the health commissioner sooner rather than later.”

In Tennessee, conversely, the state’s Department of Health (DOH) has said it expects to issue another round of questions following its own meetings with healthcare consultants. Commissioner Dr. John Dreyzehner also said after a June 7 public hearing that DOH would likely hold another public hearing before making a decision on the application’s completeness. The pace in Tennessee has become enough of an issue in some quarters to provoke open concern.

On July 20, a joint letter signed by the CEOs of the area’s three largest chambers of commerce (Kingsport, Johnson City and Bristol) was submitted to DOH. The letter, obtained by News & Neighbor, noted what the signatories said were ample opportunities for the public to comment and ask questions, and a thorough scope of work by a COPA Index Advisory Group to suggest measures for evaluating the COPA’s effectiveness.

The letter stressed the chambers’ support for the merger and belief that its advantages would outweigh the disadvantages. It even cited, “evidence of higher pricing related to non-regulated mergers and out-of-market acquisitions of systems like Wellmont and Mountain States.

“Thus, from the perspective of those who are paying a large portion of the bills … we believe the COPA model is superior in its controls on cost growth and ensuring the synergies from the consolidation remain in our communities.

“On behalf of our members,” the letter continued, “we respectfully encourage your department to work with the two health systems to bring the merger to a conclusion rapidly. As it stands, the merger may not be complete until 2017. We are concerned by this timetable and believe with diligence, the process may be accelerated.”

DOH spokesman Bill Christian said the letter from the chambers will be posted on the state’s website soon. He said DOH does plan an additional public hearing in the Tri-Cities, with the details still being worked out.

As for additional material, Christian said this: “Because much of the information received and to be received requires a sophisticated economic analysis, on behalf of the department the Attorney General’s Office has retained an experienced consulting firm with expertise in healthcare accounting and finance to assist with the department’s review of the COPA application.”

The timeline for a final decision is shorter in Tennessee than in Virginia (120 calendar days versus 150 business days), so if the Virginia application is deemed complete sooner, final decisions from both states still could come around the same time – likely after the first of the year.

Questions from the Southwest Virginia Health Authority: Click Here

Answers to the Southwest Virginia Health Authority: Click Here

Questions from the Tennessee Department of Health Part 1: Click Here

Questions from the Tennessee Department of Health Part 2: Click Here

Answers to the Tennessee Department of Health: Click Here


About Author

Comments are closed.