Mountain States Health Alliance and Wellmont Health System filed with the Tennessee Department of Health a letter of intent to merge in order to lower costs and improve the quality of care for clients.
The two organizations await state approval to begin the consolidation process. This is the first piece of paperwork with the state beginning this process since both organizations’ boards unanimously approved the proposal in April 2015. The next step will be submitting a formal application for a Certificate of Public Advantage this fall.
The new COPA law makes it possible for two or more hospitals to merge or combine assets for the “sharing, allocation or referral of patients, personnel, instructional programs, support services and facilities or medical, diagnostic or laboratory facilities or procedures or other services traditionally offered by hospitals.” This makes it possible for smaller regional hospitals to save money and provide better care to more individuals within their region.
The two are working to improve regionally, rather than to join major nationwide hospital systems.
According to CEO and President of Mountain States Health Alliance Alan Levine, five major insurance companies are consolidating, leaving three. On top of that, over the last five years, multi-state hospital systems are requiring smaller systems, like MSHA and Wellmont, a process that Levine said has led to a reduction in jobs and higher costs.
“We want to retain local jobs,” he said. “We feel this allows us to come together, and we want to reinvest those dollars locally to grow jobs.”
In the Business Journal of Tri-Cities Tennessee and Virginia, Levine referenced a 1996 merger between Memorial Mission and St. Joseph’s hospital in the Asheville, North Carolina area. Levine said that Mission’s costs per admission are lower than all their peers, and noted that the regulations on Mission are less than regulations proposed for the MSHA-Wellmont merger.
He said that they plan to invest in research at East Tennessee State University. “Those are the types of things that we think we benefit from, and that’s very unique from what other hospitals are doing,” he said. “The business community in the region–the job creators–strongly support this merger because they see the same thing we do. There’s opportunity for our region as opposed to both systems becoming parts of larger systems based elsewhere.”