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2-hospital model 'not sustainable'

2-hospital model 'not sustainable'

MU Health Care, SSM outline strategy behind potential St. Mary's sale

December 7th, 2018 by Joe Gamm in Local News

SSM Health St. Mary's Hospital in Jefferson City is shown in this Jan. 23, 2017 photo.

Photo by Julie Smith /News Tribune.

The two-hospital model of health care — like what exists in Jefferson City — cannot be sustained, according to leadership from MU Health Care and SSM Health.

Jonathan Curtright, chief executive officer of MU Health Care, Philip Gustafson, interim president of St. Mary's Hospital, and other staff members from the health organizations met with the Jefferson City News Tribune editorial board Thursday to discuss MU Health Care's potential purchase of the hospital.

Two JC forums planned

Two JC forums planned
The health care organizations are to host two public community forums to provide an update on the proposed sale to the public in Jefferson City.
The times and dates:
5:30-7 p.m. Monday
5:30-7 p.m. Dec. 17.
Both forums are to be held at the Missouri Special Olympics Training for Life Campus, 305 Special Olympics Drive.

SSM Health, a Catholic nonprofit health system, is now in exclusive discussions with MU Health Care to transfer ownership of the hospital to the university, the organizations announced in August. The discussions also include the transfer of SSM Health St. Mary's Hospital-Audrain, along with outpatient, home care, hospice and medical group locations throughout the region, to MU Health Care, as well as transfer of SSM Health St. Francis Hospital-Maryville and its affiliated outpatient home care, hospice and medical group locations to St. Joseph-based Mosaic Life Care.

'Present model
is not sustainable'

Health care systems are rapidly evolving — very rapidly, Gustafson said.

"SSM (the St. Louis-based owner of St. Mary's Hospital) is trying to figure out, 'How do they provide a mission-based health care system for a region?'" Gustafson said. "They came to a decision several months ago that the present model is not sustainable."

SSM conducted months of discernment — looking at its mission and deciding what is best for all parties, he said. The health care provider concluded it needed to put out a Request for Proposal (RFP) and see if another health system was interested in buying the Jefferson City hospital.

"The sense is that we need to have an integrated health care system to bring all the parts together," Gustafson said. "The purpose is to try to provide really good quality, accessibility to what's happening, as well as keeping the costs under control to the extent that they're able to do that. We don't do that very well, as you can probably see from some of your bills."

On Friday, SSM Health clarified Gustafson was not referring to St. Mary's specifically, but was speaking of the health care sector in general.

An integrated health system coordinates general and behavioral health care services to produce the best outcomes.

"The conclusion SSM has come to is that this would be best for this region," Curtright said. "MU Health Care has been here for a long time, is a tertiary facility with a lot of things that they can bring to the table that can help. The intent is that this care stays locally."

St. Mary's Hospital and Capital Region Medical Center, which has had a clinical affiliation with MU Health Care for 21 years, currently compete to provide specific health services to the Jefferson City community.

St. Mary's Hospital has operated in Jefferson City for more than 100 years. It opened a new 375,000-square-foot, multi-million-dollar facility at 2505 Mission Drive just over four years ago — but soon ran into some financial difficulty.

Online records on focusonhospitals.com show the hospital operated at a $20.9 million loss for the year ending 2016.

The community cannot support two hospitals, the men said.

"The current model we have in Jefferson City is not sustainable. Cap Region is doing well financially, but it must improve," said Curtright, who in addition to serving as chief executive officer of MU Health Care serves on the board at Capital Region Medical Center. "St. Mary's is not doing well at all, and the operations — financially — are a struggle."

 

SSM's criteria
for a potential buyer

The decision to sell was difficult, according to John Nguyen, the chief marketing officer for SSM Health who participated in the conversation via conference call. But, it was ultimately one the health care provider had to make — and it was necessary for the community, he said.

"For SSM Health, this is not a purely business decision. We are mission-based organizations," Nguyen said of similar missions SSM and MU Health Care share.

That was part of how SSM selected the Columbia-based health provider as a suitor.

Nguyen said the process began early in 2017 when SSM senior leadership teams and the SSM board began holding discussions. It sent out RFPs late in 2017. Nguyen would not disclose how many RFPs the organization sent out, nor who received them.

The RFPs asked that potential buyers meet specific criteria, in which SSM indicated it was looking for the appropriate partner who would ensure jobs and care stay in the community.

The request also required the purchaser provide a commitment to charity care, high quality standards and practices, recruitment and development of physicians within the community, and integrated health care, Nguyen said.

"Integrated health care is the path upon which the country is headed," he said. "The movement toward care that is really more about providing exceptional experience, that lowers the overall cost of care and delivers the highest level, is really the movement that we are moving toward as a country."

MU Health Care was the only organization which met all the criteria to submit a proposal, Nguyen said.

What's next
in potential deal?

The two organizations entered into a due-diligence period, in which they are trying to determine if they meet each other's standards of care. That process is expected to be completed in the next month or two, Curtright said.

"There's a lot of opportunity to grow — in terms of the number of physicians who can be recruited here, keeping the staff here and providing services here," he said. "The other part of that is there are two hospitals in the city."

Questions have been raised about whether MU Health Care's purchase of St. Mary's Hospital will create what critics are calling a monopoly.

A number of attorneys are crunching information about the potential purchase, Curtright said, " trying to determine what's the best future path for any regulatory approvals that we need."

And, he added, their research is far from finished.

"Nor are we 100 percent sure on what regulatory approvals are going to look like. Over time, we'll be working with our regulatory officials to make sure we're getting approval as appropriate," Curtright said.

He added the hospitals would likely need some guidance from multiple branches of state government concerning the best approaches. The parties would also likely need to find out if any regulatory approvals will be necessary on a federal level.

"Stay tuned on that," he said.

Meanwhile, they're getting feedback from folks in Jefferson City on what the best options are.

A concern, some said, is because the MU system has close ties with Capital Region, St. Mary's will be closed, if the sale goes through.

But, both have programs and specialized services the community needs, Curtright said.

"Over the long term, the region would be better served, and particularly Jefferson City would be better served, if we could figure out some way that those could get consolidated, so that we have services that are big enough that they can support that and spread the cost and be affordable to people," Curtright said. "I have not been involved in any of that decision-making, but looking at it from the position I'm in, I think we've got an opportunity to do something unique and pretty powerful for the people who live in Jefferson City."


The story was updated to clarify a statement by interim St. Mary's President Phillip Gustafson concerning containment of health care costs.