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Halifax Regional contemplates partnership, weighs options

Halifax Regional Health System is exploring the possibility of partnering with an outside hospital and health care system, but no decision has been made, health system leadership announced late Friday.

 

The board of directors has narrowed a list of 10 potential partners down to five, and serious discussions are about to begin, according to Hospital CEO Chris Lumsden.

In an open letter to the community in today’s Gazette-Virginian, Lumsden along with Board of Directors Chairman David H. White Jr. and Medical Staff President James H. Priest say the Halifax Regional Health System leadership team is committed to its mission and values and its ability to serve the needs of all its stakeholders.

In a weekend telephone interview, Lumsden said a sale or merger between Halifax Regional Health System and another outside agency “is not a foregone conclusion,” and he described chances of the hospital being sold as “remote.”

However, Lumsden added it would be disingenuous for him to say it is not an option.

He anticipated that within “the next few months” the 36-member board of directors will decide “whether to do nothing or to work with a partner.”

 

‘Doing what’s best’

For now the board is focused on doing “what is best for the organization, the people who work for the health system and the patients who are served here. This has not been a quick thing,” the hospital CEO said of discussions that have taken place over the past 18 plus months.

For the past week, Lumsden said he has met with stakeholders — including 800 Halifax Regional Health System employees, medical staff and volunteers in 11 town hall type meetings “explaining as much as we can.”

Halifax Regional Health System employs 1,300 — split with 650 working at the hospital, and 650 employed at The Woodview nursing home, Seasons at The Woodview unit for Alzheimer’s Care, Meadowview Terrace nursing home in Clarksville, Chase City Family Practice, Clarksville Family Practice, Halifax Primary Care and Volens Family Practice.

“We talked about some of the challenges that were facing us in the industry,” he said of the town hall meetings.

One important point considered was why there were 50 independent hospitals in the state 15 to 20 years ago, and today Halifax Regional is one of only seven left.

“We just look at those trends and ask questions why. You want to make sure as an organization you have been very visionary evaluating these trends and dynamics and make sure we are making decisions that will allow us to continue to grow and stay strong, hire new people and create new services.”

 

All possibilities

Lumsden explained the combination of different arrangements being investigated — from joint venture to strategical alliances.

“It’s a great number of options out there that we are examining,” he said. Whether to stay non-profit is only one of those options.

“It’s not just one shoe fits all. What we thought was best for our organization is to generate as many good options as we possibly could, and we more than achieved that,” he said.

After requesting proposals from some of what he described as “the best health systems in the country,” Lumsden said the health system received “tremendous response.”

 

‘Five finalists’

Now the board has narrowed its search to five companies in particular and is moving forward having discussions with the five potential “finalists.”

“We have five finalists and each has two options, so in essence we have 10 or more options to consider, and that’s exactly what we wanted,” he said, further describing the project as “complicated.”

That’s why the health system has hired “the best” national consulting company from out of state that does high level planning, but he declined to disclose the name.

A second consultant was hired last year who helped with intense planning involving three components:

w 1. assessment of the health care industry — Medicare, Medicaid, health care reform, ACOs, competition in the region – what was going on outside of the health system that may or not have good impact on the local system;

w 2. internal focus on what services are offered locally and what services are not offered that we could offer, a financial review of various divisions and departments and where volumes are going up and down; and

w 3. learning about what is going on in the partnership arena — why are hospitals consolidating, working with one another and merging more now than ever before.

According to Lumsden, in order to sustain the level of growth the local health system has seen over the past few years, board members are considering whether it will be better to work with someone than not work with someone.

“That’s what we’re doing right now,” he added.

Since meeting with stakeholders last week, the hospital CEO said he has received a tremendous amount of feedback from employees who gave the board a standing ovation for exploring all options.

“They appreciate the honesty and truthfulness. Not every health system that does this type of planning is as transparent as we’ve been,” he added.

“This is not about contracting. It’s about growth and expansion,” Lumsden said, pointing out one of the board’s objectives is to determine whether a partner can help us grow and expand while more competition and more health care reforms are taking place that will affect the delivery of health care.

Looking to the future, Lumsden foresees in the next four or five years major overhauls in how health care will be delivered.

“Whether we like it or not, it’s going to happen, and we want to be well prepared when it happens,” he said.

With change in the future, the hospital CEO said, “This is about how we best change. Do we believe working with a partner will help us make change more effectively or cope with change more effectively.”

The board’s view is that considering these options will enhance the system’s chance for growth and expansion.

He reflected on local growth over the past 25 years where the health system here has grown from 500 to 1,300 employees.

“That’s because we have grown services and built services, and jobs have been created by this, and we want this to continue,” he said, noting his “number one focus is on people and the community.”

 

Defining the future

Lumsden said he would not be leading the health system in this direction if he did not think it would be beneficial.

He describes the current project of deciding whether to partner or merge with another system as being “greater than you or me.”

“It’s a project that really may define our future in some ways,” he added.

So many rural hospitals are simply surviving, according to Lumsden.

“When you go into a survival mode, you are not going to be all you can be, so this is aimed at how do we continue to thrive and not just survive.”

He pointed out the difference between “being busy” and “getting paid for services.”

“We have a lot of people who need care and get care who can’t pay…a lot of charity care,” and the challenge the local health system faces is not “staying busy and keeping the hospital full, but it’s are we generating the revenue to pay for the services rendered,” he said describing it as “a balancing act.”

 

Regional service

From a patient care perspective, the hospital is thriving and busy.

And it’s not just patients from here in Halifax County but other areas as well, he said.

“That’s part of our strategy. We want to be a full-service hospital to a region, not for just a town,” he added.

The board is aware when discussions of this nature take place, word gets out, and he said that is the reason for running the full-page advertisement in today’s newspaper.

“Word will get out at some point in time, and we had rather just deal with it when it’s appropriate, and we think it is appropriate we communicate that we are at least considering these options now, while we are strong and healthy and don’t have to make any of these decisions,” Lumsden said.

One never wants to enter into a project of this size when they are desperate and don’t have options, he added. “Then you would have done a disservice to the organization. We’re not there. Nowhere close to there.”

And much work is left to be done between the health system and the five potential companies before any announcement will be made.

 

Just like marriage

Lumsden compared ongoing partnership discussions with the companies using the analogy of a marriage.

“You really want the marriage to be healthy and strong and last a really long time, if not forever. And that’s why this ain’t a shotgun wedding. This has been a very thoughtful courtship, if you will, and I think when we end and make a decision to move forward, the expectations on both parties will be understood very, very clearly, and the expectations also will be memorialized in a prenuptial agreement. There’s still a lot of work to do,” he concluded.