LEWISTOWN - Nearly two dozen community officials and area business owners were able to ask questions Thursday about the potential merger of Lewistown Hospital with another medical care group.
Hospital President/CEO Kay Hamilton met with the local leaders in the first of what will possibly be a series of public informational forums about a potential merger.
"Facts are what we're going to talk about today. We hope to share these facts with you, and we hope you can help us to disseminate that information throughout the community," Hamilton said.
Sentinel photo by FRANK JOST
An ambulance idles outside of the Emergency Room on Thursday after delivering a patient to Lewistown Hospital. Community officials and business leaders met with hospital representatives Thursday to ask questions about a potential merger between the hospital and an outside medical group.
Reasons for partnership
Hamilton began with a presentation of statistics provided by the Pennsylvania Health Care Containment Counsel, indicating that the hospital has seen a steady decline in its inpatient market since 2004.
The statistics state that the hospital's market share in Mifflin County has declined from 69 percent in 2004 to 58 percent in 2011. Similarly, the hospital's market share has fallen more than 10 points in Juniata County for the same time period, from 58 percent down to 46 percent.
Hamilton explained that the statistics are representative of the hospital's loss in physician specialists for the last seven years, resulting in reduced medical services available to the community and reduced income for the hospital.
Hamilton also explained how this and other factors have led the hospital's board of directors to consider the possibility of a merger.
"The decline in market share has prompted patients to seek care elsewhere. We've lost specialists and we've had tremendous difficulty in recruiting specialists," she said.
"To get a physician here, the up front costs can be as much as $200,000 to pay for their relocation expenses, pay off their school loans and offer an initial stipend. This is what the competition offers everywhere else, and we need to be able to offer the same," Hamilton said.
By the numbers
Hospital Vice President of Finance/CFO Randy Tewksbury also gave a presentation on the hospital's overall financial picture.
"As of June 30 our Fiscal Year 2012 revenue is up slightly from Fiscal Year 2011, by about $1.6 million, but we are nearly $5 million below the projected budget revenue for this year," Tewksbury said.
Tewksbury attributed the revenue shortfall in part to a decline in the number of patients receiving care at the hospital. He cited figures indicating a 6 percent decline in patients for 2012, a 10 percent decline in patients in 2011 and a 9 percent decline in patients in 2010.
"What we're seeing here is the ongoing change in health care where patients are spending less time being treated in hospitals and more time being treated at home," he said.
Tewksbury also cited an increase in the hospital's operating expenses, which are up more than $5 million from FY 2011 to nearly $115 million for the current year. He also reviewed several other key areas in which rising costs are impacting the hospital's bottom line, such as employee pensions and developing infrastructure.
The Affordable Care Act
Hamilton provided additional details on how the hospital believes it will be impacted by the Affordable Care Act - also known as "Obamacare."
"Good, bad or indifferent, this is where we're going to see the biggest change. Our hospital is going to be tasked with managing the health care of an entire population," she said. Previously, Hamilton has estimated the size of that population to be about 80,000 people throughout Mifflin, Juniata, Snyder and Huntingdon counties.
Hamilton said that under the Affordable Care Act, the hospital is going to be responsible for managing a person's care for up to six months after they've received treatment. Where this can become problematic, she said, is in the case of chronic conditions, such as diabetes.
For example, a person whose diabetes is out of control receives treatment at the hospital, but then returns to the hospital in less than six months because their diabetes is out of control again - in that instance, Hamilton said, there will be no additional reimbursement given to the hospital under the provisions of the Affordable Care Act.
"This is going to cause a great strain on hospitals around the nation. For us, this will lead to a decline in revenues and a continued decline in the overall market share," she said.
Hamilton also listed several of the key components the hospital is seeking in any proposed merger with another health care organization.
"We want to keep this hospital open and we want to keep all of our employees here. We want to keep all of our doctors - employees, contract and independent - and we want to keep the School of Nursing open," she said. "All of these are deal breakers. If in the negotiation process another party says they can't do any one of these, then we're not going to be interested in what they have to offer."
Hamilton also emphasized that the hospital has not made any decision yet as to which outside medical group the hospital might select as a partner, and she said there is a multi-step approval process that needs to occur before any final decision is made - a process that will likely take months.
Questions and answers
After the presentations, Hamilton took questions from a number of the community members in attendance. She emphasized that due to confidentiality agreements the hospital has entered into as part of the proposal process, she would not be able to give specific information regarding any of the potential partner groups at this time.
Q: How does Lewistown Hospital's trend in declining market share compare to that of other hospitals?
Hamilton: It is the same trend for community hospitals around the nation - in varying degrees, but in many cases hospitals have closed their doors. (Our situation) is not due to poor management, although it is easy for some to say that it is. We've had a number of outside sources tell us we are actually managing the hospital very well, and we fortunately are in a position of strength that makes us more attractive to a potential partner.
Q: Over the course of the last 30 years there has been a growing level of competition with Geisinger Medical Group - has that been a factor in the loss of patients?
Hamilton: Yes, certainly, but it's not just with Geisinger. We've also lost patients to Hershey, Mount Nittany, Evangelical and others. It is highly dependent on the diagnoses for the patients and the services a hospital can provide. There is a lot of competition for patients.
Q: When negotiating with these other groups, is the hospital seen as being an attractive option for them?
Hamilton: Yes, very much so, particularly in light of the current economic market.
Q: What else is there that makes this a good deal (for Lewistown Hospital)?
Hamilton: We want to seek a partner that is going to help us grow and remain strong as a hospital. We're not looking to partner with just another hospital - we're looking for a group that has an integrated health care system, that already has a system in place for managing health care populations.
At the beginning of the proposal process, there were 13 interested parties. That funneled down to about 10, and we ultimately received 5 proposals. Some of those parties are for-profit, some are not.
Q: What type of local autonomy do you see the hospital losing in a partnership or merger?
Hamilton: Well, it's going to change, and that certainly is one of the points of our negotiations. It (the hospital's authority) likely will not remain fiduciary, but will more likely become advisory in nature. We certainly want to have at least one position on any advisory board within any group we would enter into an agreement with.
Q: How many specialists do you feel we need to regain a higher level of the market share, and what kind (of specialists)?
Hamilton: That is based on the needs of the community. We don't foresee doing neurosurgery or heart transplants. B we do need specialists in neurology, orthopedics, pulmonary medicine, gastrointestinal medicine and others. We've compiled rosters of what we'd like to have, and we'd like to add about 15 specialists.
Q: Is there enough work here to keep that many doctors busy full-time?
Hamilton: Yes. Our population is not growing, but it is remaining stable.
Q: How much money is needed to achieve the vision of the future in which everything works out the way you hope it does?
Hamilton: We'll need $100 million.
Q: Are there any examples in the past year or two of situations similar to ours (Lewistown Hospital), and how have they worked out?
Hamilton: Yes. Bloomsburg, Shamokin ... there've been several. In each case, the 'parent organization' in the merger has learned a lot from dealing with the state Attorney General's office, and we think that's going to work in our favor. Moving forward, we plan to take a team of people to see some of these other examples and how they're succeeding.
Additional information about Lewistown Hospital, the Lewistown Healthcare Foundation and its board of directors is available online at www.lewistownhospital.org.