Hospitals say new agreement isn't a merger

The two hospitals serving the Flathead Valley are now more closely aligned after the governing boards of North Valley Hospital and Kalispell Regional Healthcare voted in favor of a new collaborative affiliation last month.

The agreement, set to take effect Jan. 1, 2016, follows more than two years of exploratory discussions on whether working jointly would improve access, quality and efficiency of care.

North Valley Hospital chief executive Jason Spring said the new relationship isn’t a merger. Rather, he describes it as a move by North Valley Hospital from being independent to interdependent.

“A merger is typically bringing together two organizations and they become one,” Spring explained at a press conference Monday at Kalispell Regional. “That’s not really what we’re doing here. We’re trying to strengthen our ongoing relationship and still maintain the facilities we have in our community.”

Kalispell Regional Healthcare is the parent organization and North Valley Hospital will now fall under that umbrella. Both hospitals will retain their own boards.

“We’ve become part of the [Kalispell Regional Healthcare] system,” Spring said. “Ultimately our financials role up into the system, but we still will maintain separate financials.”

North Valley will keep its name, and satellite clinics at both hospitals will remain under their current brand.

Velinda Stevens, chief executive officer of Kalispell Regional Healthcare, said Monday that the hospitals already collaborate on 70 percent of services provided with physicians often working in both facilities.

“It’s not going to be that much different,” she said.

She said consolidation tends to be happening more often in health care since the passage of Obamacare.

“Just like in the insurance industry, where there used to be 50 insurance companies and now, I think it’s going to be down to four main ones pretty soon,” she said. “There’s massive consolidation going on after Obamacare in the provider’s side, too.”

Patients aren’t likely to notice any changes, Spring said, other than the possibility of a few more services available.

Ultimately, Spring said, the affiliation is going to help both organizations better address overall population health and streamline workflow.

“Collaboratively, we can do that a lot better than we can independently,” Spring said. “We’re working with the same population. We already share so many physicians and lots of services that we think we can be much more effective in that role than we can by trying to do it independently.”

“This formalizes what we’ve been doing for a long time,” he added. “It makes it a little easier to move around some of the regulatory and contractual relationships that we have with each other. This will make it easier for us to begin to say ‘How can we work together’ and not spend three months negotiating a contract.”

More consistency in medical records is another area that will be streamlined.

“Right now our medical records are different,” Stevens said. “They do not talk to each other well and that’s going to change over the next couple of years, which will be very beneficial for all the patients in the valley.”

North Valley Hospital currently employs about 400 workers while Kalispell Regional Healthcare employs about 2,700. 

For now, each hospital will maintain their own payrolls. An employee at North Valley will continue to receive a check from North Valley, Spring said.

“Initially, they’ll have a check from North Valley Hospital,” he said. “We’re on different information systems and different payroll systems.” 

“I wouldn’t say that would never change,” he qualified, however.

As a part of the agreement, North Valley will remain a nonprofit, maintain its Planetree philosophy of care, and keep its status as a critical access facility. Spring said the North Valley board worked to keep those attributes in place.

“Kalispell worked very closely with us to develop something that met our needs but also helped us move into what we think is the future of health care,” Spring said.

Donations to the North Valley Hospital Foundation will continue to stay within the hospital system.

“Unless a donor directs it otherwise,” Spring said. “Our donors have been very supportive of this. They like the idea of seeing us leveraging the two organizations together to be able to really deliver health care seamlessly across the valley.”

Both organizations shot down the notion that the new affiliation creates a monopoly in the local health care market that could drive up costs.

“Your typical market principles don’t seem to apply in the same way they do in typical industries where competition helps drive the quality and cost of things,” said Tagen Vine, president at Kalispell Regional Healthcare Foundation. “Health care responds differently to those kind of pressures.”

“We just want to work together to take care of each other,” he said. “If we can keep that local governance and control of our health care decisions being made here locally instead of out of the state, then we’d like to look at ways to collaborate with agencies and organizations in Montana that have the same philosophy.”

Some key components of the agreement include:

• Continuing the current scope of services provided by North Valley Hospital, including the Emergency Department; Obstetrics (Delivery); Inpatient and Outpatient Medical/Surgical procedures; and ancillary services that directly support these service lines;

• On an annual basis for at least five years, completing an annual report on the progress and community benefits of the affiliation and publishing that report to the communities within the Flathead Valley;

• Continuing to operate North Valley Hospital as a separate critical access, general acute-care hospital;

• Maintaining North Valley Hospital’s Board of Directors while creating shared governance by having board members of each organization serving on the other organization’s board;

• Maintaining the North Valley Hospital Foundation reporting structure to the North Valley Hospital Governing Board, along with its focus on north valley philanthropic efforts; and

• Enhancing the recruitment and sharing of physicians and other clinical staff.

Both boards will have to approve the final affiliation agreement.

To learn more about the organizations, visit kalispellregional.org.