Morrow County Hospital Board President Patrick Drouhard noted that it was after 18 months of research that the hospital board passed a resolution Wednesday, May 8 at a public meeting at Cardington High School Auditorium.
The resolution is to “enter into an Asset Purchase Agreement with Morrow County Hospital, OhioHealth Corporation, Morrow County Hospital Health Services, Inc. and OhioHealth Physician Group, Inc.”
Before discussion and passing the resolution, Drouhard said the agreement turns over the four primary care physicians’ practices the hospital owns to OhioHealth along with those physicians’ physical assets. The agreement also states that if the hospital is unable to remain open, “Ohio Health will design, construct and operate an ambulatory healthcare facility in Morrow County.”
FINANCES
The reasoning for this agreement, Drouhard said, is that the action will boost the bottom line of hospital finances by $2 million each year going forward. That is because the physicians are currently employed by the hospital at a cost of more than $2 million each year to operate the primary care practices at Northfield, Cardinal Center, Cardington and Mount Gilead.
The move will also keep the hospital open going forward and give OhioHealth the ability to recruit doctors and replace doctors as they leave or retire. Having the Ohio Health name will be an advantage in recruiting doctors.
After outlining the advantages, Drouhard opened the floor to the ECG Management Consultants who explained the process by which they made recommendations to the board for accepting the OhioHealth agreement.
Hector Torres of ECG gave an overview of healthcare industry trends and spoke about the consulting firm’s research and assessment of the local healthcare situation in Morrow County. He also explained the reasons the consultants recommended OhioHealth over Avita Healthcare System, the other healthcare system that had shown an interest in having an association with Morrow County Hospital.
LOCAL TRENDS
Trends they observed in Morrow County that followed national trends were: lower reimbursements from more Medicare and Medicaid patients (the hospital relies a lot on older patients,) the county is surrounded by seven hospitals in fairly close proximity, patients are choosing other facilities more often and the population of the county is stagnant and aging.
Other factors of concern are: primary care and specialist physicians are hard to attract to the rural area and the emergency department is unsustainable due to low volume. Because of these factors patients are going elsewhere which makes higher specialties such as cardiology difficult to keep.
ECG consultants projected that the hospital can be sustained with the purchase of the physicians’ practices so that the $2 million they are costing can be used to maintain services such as the emergency department.
WHY NOT AVITA?
During the public question & answer session, several of the questions concerned why Avita Health System was not more seriously considered. It was noted that Avita had brought in $140 million in revenue that was income that stayed in their communities. That system appears to be growing, while MCH under the leadership of Ohio Health has been shrinking.
Torres answered that the figure of $140 million is exaggerated or questionable and that debt for the Avita stood at $80 million. When the consultants “peeled back the layers of Avita’s financials,” they found OhioHealth to be stronger and more stable.
Dr. Grant Galbraith said that “times have changed” for healthcare with the requirements of more technology and more regulations. More support is needed by a larger healthcare organization. He observed that it is valuable to have the support of OhioHealth where there is a good relationship with physicians.
LEVY
Questions were asked about the present hospital levy. It was answered that it is current through 2020, payable through 2021. It provides about 5 percent of the total hospital income.
Former hospital CEO and present OhioHealth Vice President Cheryl Herbert said the levy is important in keeping up the physical plant such as the $10 million air/heating unit that was installed a few years ago. She said that OhioHealth’s agreement that began in 1984 only provides management for the hospital and has not made any monetary investments in MCH.
Morrow County Auditor Pat Davies said after the meeting that the economic impact and financial stability of healthcare and the hospital situation is very important for the county.
“The hospital board has tried to do their due diligence in seeing how Morrow County Hospital grows with the county,” Davies said. “We are optimistic that the solution they came up with will support the economic growth of the county by supplying all of this community with health care that is top of the line.”
