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May 2009
The following FAQ's were provided by Haywood Regional Medical Center and Westcare Health System management regarding the recently-announced affiliation with Carolinas Healthcare System. They are reproduced by permission.
You can download a pdf copy here.
Q: What is a JOC?
A: A Joint Operating Company (JOC) is formed through a Joint Operating Agreement (JOA). The JOA allows the hospitals to retain separate boards of directors but turn over management to a separate company. The JOC structure will make it possible for the hospitals to coordinate services and expertise, construction needs, and the purchase of major equipment. In a nutshell, working through a joint operating company will help our two hospitals integrate in order to deal with the limitations and challenges of conducting business as individual healthcare entities.
Q: What does this mean to the relationship we have with Mission and our participation in the WNC Health Alliance?
A: Our affiliation and future management agreement with Carolinas HealthCare System (CHS) should have no impact on our relationship with Mission and is in no way a reflection on Mission. Our relationship with Mission spans decades, and we look forward to continuing to utilize Mission’s healthcare services. Mission is an excellent organization and has done much to benefit the Western North Carolina community.
Q: Why was Mission not selected? Why was Carolinas HealthCare System chosen over Mission?
A: Mission put forward an excellent proposal. CHS brings to the table a depth of experience that will best benefit the patients of HRMC and WestCare.
We will continue our referral relationship with Mission as our region’s tertiary care hospital. We believe, and our study of similar affiliations across NC confirms, that the JOC structure, combined with the management relationship with CHS, will allow us to increase access, lower cost to the patients and improve patient outcomes.
Q: Will we be expected to send patients to Charlotte?
A: No. Carolinas HealthCare System has made it clear that our doctors will not be expected to send patients to any CHS facilities. Mission has always provided excellent services for those patients that could not be treated at our facilities. We expect that to continue and feel confident that our physicians will be free to refer patients to where their needs will best be served and patients will be able to choose where to receive their care.
Q: Why is this structure better than continuing as stand-alone hospitals? Why not go it alone?
A: The healthcare business environment is growing more complex and difficult every year. Stand-alone hospitals have to meet the same standards as those of large hospital systems that have access to substantially more resources. Today, more than 55 percent of all the hospitals in the US and more than 75 percent of the hospitals in NC and SC are part of systems, and the trend continues to grow. We believe the time is right for us to become part of a larger, integrated healthcare organization to benefit the people we serve.
Q: Who will own our hospital?
A: The assets of WestCare and HRMC will remain separate, and control over these assets will remain with the respective boards of WestCare and HRMC. This is not a merger, and the ownership of the hospitals will not change.
Q: Does the Haywood County Board of Commissioners need to approve the agreement?
A: We certainly want the Board of Commissioners to agree with our decision, but whether formal board approval is required is a question that has not yet been determined.
Q: What happens to the boards of HRMC and WestCare once the joint operating company is formed?
A: The boards of HRMC and WestCare will continue to exist as they have in the past, but with a different role. Some of their current responsibilities will be delegated to the board of the JOC, but certain responsibilities will remain with the existing boards. All of the members of the JOC’s board will be local representatives. We do not anticipate that CHS would have membership on the board.
Q: How will this impact our doctors?
A: We believe this will be a very positive step for our doctors. By joining with CHS, we will be able to expand existing service lines and develop new programs. The doctors on the Joint Study Committee have made positive statements about joining with CHS and feel that it will benefit their practices.
Q: Is CHS going to try and buy up our physician practices?
A: No. Some physicians may choose to join Carolinas Physician Network, the employed physician group of CHS. CHS will be helping us recruit and retain physicians in our local community. CHS has tremendous experience in managing physician practices and we see that as one of the strengths they bring to the relationship. The vast majority of our physicians are independent and are free to choose their practice relationships. Physician practices can remain independent or become part of a new network of physicians organized under the new joint operating company. Also, Physicians may choose to join other physician networks including the practice network owned by CHS, Carolina Physicians Network, but that will be the free choice of our physicians.
Q: Will our patients now have to deal with Charlotte doctors for their care?
A: No. Patients and their doctors will continue to be able to choose where they go for care.
Q: Why is this good for the community?
A: Healthcare is “scalable.” A larger organization has more economies of scale and deeper skill sets to improve healthcare delivery. By forming this joint operating company, we will be enhancing services, lowering costs to patients, and improving access to healthcare services.
Q: What about the activities and organizations our hospital supports in the community? Will CHS continue that kind of support?
A: We expect no change to the civic roles the hospitals have played in their communities. All of the hospitals currently part of Carolinas HealthCare System are safety net providers and are committed to the same mission, vision and values to which HRMC and WestCare are committed.
Q: What if I have donated money to the HRMC or WestCare Foundation? Where will that money go?
A: The funds donated to those foundations will continue to be used by those foundations to support their respective hospitals. In other words, the money is going to stay where it is and be used for the benefits as initially intended.
Q: Will the cost of care to our patients increase as a result of the JOC?
A: There is growing cost pressure across the board in healthcare and one of the ways hospitals in other parts of the country have addressed that pressure is by affiliating with systems to take advantage of what these systems offer. This approach is becoming more and more commonplace and results demonstrate that the more successful hospitals are part of a large system.
Q: Aren’t we going to be lost within a large organization such as CHS?
A: No. CHS has developed a tremendous infrastructure to support the management of the System’s hospitals. They manage hospitals from 30 beds to more than 800 and are committed to a consistent level of management for all of them.
Q: Will some services be combined and thereby will people lose their jobs?
A: A major objective of HRMC’s board in making this move is to sustain and grow HRMC’s hospital services for our community. We expect over the long term that the employment base may actually increase as the new organization develops new services and expands existing services.
Q: Will any of HRMC’s employee benefits change?
A: A major reason for selecting the joint operating company organizational structure is so that HRMC’s retirement plan would not need to be changed.
Salaries and benefits have always been subject to annual reviews at HRMC, and from time to time over the last few years changes have been made. That process will continue. At this time it is not anticipated that HRMC’s retirement plan will change.
Q: When can we expect to know more details about what is going to happen?
A: A Joint Study Committee will be meeting regularly over the next few months to develop the JOA and negotiate the agreement with CHS. Once its work is complete, the boards of HRMC and WestCare will consider the Committee’s work and approve the recommendations.
Q: When will this arrangement to go into effect?
A: We continue to work through the process but it will take time. Our goal is to have most of the work completed by October 1, 2009.
Q: Will the CEOs of the two hospitals remain the same or is CHS going to bring in its own management team?
A: We are fortunate to have two outstanding individuals serving as CEOs of their respective facilities, and they have established strong management teams. The new organization will have a single CEO. The decision as to who that will be will be made over the course of the next few months. Whatever the decision, it will be made collaboratively by local representatives and representatives from CHS.
Q: What does a management services agreement with CHS mean?
A: It provides the new organization with all the experience and resources of a $4.5 billion organization to help our hospitals increase access, lower patient costs and improve patient outcomes. CHS presently manages 25 hospitals and has developed a significant infrastructure to support those hospitals. The management agreement makes that infrastructure available to us. As stand-alone hospitals those resources are out of reach.
Q: Who is going to be the management of the new organization?
A: Both hospitals have strong management teams and we are very proud of that. Over the next few months decisions will be made about what roles these individuals will play in the future organization. As decisions are made we will of course keep the community informed.
Q: Will we become employees of CHS?
A: No. For the vast majority of employees, your employer will not change. The senior leadership of the joint operating company will be CHS employees, but their hiring will be subject to the approval of the local board.
Q: Does CHS intend to invest CHS money into expanding local healthcare facilities, equipment and medical practices?
A: No. CHS will provide management support to the joint operating company, but there are no plans for CHS to invest in the new organization.
Q: How long are the hospitals bound by the terms of the agreement? If CHS does a bad job, can the hospitals get out of it?
A: While the decision on the length of the agreement has not yet been made, generally agreements of this nature are for a minimum of 10 years and can be terminated for cause. CHS has proposed a 15 year management agreement with renewals by mutual consent.
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