Gaylord, Mich. — The Otsego Memorial Hospital (OMH) Board of Directors has decided to explore strengthening its relationship with Munson Healthcare.
OMH CEO Tom Lemon said the Board remains fixed on positioning the hospital for a strong and successful future, ensuring the right mix of close-to-home health care services in Gaylord and surrounding communities for years to come.
“The OMH and Munson Healthcare Boards have approved a non-binding agreement to proceed with the development of an integration plan that would permit closer affiliation between the organizations for the Boards’ future consideration,” he said. “The OMH Board strongly believes that a strategic partnership with Munson Healthcare system could provide the hospital access to the resources needed to realize its future goals.”
OMH first affiliated with the Munson Healthcare system in 2006. During the past 11 years, the organizations have worked together to strengthen cardiology and oncology services in Gaylord and throughout OMH’s growing service area. Joint planning and shared physician recruitment activities have allowed OMH and Munson Healthcare to partner, reducing costs and enhancing overall outcomes.
While the future of health care legislation remains unknown and many rural community hospitals across America are struggling to survive, OMH is in a strong position with high quality clinical services and sound financial performance, making this an ideal time to explore closer integration with the Munson Healthcare system.
OMH Board President Mary Sanders said this integration will create an efficient structure for coordination and governance, and maximize capital and operating resources not readily available to independent organizations.
“The delivery of health care continues to change rapidly, and it is becoming critical for hospitals to be tightly integrated into a larger health system to support new accountable care models, requirements for bundled payments, demands for increased coordination of care between providers, and future responsibilities for population health management,” she said.
Munson Healthcare President and CEO Ed Ness said exploring a closer integration makes sense at this time for both organizations.
“Otsego Memorial Hospital is a great asset for Gaylord and consists of a fiscally strong and vibrant community hospital and medical group,” he said. “Our goal is to continue to provide the Gaylord-area residents the type of care they need close to home. In these changing and challenging times, there are things we can do together to enhance services for the region.”
The non-binding agreement allows leaders from Munson Healthcare and OMH to move into a “due diligence” phase. During this phase, leaders will exchange pertinent information related to planning for full integration and identify any opportunities or challenges. This includes information about human resources, facilities, equipment, agreements and financial records. Teams will also negotiate a final agreement and seek all necessary approvals for the integration.
As OMH and Munson Healthcare leaders have discussed the potential of a fully-integrated relationship, the concept of establishing an Eastern Region of Munson Healthcare has emerged. The Eastern Region would be comprised of residents living in the communities served by both OMH and Munson Healthcare Grayling Hospital.
Coordinating health care providers and service planning through a regional approach will enable OMH and Munson Healthcare leaders to better initiate and sustain care models to serve patients in both communities more efficiently and close to home whenever possible. By combining efforts in the Eastern Region, OMH and Munson Healthcare can explore offering services that otherwise could not be delivered based on the size of each hospital’s individual community. Operating as a larger region will also help recruit and retain the best talent and will allow for expanded service offerings.
Lemon said under any agreement the OMH Foundation will continue to fundraise to benefit the hospital and its programs and services.
“All donations will continue to be used as intended by the donor. That has always been the case and will not change,” he said. “That is our commitment to the community and to our donors.”
Contact:
Foundation and Marketing Director
Otsego Memorial Hospital
Office: 989-731-2342
Alternate: 989-731-2230
Frequently Asked Questions
What Is A Non-Binding Agreement
A non-binding agreement, or term sheet, is a legal document that sets forth the basic terms and conditions under which full integration will be made. A non-binding agreement serves as a template to develop more detailed legal documents. A non-binding agreement lays the groundwork for ensuring that both parties involved in a business transaction agree on most major aspects of the deal up front, including basic information surrounding any involved assets as well as financial information, what, if anything, is excluded from the integration or any items that may be considered requirements by both parties.
What Is Due Diligence and How Long Will It Last?
Due diligence is an inspection period, similar to what most people go through when they are purchasing a home. During due diligence, both organizations have an opportunity to review and verify information in order to ensure the proposed details of the agreement are as intended. This would include a physical inspection of facilities, review of records and agreements, and analysis of all hospital assets and liabilities, as well as any other items that could affect operations after full integration is completed. OMH and Munson Healthcare are just beginning the due diligence phase. The due diligence process could take several months with both sides exchanging and reviewing information necessary to complete any proposed integration.
What Other Hospitals are Part of the Munson Healthcare System?
Other fully integrated hospitals in the system are Munson Healthcare Cadillac Hospital, Munson Healthcare Charlevoix Hospital, Munson Healthcare Grayling Hospital, Munson Healthcare Manistee Hospital, Munson Medical Center (Traverse City), and Paul Oliver Memorial Hospital (Frankfort). Munson Healthcare also has affiliate relationships with Kalkaska Memorial Health Center and Mackinac Straits Health System (St. Ignace).
Is Otsego Memorial Hospital Facing Challenges?
No, OMH is a financially strong organization and a valued partner in the Munson Healthcare system. The hospital boasts an effective medical staff, a solid reputation for quality and patient safety, and vigorous support from the communities it serves – all of which are benefits to Munson Healthcare’s regional health system. As with all rural hospitals, OMH faces the same uncertain economy, declining reimbursement, increased regulation, and unfunded mandates. However, OMH has remained viable though many of these changes. OMH leadership believes that it is time to take the next step to ensure sustainability for the long term, before being faced with a crisis. And, a strong partner like Munson Healthcare that is willing to invest in health care close to home is the wisest solution to sustain the hospital’s continued success.
What Is OMH's History with Munson Healthcare?
Munson Medical Center and the hospitals of Munson Healthcare have an 11-year history of regional clinical collaboration with OMH. The OMH Board first approached Munson Healthcare in October 2006 about becoming an affiliate of the Munson Healthcare system.
Did the OMH Board Explore Other Options or Consider Affiliation with Any Other Hospital Systems Besides Munson Healthcare?
No. The OMH Board is exploring options with Munson Healthcare for multiple reasons. Building on the close relationship and integration we already have just makes sense. Munson Healthcare already supports care delivery at OMH through regional clinical quality initiatives, providing pathology and reference laboratory services, and bringing visiting specialists in cardiology and oncology to Gaylord and surrounding communities. Munson Medical Center in Traverse City is the regional referral center for specialized services including high-level cancer and heart care and neurosurgery. Munson Medical Center also has the region’s only Level II Trauma Center and the only Neonatal Intensive Care Unit in northern Michigan. In addition, Munson Healthcare has a 30-year history in northern Michigan and a demonstrated commitment to working with local hospital boards to keep health care services close to home.
Is Munson Healthcare Big Enough to Ensure OMH's Future?
The nine hospitals and other entities in the Munson Healthcare system represent nearly $1 billion in revenue and are an established and respected regional system that serves northern Michigan with sustainable, high-quality and close-to-home services. Munson Healthcare is also the largest employer in northern Michigan.
Will OMH Continue to Remain an Inpatient Hospital?
Yes. OMH serves a year-round community in addition to seasonal residents. OMH provides both inpatient and outpatient services that are critical for Gaylord and surrounding communities, and that will not change.
Are Patients Transferred From OMH to Munson Medical Center on a Regular Basis?
Yes, patients are transferred to Munson Medical Center in Traverse City from all around northern Michigan on a regular basis. This includes patients from OMH. Munson Medical Center is a regional referral center and represents the closest care to home for some conditions. It is important to remember that patients and physicians always have the final say when referral is necessary. In emergency situations, patients are always transferred to the medical facility that is best able to address their needs in the shortest time possible.
Will OMH Continue to Fundraise During This Time?
The OMH Foundation will continue to fundraise to benefit OMH and its patient programs and services in Gaylord and surrounding communities. All donations will continue to be used as intended by the donor. That has always been the case and will not change. That is our commitment to the community and to our donors. The OMH Foundation will also continue the current $4 million capital campaign to renovate and expand the hospital’s emergency department, surgical services and ambulatory care areas. The expansion will bring additional space to house new technology and enhanced privacy and safety for patients. The expansion and renovation is expected to break ground summer 2017.
What are the Benefits of Full Integration with a Larger Health Care System?
Health care is changing rapidly, and it is becoming critical for smaller rural hospitals to be tightly integrated into a larger health system. New models of accountable care, looming requirements for bundled payments, the need for increased coordination of care between providers, and future responsibilities for population health management all create an environment in which tighter integrations with larger health systems are increasingly important. Being a fully integrated member will also enable OMH to have conversations with other Munson Healthcare hospitals, including Munson Healthcare Grayling Hospital, on how to best serve the patients through a regional approach. By combining efforts in the Eastern Region, OMH and Munson Healthcare Grayling Hospital can explore offering services that otherwise could not be delivered based on the size of each hospital’s individual community. Closer collaboration could also help recruit and retain the best talent.
Why Now?
OMH’s strong clinical quality and sound financial position make this the best time to explore options from a position of strength. OMH is a valued community resource and the OMH Board is committed to taking the steps needed to ensure it remains strong for many years to come.
What Input Will the Community Have in This Process?
The OMH Board of Directors has just announced its decision to explore full integration with Munson Healthcare. Over the coming months, both organizations will work to more clearly define the steps needed to secure the hospital’s vision for local health care. Right now, it is too early in the process to provide any specifics. However, questions and comments from the community are valued and will be reviewed and answered.
What Does This Mean for OMH Employees and Medical Staff?
No changes are being made. All employees will continue to maintain their current roles, operating structure and contracts. Maintaining strong local health care means maintaining a strong local health care team, so recruiting and retaining the best staff and medical staff remain top priorities.
Will I Still Be Able to See My Same Physician?
Yes. OMH will continue to operate all of its locations as always. No changes are being made and residents can be assured that OMH and Munson Healthcare are committed to maintaining high-quality care close to home.
Will the Hospital Change Its Name?
OMH and Munson Healthcare are just beginning the due diligence process. Right now, it is too early in the process to provide any specifics. However, questions and comments from the community are valued.