Thursday, April 26, 2012

Elk Regional Health System, Penn Highlands Healthcare Consider Linkage

A group of leaders from Elk Regional Health System and Penn Highlands Healthcare have announced that the organizations are considering the creation of a linkage, a move that will enhance each organization’s ability to recruit physicians and specialists and provide premier primary care and advanced health services to the region.

“After several months of discussion and negotiation, there is little doubt that the benefits of a linkage between Elk Regional and Penn Highlands are numerous,” said Robert O’Leary, the Chairman of Elk Regional’s Board of Directors and a member of the integration committee. “We believe that coming together will elevate patient care and will be a win-win situation for the residents of this region. We’re all very excited about the possibilities this relationship will create for the communities we serve.”

Recently, officials from Elk Regional and Penn Highlands began meeting to discuss the possibility of Elk Regional joining Penn Highlands, with the goal of allowing both health entities to work together to secure, enhance, and expand health care throughout their primary service areas and beyond.
Since talks began, groups of administrators, physicians, and board members from each organization have been meeting frequently with a well-respected consulting firm to develop an organizational structure that would not only be agreeable to both organizations, but would be in the best interests of the communities they serve.

The boards of directors for each organization have ratified a letter of intent that will allow the organizations to move forward with the creation of a linkage. The letter of intent is an important milestone in the affiliation process because it allows Elk Regional and Penn Highlands to seek regulatory approval of the proposed linkage.

Now, the process shifts into what is called due diligence, a formal process that requires full disclosure by each organization of its financial, operational, and contractual activities and obligations.

“This is important to both health systems,” said Dennis L. Merrey, the Chairman of the Penn Highlands Board of Directors. “This is a common business practice that will allow the health systems to correct any issues before creating liability for the other organization. This is typically a formality. We do not expect anything unusual to surface.”

Regulatory approval could be sought as early as November. It could take between six months and one year to obtain the necessary approval.

Penn Highlands Healthcare is a parent corporation that includes DuBois Regional Medical Center; Brookville Hospital, a subsidiary of DRMC; and Clearfield Hospital. The Penn Highlands Board of Directors is made up of representatives, including physicians, from each of the member hospitals. Merrey, the Chairman of the Penn Highlands Board of Directors, is also the Chairman of the Clearfield Hospital Board of Directors.  Raymond A. Graeca, who served as the president and chief executive officer for DRMC for 21 years, is the CEO of Penn Highlands.

As a parent corporation, Penn Highlands oversees joint efforts in areas such as the expansion of services, the acquisition of resources, and operational efficiencies.

“The linkage provides the ability to keep control of the hospitals in the hands of a local board and will also provide many community benefits,” Graeca said.  “Increased local access to physician specialists, improved quality, coordination of care and increased physician recruitment and retention are just some of the major benefits that should come from the linkage.”

Each member hospital retains its name, community base, medical staff, and board of directors. Past and future community donations designated for each hospital remain in the control of that organization and are used according to the donor’s wishes.

As various requirements outlined under the 2010 Affordable Care Act become effective, hospitals throughout Pennsylvania and the nation are forming linkages to maintain financial stability. The Affordable Care Act includes a number of mandates that will cost hospitals millions of dollars.

“Put simply, the health care landscape has and will continue to change dramatically,” said Gregory P. Bauer, the President and CEO of Elk Regional Health System. “Health care reform legislation has created a lot of uncertainty, which has prompted health care providers across the nation to explore partnering opportunities. Working together is how you succeed in today’s ever changing environment. With that in mind, we at Elk Regional feel that Penn Highlands will be a strong partner whose values match our own. I think we’ve chosen well.”

O’Leary emphasized that the Elk Regional Health System Board of Directors will maintain its focus on the health care needs of the residents in Elk and Cameron counties.

“I believe that a partnership between Elk Regional and Penn Highlands provides us with the best opportunity to secure, enhance, and expand health care in this region,” O’Leary said. “Our roots are firmly planted in our hometowns, and we want the very best for our families, friends, and neighbors. It is important to us that the community hospitals we have always relied upon will continue to be strong, stable, and financially viable for generations to come.”

Officials from Elk Regional Health System and Penn Highlands Healthcare recently signed a letter of intent that will enable the organizations to begin the process of creating a linkage. Standing, from left, are Raymond A. Graeca, the President of Penn Highlands Healthcare, and Gregory P. Bauer, the President and CEO of Elk Regional Health System. Seated, from left, are Dennis L. Murrey, Chairman of the Penn Highlands Healthcare Board of Directors, and Robert O’Leary, Chairman of the Elk Regional Health System Board of Directors.