O'Bleness looks likely to join OhioHealth

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O'Bleness looks likely to join OhioHealth

Post by Orange and Brown »

WRITTEN BY DAVID DEWITT
MONDAY, 28 SEPTEMBER 2009 09:40

O’Bleness Health System in Athens is exploring tightening its relationship with OhioHealth Corp., and if administrators are satisfied that a closer connection would be mutually beneficial, O’Bleness may become a member hospital as opposed to the affiliate status it currently holds.

In July, O’Bleness and OhioHealth signed a non-binding letter of intent to “explore a closer, more formal working relationship,” according to a press release. The letter of intent allows for more detailed sharing of information from both organizations during negotiations.

Over the summer, O’Bleness, OhioHealth, Ohio University, the OU College of Osteopathic Medicine and associated physicians have been discussing how they might be able to work closer together to meet the health-care needs of Athens County, the release said.

“We are committed to pursuing all possibilities for sustaining quality health care in our communities over the long term,” O’Bleness Board of Directors chair James Riestenberg said at a meeting this summer. “We also want to assure that the O’Bleness Health System continues to grow and meet needs for local care.”

The 70-bed O’Bleness Memorial Hospital, a nonprofit organization, is one of nine affiliates of OhioHealth, meaning the two organizations already cooperate on clinical programs, professional education and group purchasing, while remaining independent.

Jan Jennings, O’Bleness interim administrator from October 2008 through July 2009, is helping with negotiations through his consulting firm, American Healthcare Solutions.

Jennings was enthusiastic about the possible merger in an August interview with Columbus Business First.

“We could be a good hospital, but we could be a really great rural hospital if we were a full member of OhioHealth,” Jennings said at the time. “We really want this to happen.”

Despite repeated attempts, Jennings could not be reached for comment on the earlier interview or the potential merger in general.

O’Bleness named Clifford “Skip” Young as transitional CEO while the two organizations are performing due diligence. Young is a 40-year employee of O’Bleness and most recently served as senior vice president for clinical services before his appointment. Young did not return several calls seeking comment.

As an OhioHealth affiliate, O’Bleness has worked with the organization on a variety of initiatives including the development of the Cornwell Center for Cardiovascular and Diabetes Care, the release stated.

Michael Bernstein, senior vice president and chief strategy officer for OhioHealth, was quoted in the release stressing the importance of working together.

“In today’s environment, collaboration is key to assuring quality and access to care,” he said. “We look forward to exploring closer working relationships and opportunities over the next several months.”

OhioHealth spokesperson Mark Hopkins said the organizations hope to come to a decision by the end of the year.

“We are still on track with our due-diligence process, exploring how the relationship between OhioHealth and O’Bleness might be expanded,” he said. “As you know, we don’t know what shape that will take right now. But we do know that whatever it’s going to be, it’s going to have to be a benefit to O’Bleness, OhioHealth and, of course, most importantly to people who live in and around Athens.”

The O’Bleness Development Council is set to meet today (Monday) at noon. The meeting is for members of all committees as well as the hospital Board of Directors and the Guild of O’Bleness Executive Committee. An e-mail notification of the meeting mentions that the discussion will “explore the potential benefit that a closer and stronger relationship” with OhioHealth could bring to O’Bleness.

Jennings told Business First that O’Bleness lost $6.3 million on $76.6 million in revenue in the year ending June 30, 2008, but has turned that around through a combination of increased cases and improved productivity. He said operating income was an estimated $500,000 in the year that ended June 30, part of an overall surplus of about $2.5 million for the nonprofit operation. Updated figures from the past year were unavailable.

The system could sustain that performance but doesn’t know what to expect from more state budget cuts and national health-care reform, Jennings said at the time.

Bernstein told Business First that as the economy has changed, it has become increasingly more difficult for hospitals, especially stand-alone rural hospitals.

Through the nine months ended March 31, OhioHealth had $85.7 million in operating income on $1.5 billion in revenue but lost $24.3 million overall because of investment losses, interest swaps and other non-operating items, Business First reported based on figures from audited financial statements. The system has not had an annual loss since fiscal year 2001, it continued.

Both Bernstein and Jennings said at the time that legislative changes and the economy are spurring along the possible merger. An acquisition would be accomplished with a transfer of assets, not a sale, Bernstein reportedly said.

Doctor’s Hospital of Nelsonville is already a member of OhioHealth. Bernstein reportedly said that a merger would strengthen O’Bleness’ relationship with that hospital.

“OhioHealth has clinical assets that O’Bleness could never dream of but could be plugged into at relatively low cost,” Jennings told Business First.

PAULA SONG, AN ASSISTANT professor in Ohio State University’s College of Public Health, said that rural hospitals face financial challenges greater than that of urban hospitals.

“One of the advantages of mergers is to be able to access capital and to help expand services and service lines,” Song said. “It seems like lately, and over the past few years, a lot of the merger activities have occurred between rural hospitals and systems.”


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