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Nathan Baker

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Down to 6: Wellmont still looking for partner

June 12th, 2014 8:23 am by Nathan Baker

Down to 6: Wellmont still looking for partner

Six of nine potential suitors remain for a partnership or merger with regional health care provider Wellmont Health System, but the final decision likely won’t come until at least December.

An emailed media release from the nonprofit said its board of directors and Kaufman Hall & Associates, the consulting firm hired to find another system with which Wellmont will affiliate, are halfway through the search and analysis process, having started in January.

Out of nine health systems that answered Wellmont’s request for proposals earlier this year, three are no longer under consideration, having failed to meet the specifications the board set for the new partner.

“We expect several more months of research and discussion are needed before our board will determine final recommendations this fall,” Board of Directors Chairman Buddy Scott stated in the release. “This takes considerable time and effort given the substance of these proposals and the importance of the task.”

Wellmont leaders won’t reveal the identities of the interested systems, citing confidentiality agreements, but in January, CEO Denny DeNavarez said the system is seeking a larger partner to help share the costs of unpaid bills for service, declining federal reimbursement levels and mandated implementation of an electronic medical records system.

The ideal partner would be another nonprofit health system, Scott said then, but the board will leave room for a profit-driven company to take the reins.

As they did in January, Wellmont’s leaders touted the financial stability of the system, saying the time is right to find a merger partner while the country’s health care system is undergoing rapid change, from a fee-for-service model to one that instead encourages efficiency and consideration for savings.

The health care provider contributed an $86 million benefit to the communities in its coverage territory, including $70 million in uncompensated care, during the previous fiscal year, and enhanced its hospitals and equipment, the release stated.

In October, Wellmont closed the 70-bed Lee Regional Medical Center in Pennington Gap, Va., pointing to low patient volume and unreliable on-call coverage from physicians as the main drivers for the decision.

Through last year, the company opened urgent care facilities in Kingsport and Bristol, specialized heart treatment clinics in Elizabethton and Lebanon, Va., and moved its Johnson City cancer institute to a new, more permanent location in the medical corridor in March.

The health system is also currently embroiled in tense negotiations with insurance provider UnitedHealthcare for a service reimbursement agreement.

The insurance company claims Wellmont is being obstinate, and refusing to embrace the inevitable change of the health care landscape, while the hospital company has said United is offering unreasonable rates.

The deadline for a renewed contract has now been extended twice, with the latest date approaching next week on June 18.

If Wellmont does announce a merger or partner this year, it will be one of a litany of other smaller systems seeking shelter from efficiency-driven mandates under the umbrellas of larger companies.

The board of directors expects to begin analyzing the proposed partners in July, could reach a decision on whether to forge an agreement in the fall and sign a formal contract in December, according to a timeline laid out by company leaders.

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