Local leaders cheer Mountain States, Wellmont health system merger

Zach Vance • Updated Sep 20, 2017 at 9:20 AM

When Tennessee Department of Health Commissioner Dr. John Dreyzehner rendered his monumental decision Tuesday allowing Northeast Tennessee’s two largest hospital systems to merge, local leaders applauded the outcome, which keeps hospital ownership local to the Tri-Cities.

Washington County Mayor Dan Eldridge, Johnson City Mayor David Tomita, Milligan College President Bill Greer and East Tennessee State University President Brian Noland all praised the state’s decision to unite Mountain States Health Alliance and Wellmont Health System into Ballad Health, indicating the commitments outlined in the systems’ Certificate of Public Advantage application outweighed the need for competition.

State law was changed in May 2015 to permit hospital mergers, effectively allowing hospital monopolies under specific criteria, which included heavy state oversight and a lengthy approval process.

Over the past year, Mountain States and Wellmont officials engaged in that process and ultimately won approval on Tuesday, eliminating the possibility of an outside entity coming to the Tri-Cities and purchasing either system.

“Naturally, free-market folks raise an eyebrow when they see a monopoly, but I think it has been vetted well. It’s been studied well, it’s been given more than ample opportunity for public comment, and ultimately, I think it’s going to be a good thing for our region,” Tomita said. “We would not want to see an outside buyer come in and take all that resource and jobs out of our communities in Northeast Tennessee. I’m pleased that it’s approved.”

During a press conference Tuesday, Ballad Health Chairman Alan Levine said roughly 250 jobs would be cut in the short-term through “attrition and synergies,” which he said was less than half the number of jobs Mountain States lost last year.

Levine estimated the alternative to merging with Wellmont — another hospital system taking over Wellmont’s ownership — would result in the elimination of approximately 1,000 jobs.

“The biggest projection of synergies in the near term, when I say near term is in the next two to three years, comes from the elimination of duplicative administrative jobs,” Levine said.

“If our turnover rate is 10 to 15 percent and we have a couple thousand people in the corporate structures between the two systems, it’s pretty easy to reach the conclusion that a lot of the synergies can come from simple turnover. At Mountain States, we have 500 fewer FTEs (full-time equivalents) today than we had a year ago. We didn’t lay anybody off. That happened because of turnover.”

Despite the potential of losing some duplicative jobs, Eldridge said the merger’s ramifications will have a beneficial impact on the health-care employees living and working in the Tri-Cities.

“This is very much an economic-impacting event from the standpoint of really putting us in a position to grow our local economy in a lot of different ways, and also to provide a degree of stability (by) realizing that health care (makes up) about 30 percent of the local economy of Washington County,” Eldridge said.  “It is important to provide stability to that industry sector because that is (nearly) our entire local economy. I’m really pleased to see us get over the hump with the state of Tennessee.”

Considering the history of relationships and collaborations between ETSU, Milligan and the two health care systems, both college presidents were glad the merger was approved, allowing those partnerships to continue.

Ballad Health officials also pledged to contribute at least $85 million to grow academic and research opportunities and support post-graduate health care training.

“Our region’s health-care providers can now work together, leveraging their resources without undue duplication, to provide the very best in health care to the people of our region. And despite concerns about reduced competition, the COPA will provide important consumer protection. Milligan is delighted to have partnered with Mountain States and Wellmont through the years, and we look forward to those relationships continuing,” Greer said.

Noland called Tuesday a “historic day,” not just for for ETSU, but for the region as a whole.

“Through the power of this merger, the university, in conjunction with our two partners, will be able to direct our clinical, our research and our teaching operations towards meeting the mission of serving the needs of the region,” Noland said. “From the nursing program to physical therapy to the college of medicine, there’s not an aspect of the health science infrastructure at the university that isn’t touched by this merger.”

Residencies, new subspecialties in pediatrics and clinical operations are all areas Noland said could enhanced by this merger.

“You’ll see dedicated investments in the research infrastructure of the university in excess of $8 million a year in new investments as a result of the merger,” ETSU’s president said.

Email Zach Vance at [email protected] Follow Zach Vance on Twitter at @ZachVanceJCP. Like him on Facebook at Facebook.com/ZachVanceJCP.

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