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Lee County hospital reopening is reason Ballad was created, CEO says

Zach Vance • Jan 30, 2019 at 11:58 PM

No other hospital system in the nation, much less Tennessee, is reopening or building rural hospitals, Ballad Health CEO Alan Levine told reporters Wednesday after an announcement that Ballad would re-open Lee County Regional Medical Center.

“This is what Ballad Health was created to do, and this is the benefit of the merger,” he said.

“This is why, (in our merger application), we said, ‘Without this merger, rural hospitals will close. With this merger, rural hospitals will not close.’ Note, we never committed to reopening rural hospitals, but we believe this is a major benefit of the merger. And I think anybody who is being objective, would agree with that.”

On Tuesday, Ballad Health’s Board of Directors voted unanimously to begin negotiating an agreement with the Lee County Hospital Authority to reopen the hospital in rural Southwest Virginia.

In 2013, Wellmont Health System, the entity that merged with Mountain States Health Alliance to form Ballad Health, closed Lee County Regional Medical Center, citing a lack of patients and federal reimbursements as reasons.

Three years later, the authority bought the Lee County hospital facility, with the intent of reopening it. Eventually, in 2017, the authority reached a $2 million deal with Florida-based Americore Health to have it re-opened.

Americore then used the building as collateral on a $1.5 million loan to fund facility renovations. Progress on those renovations apparently halted in mid-August 2018, Hospital Authority Commissioner Howard Elliott said in a press release.

After several missed deadlines, Elliott said the authority met with Americore on Dec. 16 to discuss an extension, but both parties ultimately opted to terminate the agreement, effective Feb. 1.

That’s when Ballad Health stepped forward with the intent fulfill its commitment to provide “essential services” in Lee County, as outlined in the Cooperative Agreement authorizing the merger.

“Those conversations quickly became a conversation about doing more and re-opening a hospital in the county,” authority Vice Chairman H. Ronnie Montgomery said in the press release.

Levine said he anticipates Ballad spending as much as $15 million on capital investments at the Lee County hospital during the next one or two years. Ballad will also be responsible for paying the $1.7 million debt incurred by Americore, according to the authority’s press release.

The plan for the hospital in Lee County, according to Levine, is to serve the unique needs of the area, which will be determined through a “community health needs assessment.”

“We build the services and programs in that hospital based on the needs of that community,” he said. “I think we all know that more and more services are moving out of the inpatient setting. So these hospitals really are becoming a hub for other types of services in those communities, whether its education, diabetes outreach, dental services.”

Becoming the 22nd hospital added to Ballad’s hospital system, Levine said the Lee County hospital will also serve a vital role in the system’s trauma network, providing a place where patients in critical condition can be stabilized.

Before he even delved into Ballad’s plan for Lee County, Levine talked about today’s rural hospital environment, saying the vast majority of rural hospitals are either shuttering or ceding local governance to publicly traded, for-profit companies.

His examples were: Tennova Health closing two hospitals in Knoxville, Asheville-based Mission Health selling to for-profit HCA  and Community Health Systems’ decision to unload most of its rural hospitals in recent years.

“There’s some real shifts going on in health care throughout the country, and it’s important for people to realize those external pressures are out there for us,” Levine said. “And they affect us just like everybody else, but while that’s been going on throughout the country, Ballad Health has been focused on doing things that are unusual in today’s environment.”

So how will Ballad Health turn a profit at the Lee County hospital? Well, according to Levine, it won’t.

“If I can crystalize for you the benefit of the merger, this is one of them: Neither MSHA nor Wellmont on their own, could sustain these rural hospitals. By merging and eliminating unnecessary duplicative services, by merging and eliminating duplicative administrative costs, by being a lot smarter with the resources we have, we now have the capacity to sustain hospitals that are not making money,” Levine said, later adding that, to his knowledge, no other hospital, nor state is doing anything like Ballad Health.

“Unicoi is not a hospital that makes money. We subsidize it. Russell County? We subsidize it ... We subsidize these rural hospitals through the generosity and kindness of the people that live in Johnson City, Kingsport, Bristol and Abingdon. Hospitals that are profitable, we use those synergies and we use that revenue to help subsidize these rural hospitals, which are critical access points.”

Without rural hospitals, Levine said people in rural communities go without health care, and eventually end up in larger, tertiary hospitals once the ailment becomes serious.

“It’s to the benefit of Johnson City, Kingsport, Bristol and Abingdon for these patients to receive the proper care as locally as possible. That helps mitigate the need for higher-acuity specialty services,” he said.

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