New River Medical Center prepares for affiliation change

The Monticello-Big Lake Hospital District is a few short days away from history. New River Medical Center becomes a CentraCare Health Systems affiliate April 1.
A small group of community members learned about New River’s affiliation plans with St. Cloud-based CentraCare during a final public meeting March 21.
New River changes its name to CentraCare Health Monticello next Monday.
Last Thursday, hospital administrators from both organizations provided a final review of the hospital lease and affiliation process and answered questions.
”It’s moving along,” said New River Medical Center Administrator Mary Ellen Wells.
Wells opened the meeting with a telling observation: The days of a small independent hospital meeting the diverse health needs of the community are gone.
“According to the American Hospital Association, in 1995, 51 percent of the nation’s hospitals were stand-alone,” Wells said.
Two years ago, that number had dropped to 13 percent. “Now, it’s even lower,” she said. “It’s almost impossible to go it alone, and it’s very difficult for small organizations to exist.”
Wells said recent health care industry changes, competitive pressure to provide physicians and services, access to financial resources and the need to guarantee the long-term viability of local health care were key factors that compelled the New River Board of Directors to research affiliation with another hospital system. After establishing a “must-have” list of criteria and using a two-phase process, an affiliation task force recommended and the board eventually selected CentraCare as a partner.
CentraCare has a history of supporting health care in the community, said Dr. Terence Pladson, president and chief executive officer. “This is a strategic affiliation,” Pladson said. “We’ve been developing relationships here for 20 years. You are right in the region where were,” he added, referring to CentraCare’s kidney dialysis program in Big, Lake, St. Benedict’s Senior Community in Monticello and partnerships in the Big Lake Clinic and the Monticello Cancer Center.
Sheldon Johnson, chairman of the New River Medical Center Board of Directors, said that CentraCare best met the list of affiliation task force “must haves.”
“The needs of the hospital district are changing all of the time,” Johnson said. “Our competition is on the cutting edge. CentraCare will take over all the district’s debt payments. There will be no more levy payments to retire.”
Johnson said the approved affiliation and lease agreements confirm CentraCare’s pledge to growing local health care services. “They are putting a lot of dollars behind a statement,” Johnson said, referring to CentraCare’s 10-year, $45.6 million commitment to invest in locally based health care facilities. Johnson said if a lease agreement purchase option occurs, the CentraCare Health Foundation or a locally operating arm of that foundation will write out a $2 million check. “The entire district will benefit,” he said. “We’ll be the benefactors.”
New River Medical Center’s administrative staff and employees have been cooperative and good to work with, said Jim Davis, CentraCare Health System’s vice president of corporate services.
Davis announced Central Minnesota Emergency Room Physicians, a sub-corporation of CentraCare Health Systems, will replace North Memorial in the hospital’s emergency room. Last year, New River’s emergency room treated 13,000 patients.
Davis also addressed the recent daylight-only operating hours restriction placed on the hospital’s helipad. “We were surprised to learn that the state doesn’t like our helipad set-up,” he said. “That’s a challenge. It’s on the top of our list. We need to see what needs to be done to make it acceptable for night landings and takeoffs.”
Davis also said CentraCare Health Monticello will form a new task force to study obstetrics and gynecology (OB-GYN) site improvements. Emergency room improvements are also planned.
“It’s a perfect time to update the existing OB area,” Davis said. “We don’t have to blow it up and start over; it just needs a little spiffing up.”
Davis also addressed the decision to make a name change. “We did a lot of research in the community,” Davis said. There wasn’t any brand equity associated with continued use of New River Medical Center,” he said. “Thirty-seven percent of the people we surveyed locally said they would never come back here [New River Medical Center] even if their doctor recommended it. The CentraCare Health part of the name describes the who, the Monticello describes the where. This is the way all of our area health facilities are branded. It’s another step.” Davis said last week new outdoor building and parking lot signage have been ordered. During the meeting’s question and answer session, Jeff Young, Monticello resident and former hospital board member, asked if a citizen copy of a hospital property appraisal would be provided as part of the affiliation due diligence process.
Davis said an appraisal was not prepared because CentraCare wasn’t buying hospital property, it was leasing.
Wells said an appraisal was not a key detail in the agreement, and Thomas Schroeder, New River Medical Center’s legal counsel replied: “This is the most common form of affiliation transaction. The hospital board and affliation task force focus was not to cash out an asset but to continue to provide health care.”
Wells and Schroeder confirmed that CentraCare could buyout the lease with New River starting in 2016.
“That would be considered rent paid, and would equal the district’s debt,” Schroeder said. Young also showed a layoff notification letter received by one of his neighbors who is employed by New River Medical Center as a member of the American Federation of State, County and Municipal Employees (AFSCME) bargaining unit.
Young was critical of the formal and technical wording contained in the March 11 letter, which was written by Kathy Vos, director of human services.
“It was poorly written,” Young said, referring to the letter, which stated all New River employees would be separated from employment and offered letters  sent by CentraCare.
Employee layoffs or employment separations would become effective at 11:59 p.m,. March 31, the letter stated, the day before the affiliation and lease agreement becomes effective. Davis addressed Young’s concerns. “We spoke to all New River Medical Center employees,” Davis said.
“There will be no pay cuts. If an employee is at below market-rate pay scale, they will be brought up.” Davis said. “If an employee is currently at particular pay scale, they be held there until the market catches up.”

Contact Managing Editor Tim Hennagir at tim.hennagir@ecm-inc.com

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