By Thomas Beeler
March 9, 2017
WOLFEBORO — With the turn of the new year in January the formal affiliation of Huggins Hospital, Catholic Medical Center (CMC) in Manchester, and Monadnock Community Hospital in Peterborough took effect. All three hospitals are now part of GraniteOne Health.
The GraniteOne Health affiliation has been in process for some time. After an extensive period of discussion, due diligence and review and approval of the agreement by all three hospital boards, plus approval by the Roman Catholic Diocese of Manchester, a letter of intent was signed by Huggins with CMC on November 2015. CMC then signed a letter of intent with Monadnock Community Hospital in January 2016. The agreement detailing the terms of the affiliation was filed with the Charitable Trust Unit of the New Hampshire Attorney General’s Office in July 2016 and approved in November.
This affiliation marks a major change in the history of Huggins, which was founded in Wolfeboro in 1907 and admitted its first patients in 1908. From its beginning Huggins has been both a major resource and employer in the town (with over 450 employees) and, over the years, expanded its services to surrounding towns.
In 2010 it completed a major renovation of its campus, including a new main building. The renovation did not add in-hospital beds but was aimed at improving efficiency and reducing operating costs while focusing on its role as a Critical Access Hospital, a designation that, among other things, increased its Medicare reimbursement rate. “Critical Access Hospital is a designation given to certain rural hospitals by the Centers for Medicare and Medicaid Services (CMS),” according to Rural Health Information Hub. “This designation was created by Congress in the 1997 Balance Budget Act in response to a string of hospital closures in the 1980s and early 1990s.”
According to Huggins CEO Jeremy Roberge, because of economic pressures and other forces affecting hospitals like Huggins, the board of directors began looking at affiliation with another hospital as early as 2009. That was the year that ongoing losses led to closing the hospital’s maternity unit and 13 layoffs. “It is difficult for a small hospital to stand on its own,” Roberge says, for many reasons (discussed below).
One option that was ruled out early on was acquisition by another hospital or private company like Hospital Corporation of America (HCA), which owns Portsmouth Regional Hospital. Huggins wanted to maintain its own character and involvement with the community and be a partner, not a subsidiary.
The better option was affiliation with a larger entity. Even before undergoing another restructuring in 2013, Huggins held discussions with Wentworth-Douglass Health System in Dover and explored affiliation options, including the creation of a new, comprehensive healthcare network to serve both Strafford and Carroll counties. That effort ended in March 2014 with both parties agreeing that a “structured affiliation” would not be possible.
Roberge says the board held retreats to consider other options that would protect Huggins’ autonomy. The board looked at potential arrangements with every major hospital in the state.
Out of that process came the idea of exploring an affiliation with CMC. Huggins has had a “wonderful relationship” with CMC and its Heart and Vascular service since 1987. As one of several specialty services Huggins makes available to its patients, CMC provides cardiac specialty services on a part time basis, as do Concord and Lakes Region General Hospitals.
It turned out that CMC was as strongly interested in an affiliation as Huggins, due to the trends and external forces it was also facing.
Trends and external forces
There are a number of trends and external forces that are affecting hospitals, physicians and payors alike. Among the major trends are declining hospital use, physician shortages, reductions in reimbursement rates and payment reforms, and changes in the population seeking medical care.
Declines in hospital use are due to demographic changes, decreased commercial insurance coverage and higher employee contributions to healthcare, increased Medicaid coverage at lower rates, increased demands for chronic disease management outside the hospital setting, a lower birth rate, and greater reliance on emergency rooms and walk-in facilities. In short, fewer people are using hospital services.
The physician shortage is especially difficult for rural hospitals like Huggins. A 2015 study prepared for the Association of American Medical Colleges, “The Complexities of Physician Supply and Demand: Projections from 2013 to 2025,” found that “demand for physicians continues to grow faster than supply, leading to a projected shortfall of between 46,100 and 90,400 physicians by 2025,” affecting not only primary care doctors but special physicians as well. This situation is made worse by the expanded medical coverage provided by the Affordable Care Act ACA), meaning even more doctors will be needed to provide the expanded coverage.
Reductions in reimbursement rates have come from the larger role played by Medicare and Medicaid, whose reimbursement rates are lower, as well as a shift from payment for services to payment for performance. Higher costs of reporting also reduce revenues.
Changes in the population seeking medical care include the substantial growth in the senior population as the baby boomers age into retirement as well as the effect of expanded coverage through ACA (and what will be put in place when it is repealed).
How affiliation helps
A major advantage affiliation offers, according to Roberge, is joint recruitment of doctors and other health workers. Pooled resources attract more applicants, as do the increased opportunities offered by the three hospitals in GraniteOne Health. Like Huggins, Monadnock is also a Critical Access Hospital that also benefits from pooled recruiting.
More collaboration improves both the quality of care while reducing wait times. Same day access to hospital and physician services is a major goal, according to Roberge.
Shared knowledge and experience is another advantage. Being part of a system helps problem solving and making improvements.
Affiliation also provides options to add advanced technology that Huggins on its own could not develop or acquire.
While all three hospitals continue to have their own boards of directors and remain community organizations, they are now part of the larger entity GraniteOne Health with wider access to financial and other resources. GraniteOne Health has its own 13-member board of directors that includes two members from Huggins.
What this means for patients
The major benefits of affiliation are that Huggins is financially sound and can offer more and better services with easier, quicker access for patients. “There will be no layoffs or consolidation,” Roberge says. “Patients should expect more, not less.”
Even before the affiliation was completed, Huggins was already making substantial improvements in the quality of its care and its own health as an organization. Last year it was named one of the Top 20 of the 1,500 Critical Access Hospitals in the United States after placing in the Top 100 for the three previous years, and this year, for the second year in a row, it was named one to the Best and Brightest Companies to Work For in the country by the National Association for Business Resources.
“We are thrilled that our employees find Huggins Hospital to be a great place to work,” says Laura Stauss, Vice President of Human Resources. “We have great teams in all areas of the organization and we care deeply about helping each other as we care for our patients and community.”
“A major reason we are ready to take advantage of this affiliation is that we have a great management team in place as well as excellent, caring employees,” says Roberge. “We are all excited and looking forward to a bright future for ourselves and our community.”