Keene Sentinel: Peterborough hospital partners with two others in state to form new group

By Ethan DeWitt Sentinel Staff
January 9, 2017

Peterborough’s hospital is the latest in the state to join a partnership aimed at saving money and strengthening patient care.

Monadnock Community Hospital has partnered with Huggins Hospital in Wolfeboro and Catholic Medical Center in Manchester to form an umbrella organization called GraniteOne Health.

The move comes months after the formal announcement of the partnership in July and weeks after the N.H. Consumer Protection and Antitrust Bureau gave it the green light in December.

The affiliation arrangement, the latest in a string across the state and country, is not a merger or an acquisition. All hospitals will retain their boards of trustees and a degree of independence; each will keep the same assets and liabilities, and staff will not be combined or geographically consolidated, according to the GraniteOne website.

The hospitals will coordinate services for patients, but neither Monadnock Community Hospital nor Huggins Hospital will become religious hospitals in the arrangement, the website says.

GraniteOne will instead operate as a “system parent” operation, with an 11-member board of trustees of its own — two for Monadnock Community Hospital, two for Huggins Hospital, and seven for Catholic Medical Center to account for its size.

Catholic Medical Center is a 330-bed, acute-care hospital; Monadnock Community Hospital and Huggins Hospital are both 25-bed critical-access hospitals.

Dr. Joseph Pepe, president and CEO of Catholic Medical Center, will take the role of CEO at GraniteOne.

The arrangement will give power to the GraniteOne board to ratify the budgets of the member hospitals. But for the hospitals, the affiliation is not meant to be an overhaul of operations.

Instead, say the hospitals’ leaders, the arrangement is intended to allow for lowered operating costs among the hospitals, by letting the hospitals pool resources and advantages. Banding together, they say, allows for greater power in negotiating with insurance companies and cutting costs — creating what’s known in the industry as an “economy of scale.”

To Pepe, the arrangement is a gain for patients. With closer collaboration, patients will be able to use services at all the hospitals as needed, he said.

“By affiliating through GraniteOne Health, all three of these hospitals are seeking to not only increase access to care, but also increase resources and collaboration, which in turn improves quality and patient satisfaction,” he said in an email Thursday.

Leaders from the two other hospitals agreed.

Cynthia McGuire, CEO and president of Monadnock Community Hospital, said the affiliation will build on an already-close partnership with Catholic Medical Center, in which the hospitals share cardiology, vascular and laboratory services among patients.

Speaking on GraniteOne, McGuire said, “We hope that our relationship will allow for our patients to have a seamless care experience when services at CMC are needed much as they experience right now when utilizing cardiology services.”

Jeremy Roberge, CEO and president of Huggins Hospital, said the agreement will allow hospitals to capitalize on their comparative advantages.

“Through the GraniteOne Health system, we can utilize internal resources at each hospital to their full potential,” he said.

As for how the partnership will improve patient care, Pepe said it won’t create “immediate or drastic changes” for patients in the short term. Instead, he said in an email, the partnership is meant to increase access to services in the long term and make the process more efficient so the care can improve.

“It’s a deepening and expansion of what patients currently experience with certain services, like cardiology and vascular care,” Pepe said.

The affiliation comes at a frenzied time for hospital consolidation. Under pressure from the passage of the Affordable Care Act to provide more robust services, hospital mergers and affiliations have spiked since the act was passed, according to the New England Journal of Medicine.

In New Hampshire, partnerships such as the affiliation of Cheshire Medical Center/Dartmouth-Hitchcock Keene and Dartmouth-Hitchcock in 2015 have abounded. This week alone, Massachusetts General Hospital, the largest hospital in the Bay State, bought Wentworth-Douglass Hospital in Dover, in its first cross-border acquisition.

A major force behind the drive toward consolidation is a shift in the health care industry toward the quality of care over volume of patients, according to Mark Bonica, associate professor of health management and policy at the University of New Hampshire.

The shift was ushered in partly by a change in the Medicaid reimbursement approach made by the Affordable Care Act.

The act, which passed in 2010, changed the way Medicaid funds are disbursed to hospitals by the federal Centers for Medicare & Medicaid Services. Whereas before, money was allocated based on volume — how many patients were seen and how many services were offered in a given year — the Affordable Care Act changed the allocations to be based on the quality of care.

Now, hospitals are allocated funds based on how well they score on quality assessments for their care. It’s one reason many decide to join together — the better to collaborate and find better solutions to problems with local population health, Bonica said.

Hospitals have plenty of other motivations to consolidate, according to Bonica. It allows for access to partner hospitals’ electronic health records, which in bulk can sometimes cost tens of millions of dollars to acquire otherwise. They can also develop a more robust brand under one umbrella, which can help attract patients and staff.

But the biggest benefit, Bonica says, is the negotiating power the hospitals get with insurance providers, allowing them to negotiate much better payout rates than they could on their own.

The surge of mergers and partnerships has drawn criticism from those who say it will reduce competition and drive up costs for patients. A 2012 report by the Robert Wood Johnson Foundation found strong correlations between hospital consolidation in the 1990s and early 2000s and rising costs.

Bonica said that as an economist, he sees the concern as generally legitimate — “If Dartmouth-Hitchcock bought up every hospital in the state there would be no way to control costs,” he said.

But he said that given the tight pressures hitting the New Hampshire health care industry in recent years, consolidation here is more of a necessity.

“New Hampshire has been approving a lot of these arrangements, and it’s probably a good thing because I think the pressures are there to do it,” Bonica said.

Ethan DeWitt can be reached at 352-1234, extension 1439, or Follow him on Twitter at @EDeWittKS