Lebanon — After exploring a potential partnership with a third party, officials at the nonprofit that runs Harvest Hill and The Woodlands now plan to bring the senior living facilities and Alice Peck Day Memorial Hospital back together under the umbrella of the APD health system.

In doing so — a vote of APD board of incorporators is slated for this morning — the two senior living facilities on the Lebanon hospital’s campus also would fall under the wing of the Dartmouth-Hitchcock system, which formally affiliated with the hospital in 2016.

On paper, Alice Peck Day Health Systems Corp. severed its parent-company relationship with the hospital in March 2016 when the community hospital became part of the D-H system. That left Alice Peck Day Lifecare Center, which includes assisted living at Harvest Hill and independent living at The Woodlands, as the sole operating business entity within the health system corporation.

While it was clear that the affiliation with D-H was in the best interest of APD hospital at the time, it was not yet clear that it was in the best interest of Lifecare, Alice Peck Day President and CEO Sue Mooney said.

“We wanted to ask the question: ‘Should they go in separate directions?’ ” Mooney said during an interview last week in her office at the hospital. “The answer was no.”

In discussions weighing Lifecare’s options for the future, the health system and Lifecare’s boards of trustees found that the hospital and the senior living communities are interrelated in financial and operational ways, Mooney said.

The two organizations have a shared history. When Lifecare came into being in the mid-1990s, it was as part of APD Health Systems, which also included the hospital, Mooney said. The 76 units at Harvest Hill opened more than 20 years ago and the 63 units at The Woodlands opened in 2010.

There currently are nine vacancies at Harvest Hill, where units range in price from $3,222 to $9,000 per month, depending on the size of the unit, according to APD spokesman Peter Glenshaw.

Glenshaw, in an email, attributed the vacancies to “some unfortunate timing involving a combination of resident moves and resident deaths.”

To attract new residents, the facility is hosting an open house on Thursday and offering one month of free rent.

The Woodlands, where the entrance fee ranges from $300,000 to more than $500,000, and monthly fees ranging from $2,567 to $5,498, is currently full, Glenshaw said.

Lifecare appears to be turning things around following a series of operating losses in recent years. According to tax filings, Lifecare lost $1.15 million in the fiscal year ending on Sept. 30, 2015, and $465,000 in the prior year.

But the most recent Lifecare Form 990 tax filing — for the year ending on Sept. 30, 2016 — shows a gain of $474,000.

And the audited financial results for the fiscal year that ran Oct. 1, 2016, through June 30, 2017 — a partial year because the organization has moved to a fiscal year end of June 30 — show an operating gain of $308,845, Glenshaw said.

The hospital and Lifecare are part of a joint obligated group and therefore are responsible for paying back their shared debt, which totaled about $26.3 million as of the end of June. They also share staff. Under a formal lease agreement, Lifecare currently pays for some of the time of the hospital’s senior management, Mooney said. Through a similar agreement, Lifecare also shares some of the hospital’s information technology services, she said.

Mooney and the senior managers from the hospital have been running Lifecare since its president, Todd Miller, retired in September, Glenshaw said. Lifecare’s board will undergo a search for a permanent replacement in the coming months, he said.

In arriving at the decision to reunite the two organizations, the board members also took into consideration their goal of minimizing any disruption to the residents, Mooney said.

“From a practical standpoint, residents, staff and the people who are most affected by this, their worlds have continued without any changes,” Mooney said. “And once we complete all of this, their world will continue to go on without any changes.”

This may not have been the case, however, had Lifecare’s board instead opted to pursue a relationship with another operator, be it for-profit, nonprofit or faith-based, Mooney said.

She said the idea of partnering with someone from another state “was a little bit of an unknown,” she said.

The “board did look at that option,” she said. But it “rejected that in favor of what they felt was a better option.”

The primary financial advantage to returning to their previous relationship as separate but related members of APD Health Systems will mean that banks will recognize their corporate structure. As is, the organizations still share a responsibility to their debt, but banks don’t typically loan money to unrelated organizations, Mooney said.

“At some point they’re going to say, ‘Hey, we’re not comfortable with this,’ ” she said.

The current structure, and the banks’ unfamiliarity with it, makes it difficult for the organizations to refinance their debt, she said. They don’t yet have a plan in place for refinancing and it’s not even clear if they will, she said.

“At this point in time, we’re just trying to get the corporations back together so that we can begin that discussion,” she said.

They currently have no problem meeting their debt obligations, Mooney said.

One option would be to join D-H’s joint obligated group, which some other affiliates — including New London Hospital, Cheshire Medical Center in Keene and Mt. Ascutney Hospital and Health Center in Windsor — have already joined, Mooney said. Doing so might improve the terms APD Health Systems is able to get from lenders, she said.

In addition to the financial benefit of improving the group’s management of debt, Mooney said, keeping the hospital and the senior living communities together will help further D-H’s broader goal of addressing health care needs outside the walls of a hospital.

“We need to try to build a better system (for) that population,” Mooney said. “That works for all of us.”

D-H’s board approved the merger last Friday, D-H spokesman Rick Adams said in an email on Monday.

“Pending all necessary governing body and regulatory authority approvals, the proposed transaction will integrate Lifecare into the (Dartmouth Hitchcock Health) system through APDMH and help to ensure Lifecare’s ability to service its debt obligations,” Adams said.

Pending approvals by the various boards — D-H, APD’s health system, hospital and Lifecare — which Mooney said she hopes to have by the end of this month, the merger plan will go to the Charitable Trusts Unit of the New Hampshire Attorney General’s Office for regulatory review, which will include a public comment period. Mooney said she’s hopeful the process will be completed by April or May.

APD Health Systems’ board of incorporators, a group of community members, is set to vote on the merger at its annual meeting at 7:30 a.m. today in the Dwinell Room at Harvest Hill, which sits behind the hospital on Alice Peck Day Drive.

Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.

Correction

Harvest Hill is an assisted living facility and The Woodlands an independent living facility on the campus of Alice Peck Day Memorial Hospital. A headline to an earlier version of this story incorrectly described the two facilities.

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