D-H, New London Get AG’s Blessing

Lebanon — A formal affiliation between Dartmouth-Hitchcock and New London Hospital is going ahead after being cleared by the state Attorney General’s Office.

The affiliation will begin Oct. 1 and offer opportunities for sharing resources and coordinating care for patients, hospital officials said.

On Wednesday, New London CEO Bruce King said it had been a longer and more arduous process than he’d expected, but said both institutions were committed to making it happen.

“We think this is the right thing to do for both communities,” King said.

For New London, a formal partnership with a large tertiary hospital opens up opportunities to utilize Dartmouth-Hitchcock specialists that a small hospital could not otherwise afford, boost New London’s standing with creditors and cut costs by consolidating back-office functions such as billing.

The two hospitals have “a common vision” and the affiliation accomplishes a number of goals for Dartmouth-Hitchcock, said Steve Leblanc, the Lebanon health care provider’s executive vice president for strategy and network relationships. It spreads financial risk over a larger pool of patients as Dartmouth-Hitchcock and New London experiment with payment reforms that move away from a traditional fee-for-service model of care, in which doctors are paid according to the volume of services they provide, and toward one that supports population health, in which providers concentrate on improving the health of the overall population.

Also, New London offers a kind of relief valve when Dartmouth-Hitchcock Medical Center’s inpatient beds are full. Often, patients don’t need the intensive level of care that DHMC can provide and could be better served in a smaller hospital closer to their homes.

“Trying to get some of those patients out into those communities is good for the patients and good for D-H, because that then frees up a bed and we don’t have to turn some patients away to another facility that may need the level of care DHMC provides,” LeBlanc said.

The affiliation is not a merger. New London will remain an independent hospital with its own board and separate financial assets. However, Dartmouth-Hitchcock officials will have “reserve powers,” LeBlanc said. Two-thirds of the seats will be recommended by New London and sent on to Dartmouth-Hitchcock for approval, while the remaining one-third would be appointed directly by Dartmouth-Hitchcock, which also will be involved in New London’s major governance decisions and sign off on capital and operating budgets, major borrowing and changes in clinical services.

Dartmouth-Hitchcock has long sought stronger ties with health care providers in New England as a way to eliminate redundancy in the system and lower costs while also improving care for patients. Last week, Dartmouth-Hitchcock announced a new partnership with Elliot Health System in Manchester and Harvard Pilgrim Health Care of New England. The partnership, called “ElevateHealth,” will feature a smaller network of providers than Harvard Pilgrim’s full network in employer-sponsored plans, but the premiums are at least 10 percent lower. New London is included in the ElevateHealth network .

Dartmouth-Hitchcock and New London boards began discussing the possibility of an affiliation in fall 2011, though ties between them go back much further. King, New London’s CEO, is technically a Dartmouth-Hitchcock employee who is leased back to New London through a management services agreement. He worked at Dartmouth-Hitchcock for 15 years before he was hired at New London in 2003.

Reviewing Antitrust Concerns

The Attorney General Office’s Charitable Trusts Unit and the Consumer Protection and Antitrust Bureau both signed off on the affiliation after conducting separate reviews. Because the hospitals are nonprofit organizations, the Charitable Trust Unit wanted to ensure that assets donated to New London stay within the community and don’t get taken over by Dartmouth-Hitchcock. Using federal antitrust guidelines, the consumer protection bureau was looking for potential harm to competition in the market and consumer interests, essentially making sure the plan wouldn’t create a monopoly.

In the end, the consumer bureau concluded that the hospitals served different markets and an alliance between them would not hurt competition, said David Rienzo, assistant New Hampshire attorney general in the consumer bureau.

“The federal guidelines generally say an affiliation between a large tertiary health care provider and a small community hospital tend not to raise antitrust concerns because they serve two different markets,” he said in an interview Wednesday.

New London, a 25-bed hospital with 500 employees, focuses on primary and secondary care. Licensed for 396 beds and with more than 8,000 employees, Dartmouth-Hitchcock is a much larger institution that offers an array of services, from general medicine to surgery, pediatrics, oncology and many other types of specialty care.

“There is very little evidence that patients for primary care would stop going to New London and go to Dartmouth if New London’s prices went up,” Rienzo said. “And there is little evidence that primary care patients would stop going to Dartmouth and go to New London if Dartmouth’s prices went up.”

Technically, the AG’s office didn’t “approve” the affiliation, Rienzo said, but rather did an extensive review and told the hospitals that it had no objections to them moving forward.

Not every proposed affiliation has received the state’s blessing. In 2011, Dartmouth-Hitchcock ended an effort to form an affiliation with Catholic Medical Center in Manchester, after then-New Hampshire Attorney General Michael Delaney objected to the plan, likening it to a takeover of CMC by Dartmouth-Hitchcock. Delaney said it would “result in a profound change to the governance structure” of CMC and keep the Catholic hospital from being able to carry out its charitable mission. The proposal to merge a Catholic hospital with a secular medical center also drew strong opposition from abortion opponents.

There were no such objections to the affiliation with New London, which was strongly supported by the local communities in large part because of the shared history between the two hospitals, said King and LeBlanc.

When asked whether Dartmouth-Hitchcock was considering other affiliations, LeBlanc said there were “ongoing discussions happening” but offered no specifics.

“With a lot of the federal budget cuts that are on the horizon and so forth, people are struggling and we’ve got to figure out how to work more closely together regionally to be able to be more cost-effective, improve quality and be able to manage populations more effectively under new payment models,” LeBlanc said. “All of those things are having a big influence on people rethinking the relationships and how do we work together to be more efficient and so forth. There are ongoing discussions happening I think probably all the time across the state. Both states.”

Chris Fleisher can be reached at 603-727-3229 or cfleisher@vnews.com.