Dartmouth-Hitchcock and GraniteOne seek AG’s approval

Valley News Staff Writer
Published: 1/7/2020 10:28:45 PM
Modified: 1/7/2020 10:28:12 PM

LEBANON — Dartmouth-Hitchcock Health needs to combine services with Manchester’s Catholic Medical Center and its affiliated hospitals in order to gain access to more patients, protect the state’s only academic medical center from the “existential threat” posed by out-of-state competitors and shore up the state’s struggling rural hospitals, the Lebanon-based health system said in a filing last week with the New Hampshire attorney general’s Charitable Trusts Unit.

In addition to supporting Dartmouth-Hitchcock Medical Center’s academic and research missions, keeping patients in-state will keep costs down and be more convenient for patients and families, D-HH and GraniteOne Health, the three-hospital health system including CMC, said in last week’s filing.

“To sustain its essential education and research programs, D-HH must preserve and grow its access to patients, which it can achieve by establishing a greater presence in southern New Hampshire, which is home to most of the state’s population and is the only region in the state with a rising population,” the filing said.

Without a partner in the southern part of New Hampshire, “academic medicine in that market will be ceded to the likes of Mass General Brigham with cascading recessionary effects on D-HH’s academic mission, i.e., an aging and shrinking patient mix, insufficient patient volume to support research and clinical trial opportunities, fewer graduate medical education programs, and the diminution of D-HH as a major academic health system.”

The combined organization, which would be known as Dartmouth-Hitchcock Health GraniteOne, also would help to expand specialty care — such as oncology and orthopedics — at the 330-bed CMC and to GraniteOne’s 25-bed rural hospitals, Monadnock Community Hospital in Peterborough, N.H., and Huggins Hospital in Wolfeboro, N.H., according to the filing.

The two systems, which first announced plans to combine last January and in late September, inked a formal agreement, said that they need to integrate the care they provide in order to better serve the needs of the region’s aging population and address the opioid epidemic.

The health systems also pitched the transaction as a way to “stabilize and strengthen the financial condition” of their member hospitals in the face of increasing reliance on reimbursements from Medicare and Medicaid, which in New Hampshire pays one of the lowest rates in the country.

A consulting firm, PYA, hired by the two systems estimated that the combined organization could save between $12.5 million to $32 million over three years, primarily by moving to “a more consolidated and uniform supply chain,” according to the filing. D-HH has an annual operating budget of $2.2 billion, while GraniteOne has an operating budget of about $651 million.

Other savings — approximately $470,000 annually — to GraniteOne would come from its three member hospitals joining the D-HH Obligated Group, which would allow them to access capital at lower borrowing rates. Specifically, joining the obligated group could help CMC to finance a planned 220,000-square-foot, $175 million expansion of the Manchester hospital for a savings of $188,000 interest payments annually.

“If achieved, these cost savings are a clear and quantifiable benefit to the Parties and their abilities to serve their communities’ needs,” the filing said.

Working together also would help the two systems to recruit staff amid a workforce shortage across the region, they said. By offering opportunities to practice both at Lebanon’s 396-bed academic medical center and at the urban CMC, the combined entity could offer diverse work experiences.

Though D-HH and CMC already have clinical collaborations in endocrinology, internal medicine, pediatrics, primary care, family medicine, pulmonary medicine, rheumatology, surgical services and fertility care, they have found that increasing collaboration is difficult under the current structure, which relies on professional service agreements.

“Without being financially, clinically and operationally integrated, the opportunities to expand services were both expensive and accompanied by a disproportionate return on any necessary investment,” the filing said.

The new system would prioritize efforts to improve addiction treatment and mental health care. Services in those areas are currently limited by “a scarcity of resources, a paucity of providers, and a fragmented behavioral health care delivery system,” the filing said.

Together, the new entity would work to expand addiction treatment, integrate physical and mental health care, improve addiction and mental health crisis services in emergency departments and improve such support for inpatients.

The filing details how this proposal differs from an attempt by D-H and CMC to join together a decade ago, which failed after then-New Hampshire Attorney General Michael Delaney objected to a merger plan that he likened to a takeover of CMC by D-H. Some Catholics at the time also raised concerns about the merger of CMC with a secular facility.

Under the current proposal, the system would be overseen by one board, but decisions relating to CMC’s name, Catholic identity, compliance with Catholic moral teaching, the Ethical and Religious Directives and Canon Law would require approval by the bishop who oversees the Catholic Church in New Hampshire, the Most Rev. Peter Libasci.

Though some Catholics spoke out last spring at public meetings in opposition to the plan, Libasci issued a declaration of no objection in September, describing the combination as “a significant moment for CMC and a unique opportunity to grow and strengthen Catholic healthcare in New Hampshire.”

In October, the Philadelphia-based National Catholic Bioethics Center also issued its analysis, which found the transaction “morally sound.”

If the plan becomes final, D-HH CEO Joanne Conroy would lead the new system and oversee “Region I,” which would include the system’s northern presence, while GraniteOne CEO Joseph Pepe would oversee “Region II,” the system’s southern facilities and practices.

The Charitable Trusts Unit review is scheduled to be completed by April 28. People can submit written comments on the transaction by April 2 to charitabletrusts2@doj.nh.gov or to Director of Charitable Trusts, 33 Capitol St., Concord, NH 03301. At least one public hearing will take place after Feb. 28.

In addition to approval from the Charitable Trusts Unit, the health systems will need approval from the state Consumer Protection Bureau and the Federal Trade Commission in order to proceed.

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

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