Cooley Dickinson Hospital gets serious with three suitors to find right fit
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NORTHAMPTON — In the next two months, Cooley Dickinson Hospital’s courtship of larger health care institutions will get specific.
It's pre-nup time.
After 125 years of independence, the Northampton hospital will decide which of three big players will be its partner in a changing health care economy.
It's expected that Cooley Dickinson's board will review a proposal for a merger or sale in late November or early December. A year from now, after regulatory reviews, the hospital could ultimately be governed from Springfield, Boston or Nashville, Tenn.
Last spring, after first considering a less far-reaching affiliation with a bigger hospital group, the hospital's leaders switched to an outright merger or sale. The finalists for that are Baystate Health Systems of Springfield, Massachusetts General Hospital in Boston and Vanguard Health Systems of Nashville, Tenn.
Now, CEO Craig Melin says it's time to see which one is the right fit, in a new round of talks that he said are "getting increasingly more candid ... and putting the real questions on the table."
The biggest of those questions appears to concern how much control the hospital can preserve over its future and how a new ownership will enable Cooley Dickinson to survive.
For 15 years, until 2008, Cooley Dickinson was part of the Dartmouth-Hitchcock Alliance. Under that partnership, the alliance was technically the hospital's owner, as the sole member of its board of trustees.
But because of terms Cooley Dickinson struck in setting up that arrangement, it retained its independence on decision-making. A new deal would be different, Melin expects. "I don't think we'd have the same amount of independence," he said.
For instance, Melin's own job would change. He said he plans to stay on as the top administrator, but instead of reporting to his own hospital's board, he would be accountable to an executive working at a higher level in the acquiring institution.
Surrendering that control, Melin said, would pay off for Cooley Dickinson and its customers through the benefits of being a partner of another health care facility.
The deal would help in three key ways, Melin believes.
First, it would allow Cooley Dickinson to expand programs that are now at risk - that is, those selected by a new owner to continue - by drawing from a wider geographic region.
Second, the hospital could reduce expenses by using its partnership to buy in larger volume.
And third, a new model for Cooley Dickinson could position it to survive under what Melin and others expect will be the increased influence of "managed care," a shorthand for a system that controls costs at all costs.
Benefiting Valley
A key question for all of the three suitors, according to Dr. Steven Esrick of the Valley Medical Group, is this: How are you going to benefit this medical community - and serve patients here?
Each potential partner comes in with its own needs and goals, and it is up to the group studying the ownership change to verify which promises hold water - "to know who to believe," said Esrick, who sits on that review committee. From there, it is up to the hospital to build in legal language that assures CDH gets the kind of future it wants. "There is no interest for them to make this a less robust place" medically, Esrick said of the potential partners.
By robust, Esrick means having the ability to care for a good number of patients right in Northampton through access to specialists and state-of-the-art equipment and medical practices. Esrick said he believes in the areas of pulmonary, cardiac and a range of surgical specialties, Cooley Dickinson is solid. "They're available and they're backed up," he said of this advanced level of care.
Having specialists working in close association with the hospital is important to Esrick both as a primary-care physician and as a patient himself.
Patient perspective
Donald Robinson, a retired Smith College professor, helps lead the hospital's Patient and Family Advisory Committee. That panel meets monthly and is expected to get a briefing from Melin Oct. 11 on the merger talks.
"It's a concern, sure," he said of the coming ownership change. "Are they (the new owners) going to commit enough staffing?"
But Robinson said he is not deeply worried about a new partner undermining the care that produces patient satisfaction. To do so, he suggested, would be self-defeating for a new owner.
While Robinson thinks Melin is "in many ways" a tough and effective administrator, he believes morale is not as strong as it needs to be inside the hospital. To achieve the patient satisfaction Cooley Dickinson wants, Robinson said, it needs a "happy staff."
"I think he has not succeeded in making a comfortable place for the staff to feel comfortable in what they're doing," he said of Melin. "It's difficult in this economy to cultivate and maintain that atmosphere. If the staff is fearful they're going to lose their jobs, it is hard for them to be happy. ... That has presented a difficult situation for this administration."
In his committee, Robinson takes special interest in the effectiveness of the Emergency Department, which family members have had cause to use in difficult moments. He believes the ED is the hospital's "one soft spot. ... The ED is the main place where people enter the hospital," he said.
"For the community, the ED is the face of the hospital. It's what they see. It's a very hard thing to do well. A lot of it has been very good, but not all of it."
Gathering views
Matthew Pitoniak, chairman of Cooley Dickinson's board, said the last year has been marked by "meeting upon meeting, just basically seeking input" on the change.
For months, the hospital sounded out its doctors, nurses and other staff, as well as community members. In reaching out to the community, Pitoniak said the hospital wanted to explain the need for an affiliation or ownership change, what it seeks in a partner and the kind of hospital it wants to be in the future.
In a meeting with the hospital's auxiliary, Melin answered questions that had been written out on a board. Orrin Clifford of Amherst, the auxiliary's vice president, was there and said he felt his concerns were answered.
"We have to do this. It's a necessity," Clifford said of the ownership change. " We need a community hospital and I think this is the right thing to do."
Pitoniak acknowledges that in recent months, after the fact of a merger or sale emerged, it became hard be upfront. He cites confidentiality issues for merger partners. "The flow of information has been less over the last four months," he said. "That's been hard. I don't know how we've done."
Pitoniak isn't ready to give up on retaining a good measure of local control. One fact on its side is that this would not be a "distressed" sale.
"That allows us to ask for more things at the table," he said.
"There are any number of models of governance that could work within being owned by another health care institution," Pitoniak said. "I'm hopeful that people in Hampshire County will continue to have some say in how their local hospital is governed and run. I believe - and hope - that it won't be all the way to having no say."
'Owning' results
When the decision came to seek a merger or sale rather than a looser affiliation, the crux was the issue of who "owns" the consequences of a new partnership's interaction.
Melin said he concluded that unless the new partner will feel the effects of the deal, it would not have reason to make it work. For instance, a partner like Baystate Health Systems of Springfield would not be motivated to direct patients to Cooley Dickinson's cardiac care program if it eroded the volume of its own heart health practice.
In picking a health-care partner, Melin says Cooley Dickinson is looking for an institution that is a good fit culturally as well as economically.
The Cooley Dickinson of the future, he said, must be a place able to hold on to the things that have defined it for years.
"True north, on our compass, is always the quality and safety of care here," he said.
Patients must come away feeling they've been served well. The hospital's staff members must be satisfied that they are able to do their work well and effectively. And its services must be affordable enough for it to be a player under the increasingly tough terms of the new health care economy.
"We're going to be dropping our prices," Melin said. "If we haven't brought our prices down, the place fails. It's my responsibility to see this through. I want to - but I also have to."
