Memorial Hospital adopts unification with MaineHealth

November 16, 2017

North Conway, N.H. – The Board of Trustees of Memorial Hospital on Wednesday adopted a proposal for the organization to join with other members of the MaineHealth system to form a single financial and operating model, a change in governance that has been discussed for the past year as a “unification” of the healthcare system’s members.

The decision will set in motion a process that will lead to a review of the governance change by the Charitable Trust Unit of New Hampshire’s Attorney General’s office. As part of that process, the Attorney General may hold its own hearing on the proposal in the community. The Memorial Board of Trustees must also still craft and vote on certain provisions before the matter is submitted to the Attorney General for review.

The unification proposal is also subject to a due diligence review by MaineHealth and its member organizations.

Assuming regulatory approval and no unexpected findings in the due diligence process, as well as approval by other MaineHealth members in coming weeks, Memorial and the nine other members of MaineHealth will be governed by a single Board of Trustees beginning in January 2019.

“This decision gives us an opportunity to fully leverage the scale and expertise of MaineHealth,” said Laura Jawitz, chair of the Memorial Board. “At the same time, this proposal leaves in place a strong local board that will oversee the care we provide here in the Valley.”

A year ago, MaineHealth system leaders initiated a conversation with its members about changing the organization’s decentralized governance model. The proposed unification will have all 10 member organizations operating under a single financial structure overseen by a system Board of Trustees. This will allow resources to flow more freely across the system to better support care in local communities.

Currently, each MaineHealth member must financially stand on its own, generating the revenue necessary to pay for the services in that particular local community. In recent years, however, community hospitals like Memorial have come under mounting financial pressure. This has been caused in part by the migration of more complex procedures to major medical centers, which are able to leverage new technologies employed by highly specialized providers.

Across the MaineHealth system this has created uneven financial performance among member hospitals, threatening the ability of some community hospitals to continue to deliver needed care. Meanwhile, Maine Medical Center in Portland, the system’s tertiary care hospital, has seen growth in volume and in its bottom line as complex procedures have migrated there.

A unified governance model would allow resources to flow across the system, better supporting the delivery of care in local communities.

The change does mean ceding many aspects of local control to a single Board of Trustees, however, and that concern generated a good deal of discussion in the Valley and other communities served by MaineHealth members.

“We had a number of concerns that had to be addressed before we were willing to adopt this change,” said Jawitz. “We wanted to make sure the system board couldn’t take away services arbitrarily, and we wanted to know that, as a small New Hampshire hospital that is part of a Maine-based system, we would continue to have a voice.”

The Memorial board conducted an extensive review of the proposal, including hiring its own legal counsel and financial adviser to review it. It also proactively reached out to the community for a dialogue on the merits and concerns associated with the unification plan. This outreach included an Oct. 11 community forum at the Red Jacket Inn and Conference Center that drew approximately 170 people. In the end, the unification proposal adopted by the Memorial trustees provides a strong role for the Memorial Hospital board. Its responsibilities will include formulating budgets and strategic plans, the credentialing of physicians and other providers as well as oversight of care quality.

The proposal also guarantees Memorial a representative on the system board for the first five years. This was a topic of extensive discussion among MaineHealth members, as leaders wrestled with the fact that providing that representation across the system creates a very large board that over time could prove unwieldy. The five-year guarantee, along with a commitment to ongoing geographic diversity on the board after that time, was a compromise reached as part of the discussion among MaineHealth members. “In the end, this came down to whether we wanted to build on the progress we’ve made,” said Jawitz. “MaineHealth has been a good partner since we joined the system three years ago. Joining with the other members gives us an opportunity to provide great care here in the Valley in partnership with an excellent healthcare system.”