The ripple effects of change in the medical industry

Update on facility mergers and hospital acquisitions amidst massive amendments to healthcare

Many area medical facilities have been consolidating as the industry reels from mandated changes required by the Affordable Care Act. With Community Health Systems’ (CHS) acquisition of Health Management Associates, Inc. (HMA) in January, Davenport’s Heart of Florida and Bartow Regional Medical Centers join Lake Wales Medical Center as part of the CHS family.

A leading operator of general acute care hospitals in communities across the country, the Nashville area-based CHS is one of the largest publicly traded hospital companies in the United States. Through its subsidiaries, it owns, leases or operates 206 affiliate hospitals in 29 states, with some 31,000 beds.

Under the terms, shareholders of the Naples-based HMA received $10.50 per share in cash plus 0.06942 shares of CHS common stock for each HMA share. HMA operated 71 hospitals through its affiliates.

The acquisition of HMA’s hospitals represents a significant expansion for CHS into Florida. CHS added 23 Florida hospitals, for a total of 26 affiliated hospitals statewide. The transaction did not have any immediate impact on local hospital operations. “We are excited to support the work of the medical staffs and employees of these hospitals as they deliver quality care and serve the healthcare needs of their communities,” says Tomi Galin, CHS’s senior vice president of Corporate Communications and Marketing. “A large acquisition of this nature takes many months to integrate.”

While there eventually may be changes to policies and procedures, most will be behind the scenes. “Our organization has a great record of providing affiliated hospitals with access to resources and best practices to enhance quality, services, and the patient experience,” she adds.

The transaction provides CHS with “increased scale and broader geographic reach,” says Wayne T. Smith, CHS’s chairman and chief executive officer. “Our larger organization is well positioned to address the changing dynamics in our industry and dedicated to providing quality care for millions of patients and all the communities we serve. We look forward to effectively integrating this acquisition and generating significant value for our shareholders.”

A 200-bed acute care facility, HOFRMC evolved to meet the growing needs of the Haines City community after Dr. David Green donated his clinic and real estate to the Heart of Florida Hospital Association in 1964. BRMC is a 72-bed acute care facility serving South Lakeland, Bartow, Ft. Meade, Mulberry, rural south Polk County, and northern Hardee County.

CHS acquired the 160-bed Lake Wales Medical Center in December 2002. Also part of the CHS family are the 84-bed St. Cloud Medical Center, the 126-bed Highlands Regional Medical Center, and the 480-bed Bayfront Health St. Petersburg.

At HOFRMC, staff members are learning about the resources and best practices available as part of CHS. “We have worked hard to ensure that patients have experienced a seamless transition during the integration process,” says Ann Barnhart, Heart of Florida’s chief executive officer. “Although the transition is still fairly recent, we are enjoying accessing the support and tools that come with being part of a broader network, and look forward to learning more about our new affiliation over the next several months.” Certain physicians on the hospital’s medical staff continue to hold minority ownership of the hospital, she says.

At Bartow Regional, staff members are enjoying access to a wider network of resources, along with more opportunities to share best practices. “We benefit from the economies of scale available to an even larger organization. Most things remain the same at the hospital level. Our employees continue in their current positions,” says Phil Minden, the facility’s chief executive officer. “Our medical staff continues to provide quality care for local residents. Our hospital continues to be guided by the same local management team. We continue to participate in the same managed care contracts and government reimbursement programs. Most importantly, providing high-quality care for patients remains our top priority.”

During the last year, other area medical institutions also have streamlined operations. Winter Haven Hospital merged with Tampa Bay area-based BayCare Health System in August, and Clark and Daughtrey Medical Group became a division of Lakeland Regional Health Systems last July.

Amidst the changes in the medical community, the Lakeland-based Watson Clinic maintains its autonomy. “We’re independent and we have every intention of remaining that way,” says Nancy Martinez, Watson’s assistant director of Marketing and Public Relations.

The 73-year-old clinic, which has deep roots in the community, is providing medical personnel to LRMC. As one of the largest clinics in the southeastern United States, with 17 locations in Polk, Hillsborough and Pasco counties, it offers 40 medical and surgical specialties. Some of its doctors are assigned to LRMC to treat Watson and non-Watson patients, as needed.

In addition, Watson is partnering with LRMC and a local physician in Lakeland Surgical and Diagnostic Center, which offers outpatient surgeries near LRMC and at 818 Griffin Road.

The medical industry has been grappling with a lot of change in recent years. The federal government has been offering financial incentives to medical facilities transitioning to electronic record keeping. Medical providers are also preparing to convert their billing code systems to ICD-10, which will enable encoders to give more precise data to insurance companies, Medicare and Medicaid. A recent bill signed into law in April delayed the mandated ICD-10 conversion at least one year, to October 1, 2015. However, while the delay has bought more time for flipping the switch on the new medical coding / billing system, medical providers remain diligent with preparations for the upcoming transition.

And the Affordable Care Act, also known as Obamacare, has mandated massive healthcare reforms. Its directive requiring uninsured individuals to sign-up for healthcare stirred massive debate before March 31’s sign-up deadline. The requirement is expected to bring more patients in for preventive care and treatment.