BY ANDY TAYLOR
The face of health care in Montgomery County changed dramatically Thursday when Coffeyville Regional Medical Center agreed to buy Mercy Hospital of Independence.
Additionally, CRMC will retain various health-care services in Independence, bolstered by the issuance of $3 million in bonds from the City of Independence.
In a special meeting Thursday evening, Coffeyville Regional Medical Center’s board of directors voted to sign a letter of intent for acquisition of Mercy Hospital Independence. The signing of this letter culminates several months of discussions between the two organizations. The CRMC board also voted to accept a proposal from the City of Independence, whereby the City would issue $3 million in bonds to retain some health-care services in Independence under the CRMC umbrella. That letter was also signed by the Independence City Commission on Thursday.
Mark Woodring, CRMC’s chief executive officer, said his board’s vote Thursday demonstrates their foresight and strong support of the affiliation, and he was appreciative of the leadership and commitment of the City of Independence to preserve essential services for the residents of Independence.
“This is truly a special moment in time for all of us as we work together to position our organizations and communities for the future of medicine,” Woodring said. “We are excited to build a rural health delivery model in Montgomery County that ensures our patients and families will have continued access to high-quality services for many years to come.”
Kim Day, interim leader for Mercy Independence, the letter of intent is an “agreement in principle, subject to final approvals” and outlines the transfer of assets of Mercy Hospital Independence to CRMC. The letter addresses governance of the combined entity and sets the stage for making decisions on important operational considerations, such as which health services will be retained on the Independence campus and how co-worker payroll and benefits will be handled.
“This is the starting place,” Day said. “From here, the real work begins to prepare a definitive agreement, operationalize the plan and create a transition that is as smooth as possible for our patients, co-workers, providers and communities.”
While signing the letter of intent is the first step in the affiliation process, parties expect the transaction to move along fairly quickly, with completion anticipated this fall.
The decision by CRMC to purchase Mercy’s assets — and take advantage of the City of Independence’s $3 million financial offer — is in stark contrast to the atmosphere as little as three weeks ago, when it appeared that negotiations between the two hospitals had sputtered. The City of Independence was not part of those negotiations because Mercy Hospital operates as a private, charity-based institution. However, the City of Independence was summoned to re-energize those discussions with the offer to issue bonds, which will be paid back through additional taxation over an extended period of time. The City’s stipulation was that a degree of health-care services would be retained in Independence, including emergency or immediate care, physicians in clinics, and a host of other medical activities.
What is missing from the acquisition is Mercy’s admissions-based hospital. Jim Kelly, who serves on the Mercy Hospital board of directors, said it was highly unlikely that CRMC would retain the hospital portion of Mercy because of economics and demand.
“I simply don’t see having two admissions-based hospital campuses open in Montgomery County,” he said on Friday. “However, I think Independence can keep many of the other medical activities, such as physician clinics, out-patient surgeries, diagnostic and radiology, and cancer treatment.”
Kelly said details that are yet to be worked out between the two hospitals will likely be handled through Day and Woodring, who will report to their respective boards.
The letter of intent signed by the City of Independence on Thursday indicates that the City will subsidize the following services:
• hiring and/or retention of physicians in the “critical areas necessary to maintain appropriate health-care standards in Independence,”
• provision of emergency/immediate care services at the Mercy facility,
• upgrade, implement and maintain an appropriate electronic medical records and patient portal system for the combined facilities.
The letter also said that should CRMC no longer provide health care services in Independence (under an agreed-to acquisition of Mercy), then the assets of Mercy facility would be transferred to the City of Independence.
City manager Micky Webb said CRMC’s formal acceptance of a letter of intent with the City of Independence signals that CRMC is interested in health care in Independence.
“This letter of intent is by no means the final step. This is merely an expression of how the City will use those bonds,” he said. “It merely gets us closer to the finer details.”
How did Mercy Hospital get to the point where the City of Independence was needed to pump money into the negotiations with CRMC? In 2014, Mercy Hospital began a “discernment” process that examined its future role in Independence. It was never revealed at that time if the Sisters of Mercy Health System, which owns Mercy Hospital in Independence and Fort Scott, would shutter its two Kansas campuses. Mercy Hospital in Independence sought discussions with other fellow Catholic-related medical charities, but none of those discussions bore any fruit.
Three months ago, discussions between CRMC and Mercy Hospital began (CRMC is not affiliated with any religious charity and is a stand-alone, private corporation). In the past month, those discussions appear to have stalled, as indicated by the desire of Mercy Hospital to have the local city government enter those discussions. Two weeks ago, the Independence City Commission agreed to offer $3 million in bonds as a possible financial incentive.
The discussions between CRMC and Mercy Hospital have entirely been behind closed doors, and hospitals officials have refused to divulge details, citing confidentiality agreements between the two institutions.
However, the signing of the letter of intent between the City of Independence and CRMC on Thursday did provide some insight the first public disclosure of those discussions.
The letter of intent indicated that CRMC intends to acquire Mercy Hospital and provide “certain health-care services . . . to benefit the Corporation (CRMC) and the citizens of the City of Independence, provided that the City of Independence provides certain financial incentives . . . ”
This dispelled the prevailing belief that the two institutions were forming an alliance or merger. Instead, the letter of intent indicates that CRMC intends to buy Mercy Hospital and its local assets.
The letter of intent also verified something that had previously only been a rumor: that Mercy intends to cease its activities in Independence. Mercy officials have never publicly stated Sisters of Mercy Health System’s future plans in Independence, only that there were no other plans if the CRMC-Mercy discussions failed.
“There is no plan B,” Mercy’s interim chief executive officer Kim Day said in a public meeting in May.
The letter of intent signed between CRMC and Mercy Hospital was unavailable to the press today because of confidentiality pertaining to employment of personnel in both hospitals.
What are general obligation bonds? General obligation bonds often are used by local governments as an incentive for industries and businesses to expand. Those bonds, which essentially put the local city government in a debt situation, are paid back through additional taxation over a specified period of time. The disclosure of how those bonds specifically would be used will be heard when the Independence City Commission holds public hearings at a later meeting.