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Munroe visits N.C., Va.; exploring Duke LifePoint


By 
Staff writer

DURHAM, N.C. — Munroe Regional Medical Center officials continued their search this week to find the health care company best suited to lease the county's 421-bed hospital as it struggles financially to remain competitive.

Having met with Health Management Associates (HMA) officials at one of their hospitals last week, Munroe trustees, doctors and advisers on Wednesday trekked to Durham, N.C., and later Danville, Va., to meet with Duke LifePoint Healthcare officials and more fully study that partnership's offer.

Munroe officials spoke openly about whether their hospital would benefit from a research and advanced health care provider such as Duke University Health System — which owns flagship Duke University Hospital in Durham — and what services LifePoint had in mind for Ocala's public hospital if it were awarded the lease.

The Duke LifePoint proposition of $138.7 million in lease payments and an additional $200 million commitment for facility and equipment improvements is an interesting one for Munroe leadership. The offer is $60 million short of the offer from the partnership of HMA and Shands at the University of Florida.

Duke LifePoint officials de-emphasized the money and highlighted the medical expertise Duke could bring in starting up new services at Munroe, and the support the internationally renowned medical complex could bring to Ocala.

HMA, of course, also touts the Shands teaching, research and clinical resources its partnership could bring to Munroe.

"They (Duke LifePoint) seem to be deeply interested in making this happen for us," said Dr. Ravi Chandra, a vascular surgeon and vice chairman of the Marion County Hospital District board of trustees.

Chandra was referring to the Duke LifePoint plan to bring services that Munroe currently does not offer to make the hospital more competitive and widen its health care footprint.

Describing Duke's offer to help Munroe create new service lines and expand some of its existing ones, Chandra said the LifePoint approach was cafeteria style, "where you take what you want and keep what you need."

The Duke LifePoint partnership is comprised of LifePoint Hospitals, which owns or leases more than 50 hospitals in 22 states; and Duke University Health System, Inc. The Duke LifePoint partnership jointly owns or leases five hospitals.

In more than four hours of discussion, LifePoint and Duke University Medical Center executives and doctors emphasized the benefits Munroe would reap — everything from the initial cash infusion to daily operations. Sweetening the deal is Duke's expertise in such areas as cardiac care and oncology services, both ranked among the best in the world.

Currently, Munroe has an extensive heart program but no comparative oncology service. Competitor Ocala Regional Medical Center has a comprehensive oncology program.

During the gathering, small groups broke off for more discussions: administrators with administrators, doctors with doctors, Munroe trustees and board members with LifePoint hospital advisory board members.

Initially, HMA touted its partnership with Shands, but that relationship took a backseat during last week's presentation. Munroe officials complained early during HMA's lease discussions that Shands was aggressively marketing itself in Marion County and competing with Munroe for patients — even though Shands officials have hastened to assure that they are not looking to poach patients.

The message some Munroe officials walked away with Wednesday was that the Duke LifePoint partnership was a better fit.

"That was made very clear," Chandra said during a break, referring to Duke's non interest in potentially competing for patients. "That's definitely a point in their favor."

Munroe officials expressed concern that their hospital, already struggling to compete with Shands to the north and Ocala Regional Medical Center across the street, would become just one of many LifePoint hospitals.

Leif Murphy, LifePoint executive vice president and chief development officer, said that while LifePoint might acquire more Florida hospitals in the future, the plan is for Munroe to be "the center" of its Florida interests, and that Munroe's reach would expand.

LifePoint's only other Florida hospital is the 99-bed Putnam Community Medical Center in Palatka.

"Ocala looks and feels like a market where we can be successful," Murphy said.

Munroe is owned by the state-sanctioned Marion County Hospital District and is overseen by seven trustees who are appointed by the County Commission.

The trustees lease the hospital to Munroe Regional Health System Inc., which is overseen by a 13-member board, some of whose members also are district trustees.

Without property tax support — a ballot measure failed in November — Munroe leadership says it needs an outside leasee to invest and keep the hospital competitive.

HMA/Shands and Duke LifePoint are the final two suitors.

Murphy would not be specific about what Munroe services he would expand, but he told a Star-Banner reporter during a meeting break that Munroe's emergency department and the hospital's presence in The Villages had opportunities for expansion.

Dr. Linda Sutton, medical director at Duke's Oncology Consortium, said Duke LifePoint won't force service expansion onto Munroe or force Munroe to offer services only as Duke offers them.

"It doesn't work as a dictatorship … we all have to be on the same page to make this work," she said.

Murphy said Duke doesn't only bring medical expertise to the table, but also the experience at packaging Duke medical services and delivering them to Duke LifePoint hospitals that want them.

Under the Munroe lease proposal, Duke would own 3 percent of the Duke LifePoint partnership and be paid for establishing new services at Munroe.

In contrast, Shands doesn't hold a financial stake in the HMA/Shands partnership, although Shands would have a later option to buy a stake in that partnership.

Dr. William Fulkerson, executive vice president of Duke University Health System, said Duke protects its brand as a top-line health care service provider and research facility. That means, he said, it is in Duke's best interest for Munroe to grow service lines and get better from the partnership.

"Duke will deliver," Fulkerson said. "You'll see more Duke people than you ever imagined."

That nearly 600-mile distance between Ocala and Duke was an issue LifePoint competitor Alan Levine, HMA senior vice president, brought up during his presentation last week.

But Wednesday, Murphy said Duke had a team of 45 people who were experienced at helping other hospitals adopt Duke service lines.

One such hospital was LifePoint's Danville Medical Center in Virginia.

Danville businessman Ben Davenport was on that hospital's board when it decided to sell the 390-bed facility in 2005 for $200 million.

The city of Danville had once been a prosperous mill town that saw its mills close and business go elsewhere before the purchase.

Facing high city unemployment and an inability to find the revenues necessary to invest in the hospital, the board decided to sell to LifePoint.

The transfer was tumultuous, Davenport said, as a string of temporary CEOs headed the hospitals without clear leadership goals.

Also a problem: The public wasn't notified of the sale until the day the facility changed hands.

Murphy said LifePoint learned many lessons from those mistakes.

One problem was that LifePoint had at the same time acquired too many other hospitals and failed to give Danville the attention it needed. Another mistake was not keeping the public in the process and explaining to the public that the hospital needed financial help.

Davenport said that during the past few years, LifePoint has turned the hospital around.

"It's been a good marriage," he said.

He said even though Danville was not a Duke LifePoint facility, but rather only a LifePoint hospital, Danville still gets oversight from Duke, which has made it a much better health care provider.

Sheryl Skolnick, a health care analyst with CRT Capital Group LLC, said the Duke LifePoint partnership has worked well for the two companies, and that hospitals bought or leased by the partnership have benefitted.

Skolnick did not attend Wednesday's gathering, but she is familiar with Duke LifePoint and HMA.

Danville hospital community relations director Leslie Smith said Danville was one such hospital to benefit from the partnership.

It had a modest heart program before the 2005 purchase, but since the buyout Smith said it has greatly expanded it and Duke has brought quality oversight to all its services.

LifePoint also built three primary care clinics to increase access for Danville residents to primary care doctors.

Danville administrators said that until that investment, only 15 percent of ER visitors had a primary care doctor. Now, that's climbed to 65 percent.

LifePoint also began in 2010 a doctors' residency training program at Danville. The hospital now has nearly 50 doctors in the program.

LifePoint also invested another $48 million in the hospital in equipment and service upgrades since 2005, said hospital leadership.

Danville advisory board members Laurie Moran and Shannon Hair were also at the Danville hospital meeting. They both said the partnership with LifePoint and Duke benefitted the hospital and the community. Asked if they would agree to a similar deal today, they both said yes.

The only hiccup during the Munroe trip occurred when LifePoint officials tried to take Munroe officials to an unscheduled visit to a medical, working retreat for nurses. Since most of Munroe's meetings are public and have to be advertised, Munroe official declined the offer to visit the retreat or talk with the Duke nurses.

In 2005, area resident Henry Hurt opposed the Danville hospital, saying the public was kept in the dark and not consulted.

Years later, he said, Danville has benefited from Duke's oversight and help, and the hospital operates more efficiently than it did soon after the takeover.

But despite the improvements, he said, many still seek health care at competing hospitals. The reason: Many people still feel slighted over how LifePoint acquired the hospital.

Munroe trustee Chairman Jon Kurtz said during a break that there still has to be a lot worked out in examining the HMA/Shands and Duke LifePoint offers, including carefully reviewing the proposed lease contracts.

As for what LifePoint and Duke bring to the table, Kurtz said, "I think I heard the right answers" but added more research needed to be done.

More hospital visits are scheduled for later this month.

As for the $60 million difference in financial offers from HMA and LifePoint, Chandra said the important thing is what's best for Munroe patients and the community.

And if LifePoint wants to lease or buy any other hospitals in Florida, Chandra said, "they're going to be judged by our (Munroe) success or failure."

Contact Fred Hiers at 867-4157 or fred.hiers@starbanner.com.


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