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Merger to encourage local investment and help insurance costs, health executives say

Merger to encourage local investment...

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Wellmont Health System and Mountain States Health Alliance have launched more than a dozen transition teams to work on their merger, now expected soon after the first of next year.

Merging to one health system is a move health executives say will help people with low incomes.

They expect more people to have access to services with in-network insurance coverage -- which could mean lower prices.

"There's also a provision that if payors go out of network and choose not to contract with us, we still...the cap, on price growth; the cap still applies," Mountain States Health Alliance CEO Alan Levine said.

The merger agreement that Tennessee regulators have now approved also provides unique insurance incentives.

"They did put a provision in there that provides a higher cap for if an insurance company chooses not to contract, which is sort of done as an incentive to get the insurance companies to want to have contracts with us," Levine said.

In addition, it protects rural health care.

"For 2 years, we will not be terminating, without cause, any employee in any rural hospital," Levine said.

The Tennessee Department of Health will conduct an annual review of the new merged system to make sure that it meets requirements. Those requirements include provisions for investment in region. Health system officials said they are seizing the opportunity to reinvest savings in improving the health of the region.

"If we merged with an out of market competitor, we would end up basically shipping about $50 million in capital out of the region,” Wellmont Health System Board Chairman Roger Leonard said. “So it's not just about jobs, it's about capital. And that capital is staying and being reinvested back in our health system."

"It's not about merging to eliminate jobs and save money,” Levine said. “It's about merging to get synergies and efficiencies, and then reinvesting those dollars here in the region. And the things we're going to be investing in will create jobs."

The new health system plans to make a ten year investment of $85 million in medical research and education.

Virginia officials are expected to decide whether to approve the merger before the end of September.


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