What you need to know about the forces reshaping our industry.


November 13, 2014

When small hospitals join big health systems

Daily Briefing

Providers are consolidating to deal with the effects of health reform and other industry pressures, but large and small hospitals are still figuring out how to navigate the balance of these new relationships, Jeremy Olson writes in the Minneapolis Star Tribune.  

According to Olson, small hospitals often agree to partnerships or takeovers by larger systems because of their struggles to manage decreasing insurance reimbursement rates or their desire to invest in costly new technology, such as EHR systems. In addition, partnerships and acquisitions give small hospitals access to resources and experts at larger institutions treating more complex issues.

But these alliances can create new tensions for hospitals that are used to being independent—and for their communities, too—as health systems have to weigh larger trade-offs, writes Olson.

Tension over partnership in one Minnesota town

For instance, nearly 400 people gathered at a Fairmont, Minnesota, town hall meeting last month to address complaints related to the Mayo Clinic's operation of a local clinic, now known as the Mayo Clinic Health System in Fairmont

At the meeting, residents voiced concerns about long waits for care and being diverted to Mayo facilities in other cities because the Fairmont clinic was short-staffed.

A group of city leaders—including a former mayor and former board members who participated in the hospital's sale to Mayo in 2001—said that the hospital was transformed from a regional medical center to a feeder hospital in 2008. As a result, the number of workers and staff beds was significantly reduced.

Tom Hawkins, a former hospital board member, said, "There are services you could get in 2008 and 2010 that you can't get here anymore."

According to reports from the Minnesota Hospital Association, the Fairmont hospital posted losses of $1.3 million in 2011 and $292,000 in 2012. Among other things, the hospital has performed poorly in the Affordable Care Act's (ACA) penalty programs for readmissions and care quality and patient experience, according to the Star Tribune.

Mayo’s stance: We’re helping Fairmont get stronger

However, Mayo officials say that the hospital now rates much higher on certain care measures, including having low mortality rates for patients with heart failure and pneumonia. They also note that they are in the process of making quality improvements.

Mayo officials note they say that the hospital is in a stronger position under Mayo ownership to adequately meet new tougher quality standards under the ACA.

Has the ACA triggered a wave of hospital mergers?

Bob Bartingale, the hospital's administrator, says, "If I was sitting in some of these other small, rural communities where they have a [hospital] not affiliated with a strong system such as Mayo, I'd be very, very concerned."

Bartingale also explained the hospital's staffing cuts, noting that the hospital went from about 660 employees to 550 mostly because of the consolidation of lab, call center, and record-keeping services.

Mayo Clinic Health Network CEO Rob Nesse said that the declining number of inpatient visits and growing number of diversions to outpatient care in Fairmont reflects a national trend.

"Patients aren’t being hospitalized disproportionately more in Mankato to the detriment of Fairmont," Nesse told the Star Tribune. "It’s just less people hospitalized all over" (Olson, Minneapolis Star Tribune, 11/8).

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