News & Features

CEOs at North Valley, KRH Discuss Affiliation

This month marks three years since start of agreement that executives say has streamlined local health care

Exactly three years after formally entering into an affiliation agreement, officials at North Valley Hospital and Kalispell Regional Healthcare still hear and see plenty of comments reflecting a lack of understanding regarding their relationship.

At times the commentary veers into the realm of fundamental misunderstanding, suggesting anywhere between Kalispell Regional Healthcare (KRH) outright owning the Whitefish hospital to the two entities remaining completely autonomous from each other.

The truth is far more nuanced, according to the chief executive officers of KRH and North Valley Hospital (NVH), who each recently sat down for separate interviews to discuss the affiliation.

PODCAST: Hear directly from KRH CEO Craig Lambrecht as he discusses affiliation and more in the latest Editor’s Club podcast, available here. To learn more about the Editor’s Club or to join today, visit www.beaconeditorsclub.com.

The boards of KRH and NVH finalized the affiliation agreement in early 2016, and it took effect May of that year. They had been discussing such a partnership for years, as their operations had organically grown increasingly collaborative in areas such as “recruiting and sharing physicians, sharing medical services, facilitating the electronic use of health-related information, and completion of join community health needs assessments,” North Valley’s then-CEO Jason Spring said at the time.

“We are excited to formalize our relationship so we can more effectively work together and expand our efforts to provide accessible and affordable health care for our community,” Spring added.

Current North Valley Hospital CEO Kevin Abel echoed Spring’s comments, saying the affiliation impacts both clinical operations and business practices. Among the primary purposes of the agreement, Abel said, were to “build healthier communities through more innovative and coordinated care” and to “develop a business model that is sensitive to achieving increased efficiency, cost reduction and avoidance of duplication.”

“(It’s) really a shared vision for a health care system sensitive to local and regional needs,” Abel said.

Clinically, the agreement formalized and increased collaborations already in place, while also adding new ones into the mix. Abel cited cardiac rehabilitation, nuclear medicine, radiology and pathology as prime examples of services benefitting from formal collaboration. He also said two separate Eureka clinics — one operated by KRH and the other by NVH — have been combined into a single joint venture to reduce duplication.

On the business side, Abel said finance and accounting teams were restructured to work together, while other back-office details were streamlined, such as a shared warehouse for supplies, shared policies and a consolidated purchasing group for medical supplies that brings down prices.

Under the affiliation agreement, there was no transfer of assets or title, nor was there a purchase agreement. There was also no facility consolidation, with North Valley continuing to operate as a separate critical-access, general acute-care hospital in Whitefish, with its own services such as obstetrics, an emergency services department and inpatient and outpatient medical and surgical procedures. It also maintained its Planetree model of patient-centered care.

Furthermore, North Valley retained its own nonprofit status, mission, independent foundation, management structure and board, although Abel reports to Dr. Craig Lambrecht, the president and CEO of KRH, and certain board decisions must go through the KRH board. Additionally, two members of each board serve on the other.

That structure, however, means that KRH does at times have final decision-making and governing authority over NVH, which is one of three hospitals under the KRH umbrella, alongside The HealthCenter and Kalispell Regional Medical Center.

For instance, capital and operating budgets formalized by the NVH board must go through the KRH board for review and final approval. Nor could the NVH board advance a major bond issue or cut a major service line, such as obstetrics or the emergency department, without KRH board approval.

On the other hand, Abel said, a decision regarding, say, medical staff management, involving physicians practicing at the hospital, “starts and ends with the North Valley board.”

At the top of the entire KRH system is Lambrecht, who assumed president and CEO responsibilities earlier this year. Lambrecht identified medical records as another area to streamline. Currently, NVH and KRH maintain separate medical records.

“Both institutions recognize how important it is in the next one or two years to get on the same medical record platform,” Lambrecht said.

Kalispell Regional Healthcare’s $24 million settlement with the federal government, arising from litigation and a federal investigation, doesn’t impact North Valley Hospital financially or operationally, Abel said. The hospital is not named in the litigation, doesn’t have to enter the federally mandated compliance program that KRH did, and doesn’t pay any settlement money.

For years, hospitals and health care systems across the country have been experiencing mergers, acquisitions, consolidations or joint ventures like that of KRH and NVH. The trend has contributed to the growth of expansive multi-state or multi-national health care entities, but KRH and NVH remain locally owned and operated.

Lambrecht said the affiliation helps to retain that independent local control by implementing efficiencies and pooling resources.

“The communication gets better,” he said. “The ability to problem solve for patients, the ability to put a workforce together and streamline a process just makes so much more sense.”

Over the years, KRH has significantly expanded its footprint and economic impact in Northwest Montana. Much of the growth occurred under former CEO Velinda Stevens, who envisioned KRH evolving into a regional medical destination with high-level care that would prevent locals from needing to travel elsewhere to seek specialized medical attention while also attracting people from outside the area.

Stevens, who passed away in January 2017, framed the affiliation within that vision.

“By aligning our organizations, this affiliation will allow us to focus on coordinated care within our community, allowing more patients to access services they need locally versus foregoing care or traveling out of the area,” Stevens said.

Lambrecht said the affiliation is vital for the local independent hospitals to thrive in the modern health care landscape.

“The collaborative nature of health care in valley is dependent on Kalispell Regional and North Valley figuring out things together,” he said.

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