This story by Aaron Calvin was first published in the News & Citizen on Dec. 12.
Lamoille Health Partners is facing a financial crisis, and the health care provider is turning to Copley Hospital for help.
In early October, the board of directors for the nonprofit that provides primary care, pediatric care, mental health care, substance abuse treatment and dental care to around 19,000 people throughout Lamoille County and the surrounding region found itself in dire straits.
Susan Bartlett, chair of the health partners’ board of directors, said the primary causes of this sudden deficit were the withdrawal of pandemic-era federal funding that recently buoyed the organization, and an ongoing fight between the federal government and pharmaceutical companies that cost the organization around $500,000 in rebates.
She also noted that the nonprofit’s status as one of the state’s 11 federally qualified health centers allows it to be reimbursed by Medicare and Medicaid at a higher rate than other health care providers, but that still does not equal the full cost of care. Low-income patients are also charged on a sliding scale.
Bartlett wouldn’t specify the exact size of the deficit but described it as a “tight financial situation.” She said the organization is in ongoing talks with its creditors and the state to search for a more financially sustainable path and may have to refinance some of its properties to cover the deficit.
This search for fiscal solvency has meant turning to its health care neighbor, Copley Hospital. The two providers share many patients but have had a sometimes strained relationship in recent years.
The hospital has benefited from a one-time infusion of cash following the recent sale of its Copley Terrace residences to affordable housing nonprofit developer Evernorth, giving it some financial flexibility.
Following the recent departure of Lamoille Health Partners CEO Stuart May, who Bartlett described as being unwilling to work closely with Copley, the partners signed a memorandum of understanding with the hospital to initiate a feasibility study, funded by the hospital, to determine how the organizations could best work together.
Lamoille Health Partners will also return to having its medical testing done at the hospital, reversing a 2021 decision to outsource the service that Copley administrators claimed cost the hospital more than $1 million in lost revenue.
“Among the possibilities under consideration is the creation of a stable ‘new parent system,’ which could involve significant investments over the next three years to improve operations and financial stability for both (Copley Hospital) and (Lamoille Health Partners),” read a Dec. 6 memo sent to Copley staff and signed by both Bartlett and Copley Health Systems board chair Kathy Demars.
According to the memo, the study “will explore multiple collaboration options, including a potential merger, with the assistance of external audit and consulting teams.”
“We’re very happy to be working with them,” Copley CEO Joe Woodin said. “We’ve had a relationship going back decades, and if they need some help and assistance, we’re very thankful to be able to provide that, and we’re going to work together to improve quality, reduce costs and help manage our patients in a more seamless fashion.”
The results of the study will come at the end of January, but in the meantime, the health partners have sought impactful cuts to help right the ship. That includes eliminating the position of director for the Lamoille Health Collaborative, a pandemic-era initiative under the Lamoille Health Partners umbrella meant to help local health care organizations work together.
The partners are also shutting down the community center in Morrisville, which it had acquired in 2022 to provide a safe, enriching environment for local youth. Costing about $250,000 a year to operate, Bartlett said it quickly became a target for cost cutting.
“We’ve got to reduce our spending in this year’s budget by a substantial chunk. The first thing you look at in those situations are things that may be good, and they may be worthy causes, but they’re costing you money, and they aren’t generating any revenue,” Bartlett said.
CEO woes
When VTDigger reported May had stepped down as the chief executive in October, both Bartlett and the former CEO told the news website that the parting of ways was mutual. Bartlett said there was “no dramatic event” that incited the change.
Now, however, Bartlett acknowledged that the health partners’ board felt that May was not the leader for this moment of financial distress.
“He just sort of lost the confidence of the board,” Bartlett said. “We just didn’t feel that he was coming up with a lot of the kind of really hard work that comes with having to make the kinds of reductions that we were looking at making.”
May’s disinclination to work closely with Copley, and the relationship between the partners and the hospital ranging from “neutral to hostile,” as Bartlett described it, was certainly a barrier, but Bartlett said she also believed that it was a question of management style.
“Stu’s management style was very much to have departments in silos and not a lot of good communication between various internal silos,” Bartlett said.
May took over the federally qualified health center in the summer of 2020, after joining the organization as its chief financial officer in 2019. The former Community Health Services of Lamoille Valley rebranded to its more succinct moniker the following year.
He oversaw a period of ambitious expansion of services, which included the acquisition of the Morrisville community center and the beleaguered Family Practice Associates in Cambridge, and the establishment of a mobile dentistry. Much of this expansion was funded by federal grants while May added an additional 30 employees to the health partners’ payroll.
The way he described it in an interview conducted last year, May was brought in to develop a “strategic vision” and address “financial infrastructure issues” within a philosophy of providing holistic care centered around primary physicians.
Following his departure, Bartlett and partners board vice chair Peter Anderson will share interim CEO duties, but they’re also not rushing the hiring process for a new chief executive.
“We feel as a board that it’s our responsibility to get the finances sorted out, get everything moving in the right direction, particularly, excitingly, working with Copley and (Lamoille Home Health and Hospice) to come up with some interesting, exciting things that we can do that will help, and once that direction is clear and there’s a solid path, then we will be looking for a new CEO,” Bartlett said.
Possible merger
Just as the former Community Health Services of Lamoille Valley was spun out of the Copley systems in the early 2000s, there’s a possibility it could be brought back under its auspices.
The catch now is that the health partners’ status as a federally qualified health center means that it cannot be owned or acquired by another organization. A merger, however, is possible. Woodin oversaw a similar situation at Gifford Medical Center in Randolph.
In a merger, the health partners and hospital boards would combine, with the new organization retaining the federally qualified health center status. Being the larger of the two organizations, the hospital would likely retain majority control.
While Lamoille Health Partners may have the most urgent financial need, Copley has also been searching for sustainability and solutions to its own problems, trying to expand and modernize services while remaining hampered by relatively low reimbursement levels from commercial insurers despite frequent requests to state health care regulators to raise those rates.
While Woodin was enthusiastic about the possibility of a merger, Bartlett downplayed the idea.
“You say the word ‘merger,’ and immediately people begin to panic. Our doctors are like, ‘We’re not working for Copley,’ and, that said, that’s absolutely right, you’re not working for Copley. That’s nothing to fear, not in the cards, not happening.”
Bartlett instead said the organizations will start any partnership slowly, seeing what the organizations can achieve through smaller projects, perhaps joining the New England Health Network, the multi-hospital collaborative helmed by Woodin, or combining resources to bring needed specialists to the region.
If it all works out, Bartlett is hoping that a solution can be found that will be an example for rural health care providers across the United States.
“It’s not just in Vermont, but all over the country. Access to health care in rural areas is getting more and more difficult, and an awful lot of rural areas have small hospitals like Copley and a (federally qualified health center),” Bartlett said. “If we could come up with a model that works, it could help address access to health care issues all over the country.”
