MCMC, Spectrum Health sign merger agreement
BIG RAPIDS — Many years in the making, officials from Mecosta County Medical Center and Spectrum Health signed documents on Tuesday to finalize a merger, which will become effective July 1.
Mecosta County commissioner Eric O’Neil, Spectrum Health President and CEO Richard Breon and Dr. Fred Guenther, MCMC board chair, signed the merger agreement in MCMC’s board room, surrounded by county commissioners, hospital board members and community supporters.
“This is a significant day for the hospital, clearly,” MCMC CEO Sam Daugherty told the crowd. “It’s a turning point, the beginning of a new future for the hospital and the community that we serve. ... Our bench here in Big Rapids just got a lot deeper today as a result of this relationship and partnership with Spectrum Health.”
The merger will bring MCMC’s staff into the family of Spectrum’s 19,000-plus employees, providing better resources for the Mecosta County community, Breon said. The Big Rapids location will be the 10th hospital in the Spectrum system.
“I think we’re doing the right thing for the long-term health care of this community,” he said. “We had a lot of discussions a long time ago about what might be the best thing for the health care of this community and what we could do to support that. ... We’re really looking forward to providing quality care and building on the excellence that’s already here.”
MCMC and Spectrum began exploring a possible merger in 2007. Discussions continued throughout 2008 until Spectrum ended merger talks due to the economic downturn. The discussion resumed in 2009.
In May 2012, the hospital board adopted a plan to restructure the hospital’s articles and bylaws in an effort to take advantage of a law that would allow the hospital to merge with a private corporation more easily.
In November 2012, MCMC board of trustees unanimously voted to recommend a new agreement for the terms of a merger between MCMC and Spectrum Health. The next step at that point was to gain approval from Mecosta County Commissioners and then Spectrum Health board of trustees. Later that same month, they approved the merger plans.
Negotiation points included Spectrum agreeing to assume from taxpayers the remaining $8.4 million debt attached to hospital renovation project. Voters approved paying for the $11 million project in 2003.
MCMC’s net annual revenues are around $50 million with expenses around $49 million. The hospital’s valuation is around $23 million, with assets exceeding liabilities.
O’Neil said the decision was made easy by the countless hours of research done by the MCMC hospital board.
“There came a time when the hospital board had to make a decision whether they thought you could survive in this health care environment without help,” Guenther said. “After months of study, now years of study, we thought it’d be best to entertain joining Spectrum and I don’t think I’ve ever regretted the decision. ... It’s a really outstanding thing for Mecosta County and our area.”
The merger with Spectrum comes at a time when the country at large is “entering a new era of health care,” Daugherty said, referring to the onset of the Affordable Care Act. Spectrum will be able to help build up primary health care services in Mecosta County as well as the information technology infrastructure needed to share medical records between facilities.
“They’ll be assisting us with how to cover all those patients in west central Michigan. We would have had to sort of flail away to figure out how to do that,” Daugherty said. “This is new in health care. There’s 50 million new people in the United States who are now going to be able to have health care, so how do you take care of those patients in your area? No one has a perfect answer for that.”
Spectrum also will be able to absorb some of the costs that come as a result of the Affordable Care Act, Breon said.
“As part of a larger organization, MCMC will be able to withstand some of the larger reimbursement cuts that are coming,” he said. “I think there’s also more understanding of the myriad regulations we have to deal with. I think there’s more depth to analyze those and make sure we take the right course of action. That’s going to help position this organization here in Big Rapids for the future.”