BAMC, Aurora negotiate
Local hospital takes first steps to form minority partnership
Friday, September 27, 2013 7:00 PM
MARINETTE - Bay Area Medical Center has begun negotiations with Aurora Health Care as a potential strategic minority partner.
The BAMC Board of Directors unanimously agreed Thursday to authorize negotiation of Letter of Intent with Aurora, who was one of nine health systems to show interest in partnering with BAMC.
"Our board began this process in mid-2012 by first determining that a minority partnership was in BAMC's best interest," said Ed Harding, BAMC president and CEO.
The board established its key requirements for a partner and identified access to capital to support expansion; access to managerial and clinical expertise; a future growth strategy; and access to an established Accountable Care Organization, a key provision of the Affordable Care Act.
The board also made it clear that BAMC was not interested in pursuing a full-asset merger or sale and that it intended to continue with a local board with local control.
"Aurora has agreed to that critical requirement," Harding said. "From the beginning, the board said it wanted a minority partner. Even though if was a challenging financial year ... we are in a strong financial position. We don't have to do this - we want to do this."
Harding said that the requirements of the Affordable Health Act made it "wise for individual hospitals to seek a strong financial organization to partner with."
Partnering with Aurora will help both entities, which already have a working relationship, to continue to provide health care locally.
"They, too, recognized we would be stronger together," Harding said.
"We were definitely interested from the beginning," said Brad Hahn, executive vice president of the north region with Aurora Health Care. "We have a strong presence in the Marinette community and a number of physicians and patients."
Hahn said Aurora has always been supportive of the local hospital, where Aurora's physicians have admitting privileges.
There are many opportunities both Aurora and BAMC can explore in partnership, he said, including electronically shared medical records.
"It's best if care can be provided close to home," Hahn said. While both BAMC and Aurora offer many providers and services to the community, this opportunity would open the door to more possibilities, he said.
"We put on the table the advantages we saw in a relationship," Hahn said of Aurora's initial proposals.
There still are steps to be taken before a deal would be reached, Harding said.
It is expected that negotiating the Letter of Intent will take three to four weeks. That will outline the broad intents of both parties in the agreement.
Then, each organization will go through a period of due diligence and negotiate a final definitive agreement which would require board approval.
"There could be make-or-break issues (in hammering out a definitive agreement), but both (BAMC and Aurora) will go into it for about a three-month period. At the end of that phase, it will up to the board - (where they decide) go or no go," he said.
"There's a challenge to converting (the Letter of Intent) to a working agreement," said Hahn, who added that he was confident of the two health care organizations' abilities to move forward.
He called both BAMC and Aurora trusted providers and said it is time to "set aside the differences in the community from the past" and move forward.
The process will include regulatory review and approval.
In the meantime, it will be "business as usual" at BAMC, Harding said.
"A lot of people automatically think we are going to change our name," he said, adding this is not a merger or a sale. "We are not going to become Aurora Bay Care."
But the partnership will allow BAMC to explore its plans for expansion and renovation, which were shelved during the recession, but are a strong part of the future of the organization.
"In our master facility plan, the first thing is (deciding) the best transformation of our facility - whether it is making it larger or building a brand-new facility at a new location," Harding said.