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June 16, 2008 01:00 AM

Synergy with a twist

Hospital seeks for-profit partner to deliver savings

Vince Galloro
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    Six years after a merger of the only two hospitals in Pocatello, Idaho, county-owned 251-bed Portneuf Medical Center remains split between two campuses. Bannock County officials, however, expect to make a decision this month that would pave the way for a $200 million expansion and consolidation, according to the county’s advisers.

    County-owned Bannock Regional Medical Center acquired Pocatello Regional Medical Center from Intermountain Healthcare, Salt Lake City, to form the system in 2002. It has been unable to launch a bond issue to expand the Pocatello Regional campus and consolidate operations there, said Joe Lupica, president of Stroudwater Capital, which is advising Bannock County.

    The county-appointed hospital board and the hospital administration wanted to pursue a conversion of the hospital to tax-exempt, 501(c)(3) status, but, in a report issued in January, Stroudwater contended that the system cannot remain a stand-alone and fund its capital needs. Standard & Poor’s lowered its rating on Portneuf to BB, or below investment grade, in December 2007, citing “a history of erratic financial performance and very disappointing operating results in unaudited fiscal 2007 (results), as well as a strained balance sheet.” The ratings report also noted that Portneuf hasn’t gained much from consolidation and will have to boost its debt significantly to reap those gains.

    Patrick Hermanson, chief executive officer and administrator of the hospital, declined to be interviewed. Kelly Hirning, chairman of the hospital board, could not be reached at deadline.

    “The hospital has a great plan and a great future, but bond investors, especially in the current environment, weren’t going to go for it,” Lupica said in an interview.

    The county’s plan is to convert Portneuf to a private, tax-exempt organization that would then be free to form some partnership with a for-profit operator, Lupica said. That could take the form of a joint venture with shared governance, he said. Both the conversion and the partnership would be subject to voter approval, he said.

    Twelve providers responded to the county’s request for proposals, Lupica said. The county’s lawyers are reviewing the responses and expect to name some finalists—the number hasn’t been determined—later this month, Lupica said. Those finalists will pitch their proposals at public meetings and take questions from residents, he said. There is no time frame beyond that.

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        • Leadership Symposium
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        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
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        • - Value Based Care
        • - Supply Chain Revenue Cycle
        • - Hospital at Home
        • - Workplace of the Future
        • - Virtual Health
        • - Future of Healthcare Staffing
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