The proposed merger of Mountain States Health Alliance and Wellmont Health System could save $25 million per year in labor costs, according to a document filed with the Tennessee Department of Health (PDF).
If the merger occurs, the possible job cuts would allow the systems to invest money in new clinical areas, which isn't possible if either system were to be acquired by an outside party, system leaders said. “We were trying to avoid unnecessary job losses,” said Alan Levine, CEO of Mountain States, based in Johnson City, Tenn.
Mountain States is a 13-hospital system that serves Kentucky, North Carolina, Tennessee and Virginia. Wellmont, based in Kingsport, Tenn., is a six-hospital system that serves Tennessee and Virginia, and it has 6,400 employees.
Mountain States and Wellmont revealed information about the possible job cuts in a document dated March 16 that answered queries from the Tennessee Department of Health regarding the certificate of public advantage application filed by the systems seeking permission to merge.
According to the document, the cuts would happen over time and through attrition. The proposed new system aims to cut down on job duplication, overtime and other labor costs, the document said. Employees could be transitioned to new or expanded roles in many cases.
If the merger is approved, departments that could experience cuts are administration, biomedical engineering, patient access/registration, finance and accounting, health information management, human resources, facilities and maintenance, security, supply chain, and other departments and areas.
But jobs at the two systems would be uncertain if either were acquired by an out-of-town bidder. With Medicare cuts and shrinking payment rates creating financial pressure, Mountain States and Wellmont looked at other potential partnerships. Most of the options were out of state or out of region, Levine said. If acquired by another system, the potential job losses could exceed 600, as there would be no need for the acquiring system to keep the corporate infrastructure, he added.
As part of the plan to invest in the community, Mountain States and Wellmont announced in January a pledge of almost $500 million over 10 years in community benefits if the merger goes forward. The new combined system would spend $75 million in population health improvements; at least $140 million to expand community-based mental health services, including residential and outpatient addiction recovery programs; $85 million to develop academic and research opportunities; and up to $150 million to support health information exchange throughout the region, they said.
In addition, as part of the commitment the new system would expand access and choice, they said. The systems would manage three full-service hospitals in Johnson City, Kingsport and Bristol.
A final decision on the merger is expected from state officials in Tennessee and Virginia at the end of the summer. Both states would have to approve the deal, and both would supervise the new organization and enforce the commitments made in the plan.
If the merger is not approved, Wellmont CEO Bart Hove said the system would retrench and consider its options. It would have to look at other merger offers, which could lead to more lost jobs.
