Valley Hospital, Triad make merger final

MAT-SU -- Monday marked the first day of a new future for Valley Hospital Association and Triad Hospitals Inc.

Formally named Mat-Su Valley Medical Center but doing business as Valley Hospital, VHA formally closed the deal with Triad, effective immediately. Officials from the two groups signed off on a joint venture partnership, the last step in a process that began before the Valley Hospital Operating Board hired George Larson as the new chief executive officer in October 2001.

Although there wasn't a specific partner in sight at the time Larson was hired, it was clear from presentations Larson made around the Valley shortly after arriving in Alaska that the hospital was looking for options that would allow it to expand. In September 2002, the VHA operating board voted to enter into talks with Triad to establish a joint venture company, and in November, 87 percent of VHA's membership voted to allow the association's management to finalize a definitive agreement with Triad and begin planning for a new hospital. Those plans are well under way, with the recently approved certificate of need granting Valley Hospital the ability to double its capacity and plan for the future through a new facility located near the intersection of Trunk Road and the Parks Highway.

"It's about improving the community's health," Larson in a recent press release. "As MVMC takes shape and the new hospital is built, it's our community members who will be the true winners who benefit from this partnership."

Triad and VHA officials will be in the Valley Monday to meet with members of the community and celebrate the new partnership. A reception is planned from 5 to 6:30 p.m. Monday in the main lobby of Valley Hospital in Palmer.

The new partnership will change significantly the role of VHA, the quasi-public entity that previously determined the hospital's direction. The association will continue to exist, according to hospital spokeswoman Elizabeth Ripley, and it will hold 23.8 percent of the ownership in the joint venture, with Triad holding the remainder. The percentage represents the amount of assets and cash Valley Hospital brought to the table, Ripley said, and that percentage of profits from the hospital will be returned to the association, which will control how the money is spent.

"It will take its share of the profits and invest them in charitable works in the community," Ripley said. Where exactly those profits will go is still being determined, she said, although some of it may go to buy additional shares in the organization. "It can be used to buy up the share of ownership in the hospital -- up to 35 percent."

Ripley said the money could also be used to provide services not currently being provided by the hospital, or could go to provide scholarship programs for new employees, or toward an increased investment in Healthy Communities grants currently being provided by the hospital.

Although VHA holds less than one-quarter of the ownership, Ripley said the association will hold half the governance power, with five directors on the 10-member joint venture board that governs the organization. The set-up of the organization will change a little through the shift to a partnership, Ripley said, with roles of board members changing slightly. Previously, VHA's membership elected the hospital's 15-member Association Board, who, in turn, elected its eight-member operating board, which is responsible for establishing broad corporate policies and for leading management of the hospital. With the new joint venture, Ripley said both boards will remain in place, but the operating board will select the five people representing VHA on the joint venture board. That board, Ripley said, is responsible for setting the overall policies of the hospital, determining new directions for service, and essentially for big-picture decisions. It's also tasked with electing a board of trustees, made up in equal parts by hospital staff and community members.

Although the setup may appear to be multi-layered, Ripley said it's a model Triad has used previously -- one that cemented VHA's decision to partner with Triad.

"It's really about meeting a need in the community," Ripley said. "That was one of the things that greatly appealed to us about Triad."

Although the goal of the joint venture is to build a new facility, which is set to break ground in May 2004, several changes will begin before the new, nearly 200,000-square-foot acute care facility is ready to open for business, an event targeted for 2006.

The new facility will no longer fall under the tax-exempt status held by Valley Hospital, and Ripley said it's estimated to generate about $1.3 million in property taxes for the Mat-Su Borough. But, Ripley said, with the joint venture in place, Valley Hospital's current property holdings will also become part of the private domain, thereby generating property taxes in the meantime.

Although the status officially changed with the signing of the deal Monday, Mat-Su Borough Assessor Allen Black said property doesn't go on the taxable rolls until Jan. 1 each year. He added that the hospital facility has apparently never been assessed by the borough assessment department, and that job will have to be done in the coming weeks. West Valley Medical Campus, also now owned by the joint venture company, is expected to generate about $850,000 in taxes yearly. But Triad officials are saying the hospital will have a broader effect in the future.

"The new hospital's 'bricks and mortar' are really only a piece of Mat-Su's new healthcare delivery system," said Danny Shelton, Triad chairman and chief executive officer in a press release from the company. "Until and while construction is underway, Triad will develop other key components of that system, such as physician recruitment and employee and patient satisfaction."

Ripley said when the hospital moves to its new location, virtually every department will increase in capacity -- and in staff. The number of physicians and specialists needed to provide care at the new facility will need to have nearly doubled by then, Ripley said, and the hospital is working hard to recruit and encourage physicians and specialists to come to the Valley now, in preparation for that change.

Part of the challenge of recruitment, Ripley said, is that the new physicians and specialists won't be part of the hospital staff, but will have hospital privileges to admit and care for patients. The balance lies in providing access to the hospital to the new physicians in a timely manner, which is difficult with the existing hospital's limited capacity.

"We have access issues," Ripley said.

The hospital is pushing forward, however, in recruiting new physicians and specialists. While the population of the Valley was formerly too low to be able to support specialists, she said that has changed, and the hospital is now searching for two cardiologists who would be on active staff, able to respond within 30 minutes.

Along with new physicians and specialists, Ripley said, come several benefits for the community. They generally lease office space in the community, buy homes, and hire staff to manage their offices. While it's the job of the physicians and specialists to hire their staff, Ripley said the hospital is also gearing up for the needed staff expansion at the hospital of nurses and other personnel. That expansion may be as difficult as recruiting new physicians, however, with the nation's current nurse shortage.

"With limited nursing and other clinical training programs in the state and a nursing shortage nationwide, this means that MVMC (Valley Hospital) must be extremely competitive in terms of meeting the needs of its employees now and in the future," said Dr. Mike Alter, chief of the hospital's medical staff. "Triad has an excellent track record in terms of recruiting quality physicians to its hospitals."

Ripley said Valley Hospital currently has several 21-week nursing intern programs, where recently graduated nurses can get some on-the-job preparation in specialty areas such as obstetrics, intensive care, emergency room and other areas.

"The whole point is to train them and get them ready," Ripley said.

Those programs, she said, are in addition to others currently being offered through the Mat-Su School District and Alaska Job Corps. Through such programs, the hospital hopes to increase the number of trained nurses in Alaska, thereby increasing the pool of future applicants for nursing positions in the Valley.

Although there will be significant additions to staff when the new hospital comes on line, Ripley said the existing staff won't be disrupted by the joint venture. Part of the agreement, she said, was that, if the person is an employee at the time of the joint venture closing, they have a job under the new organization. That goes for administrative staff as well, Ripley said, although they're not under the same working arrangement as other, union-represented employees.

"All of us in administrative positions serve at will," Ripley said, "but yes, they're all working within the Triad system."

Other aspects of the hospital's workings had already begun switching over to Triad's method of management, she said, and that will be a continuing transition.

"We already submitted a business plan and budget generated through the Triad plan," Ripley said. "We're converting our other systems, one by one, to the Triad system. They have refined hospital management to a fine art and science -- they're very very good at that -- with the whole emphasis being excellent patient care."