Health system commits $56M for integration
A health system has committed millions to a health care provider in the region and its foundation as part of an agreement to integrate their operations.
The Grand Rapids-based Spectrum Health board of directors and the Hastings-based Pennock Healthcare System board of trustees announced today the approval of resolutions for a definitive agreement to integrate Pennock Health Services into Spectrum Health as Spectrum Health Pennock Hospital, as of May 1, pending final legal documentation.
Richard Breon, president and CEO at Spectrum Health, said the organization has enjoyed a strong relationship with Pennock for many years.
“This agreement signifies an investment to provide quality health services to the Hastings community and Barry County,” Breon said.
Sheryl Lewis Blake, CEO of Pennock Health Services, said the organization remains committed to providing a “seamless circle of patient care” by offering greater access to physician services.
“The connection with Spectrum Health provides an opportunity to increase services locally, while facility and technology replacements are enhanced by the economies of scale achieved by integrating with a larger system,” Blake said.
Under the terms of the agreement, Spectrum Health will become "the sole corporate member" of Pennock Health Services, while the local board of trustees will remain with the addition of two Spectrum Health representatives.
Spectrum Health has committed $46 million in capital over a period of 10 years and will maintain essential services.
Spectrum also agreed to a nine-month master facility planning process for the roughly $70 million, 49-bed hospital and medical arts building project proposed by Pennock in February 2014 in Rutland Township, at the corner of M-37 and M-43.
Pennock employees will have their seniority transferred into Spectrum Health benefit levels, and physician employment contracts will be honored.
Brad Johnson, vice chair of the board at Pennock, said the board is committed to strengthening the delivery of local health care to patients and the community, and the relationship with Spectrum will provide enhanced care.
“Spectrum Health is making significant financial and non-financial contributions to demonstrate their long-term commitment to our community,” Johnson said.
With the Pennock Foundation Board of Trustees becoming a committee of the Spectrum Health Foundation, Spectrum has agreed to contribute $10 million to the foundation committee.
The Pennock Foundation Committee of Spectrum Health Foundation will manage a total of more than $16 million to allocate toward Pennock hospital programs, services and community health outreach.
As a committee of the larger Spectrum Health Board, the Pennock Foundation will also assist in carrying out the overall foundation’s responsibilities: development of funding priorities, maximizing philanthropy and directing the distributions of funds for the Pennock hospital and the local community.
Mike O’Mara, board chair of the Pennock Foundation, said the local foundation leadership will remain and all current and future funds will be designated for local use.
“The integration of foundations provides greater opportunity for higher investment returns, while leveraging Spectrum Health’s expertise and systems to enhance foundation opportunities,” O’Mara said.
The selection process
The Pennock Hospital Board of Trustees voted to affiliate with Spectrum Health back in September 2014 and announced the completion of a letter of intent on Oct. 23, 2014.
The decision to integrate with Spectrum Health resulted after the board and leadership conducted a due diligence process, incorporating data analysis, candidate interviews and site visits with potential partners.
Dave Baum, secretary of the board at Pennock, said the integration with Spectrum Health resulted after careful exploration.
“The hospital board identified criteria for evaluating a potential partner, including cultural match, the provision of measurable outcomes and high-quality care,” Baum said. “Even though Spectrum Health is clearly the quality leader in West Michigan, it was a lengthy process of education, debate and listening to other independent hospitals and how affiliation impacted their local delivery of care.”
A sub-committee comprised of board and medical staff leadership spent more than 12 months learning about types of affiliation and contracted with Juniper Advisory between April 2014 and September 2014 to seek out interested organizations.
Out of four proposal letters and a four-week process of due diligence and site visits, Spectrum Health was ultimately selected as the affiliation partner.