mayo certificate of need application - draft (bgw …€¦ · web view2019/08/19 · her 25-year...

Certificate of Need ApplicationHospital Administrative District No. 4 to Affiliate with Northern Light Health

Transfer of Ownership

August 19, 2019

ContentsI. ABSTRACT...........................................................................................................................................4II. FIT, WILLING AND ABLE.................................................................................................................6

A. Summary of the Project.....................................................................................................................6B. Legislative Process.............................................................................................................................6

C. Profile of the Applicant......................................................................................................................7D. Key Personnel..................................................................................................................................11

E. Quality, Patient Safety, Experience and Performance Improvement..............................................13F. Integration Process...........................................................................................................................14

G. Rationale for Northern Light Health to Affiliate with H.A.D. #4...................................................14H. Regional Support.............................................................................................................................15

I. Summary of Fit, Willing and Able..................................................................................................15III. FINANCIAL FEASIBILITY...............................................................................................................16

A. Background......................................................................................................................................16B. Financial Impact Initiatives..............................................................................................................17

C. CON Filing Fee................................................................................................................................18D. Summary of Financial Feasibility....................................................................................................18

IV. PUBLIC NEED....................................................................................................................................19A. Description of Hospital Administrative District No. 4....................................................................19

B. Board of Directors............................................................................................................................26C. Needs of the Community.................................................................................................................26

D. Community Benefit..........................................................................................................................27E. Regional Clinical Collaborations for Access to Services................................................................27

F. Quality Programs.............................................................................................................................28G. H.A.D. #4 Selection Process and Rationale to Seek Affiliation with NLH.....................................30

H. Accountable Care and Population Health........................................................................................31I. H.A.D. #4 Service Areas and Market Overview.............................................................................32

J. Health Professional Shortage Areas and Medically Underserved Areas/Populations.....................36K. Socioeconomic and Market Share Information for the Service Area..............................................37

L. H.A.D. #4 Historical and Forecasted Service Statistics...................................................................38M. Summary of Public Need.................................................................................................................41

V. ORDERLY AND ECONOMIC DEVELOPMENT............................................................................42A. Benefits of H.A.D. #4 and NLH Affiliation....................................................................................42

B. Quality Improvement.......................................................................................................................43C. Governance Post-Affiliation............................................................................................................44

D. Alternatives......................................................................................................................................44E. Service Regions...............................................................................................................................45

F. CMS notification..............................................................................................................................46G. Payor Mix Assumptions...................................................................................................................47

H. Summary of Orderly and Economic Development..........................................................................47VI. OUTCOMES AND COMMUNITY IMPACT....................................................................................48

A. Quality Improvement.......................................................................................................................48B. Region’s Capacity for Services........................................................................................................49

C. Summary – Outcomes and Community Impact...............................................................................49VII. SERVICE UTILIZATION..................................................................................................................50

A. Utilization Data................................................................................................................................50B. Summary of Service Utilization.......................................................................................................50

VIII.TIMELY NOTICE...............................................................................................................................51IX. CONCLUSION....................................................................................................................................52

X. LIST OF ATTACHMENTS................................................................................................................53A. LD 1708 – Maine Act to Provide for H.A.D#4 to Merge into MRH Corp.....................................53

B. Membership Substitution Agreement..............................................................................................53C. Letters of Support............................................................................................................................53

D. Profiles of NLH Clinical Members..................................................................................................53E. NLH and MRH Board Member Lists..............................................................................................53

F. Medicare – CMS Compare Report..................................................................................................53G. Financial Forecasts...........................................................................................................................53

H. NLH and MRH 2018 Audited Financial Statements – 1) NLH 2) MRH 3) GASB to FASB.........53I. H.A.D. #4 License...........................................................................................................................53

J. Community Health Needs Assessment (CHNA) Action Plans 1) MRH 2) CA Dean....................53

2 | P a g eNorthern Light Health – H.A.D. #4 – Transfer of Ownership August 19, 2019

FiguresFigure 1: Pre and Post Northern Light Organizational Chart................................................................8Figure 2: Northern Light Health Sites of Care (pre-H.A.D. #4)............................................................10Figure 3: Mayo Regional Hospital Service Locations...........................................................................21Figure 4: Mayo PSA/ SSA Service Area.................................................................................................33Figure 5: Northern Light CA Dean, Northern Light Sebasticook Valley, and Mayo PSA’s..............35Figure 6: NLH and H.A.D. #4 Service Areas.........................................................................................46

TablesTable 1: Mayo Historical Financial Results............................................................................................16Table 2: Financial Impact Initiatives Post-Integration.........................................................................17Table 3: H.A.D. #4 Projected Financial Results Post-Northern Light Health Affiliation..................18Table 4: Mayo Service Location and Descriptions................................................................................22Table 5: Mayo Medical Staff Composition.............................................................................................23Table 6: H.A.D. #4 FY2018 Community Benefit Expenditures............................................................27Table 7: NLH Regional Clinical Relationships with H.A.D. #4............................................................28Table 8: Mayo Regional Clinical Relationships with Other Health Care Providers..........................28Table 9: Medicare Hospital Compare Results for Timely Emergency Department Care.................29Table 10: Mayo Patient Origin by Town to Derive PSA/ SSA Regions...............................................33Table 11: Regional Market Volumes and Shares...................................................................................34Table 12: Mayo Historical Inpatient Market Share - PSA/SSA – CY 2018........................................36Table 13: Piscataquis County Health Professional Shortage Areas (“HPSA”) and Medically Underserved Areas/Populations...............................................................................................................36Table 14: Mayo Service Area Population Trends to 2031......................................................................37Table 15: Piscataquis and Penobscot County Household Income Trends to 2023.............................38Table 16: Maine Hospital Average Travel Times from Mayo..............................................................38Table 17: HAD#4 Historical Inpatient and Outpatient Statistics........................................................39Table 18: Mayo Projected Inpatient Statistics.......................................................................................40Table 19: Mayo Projected Outpatient Statistics.....................................................................................41Table 20: Payor Mix Assumptions...........................................................................................................47


I. ABSTRACT Eastern Maine Healthcare Systems d/b/a Northern Light Health (“NLH”) is the applicant in this Certificate of Need (“CON”) application, which proposes to effect a merger of Hospital Administrative District No. 4 d/b/a Mayo Regional Hospital (“H.A.D. #4”) into MRH Corp., a nonprofit subsidiary of NLH. NLH is an integrated healthcare delivery system providing a comprehensive continuum of services to communities throughout Maine. NLH is the second largest healthcare system in Maine. NLH’s core services include acute care medical-surgical hospitals, critical access hospitals, an acute psychiatric hospital, physician practices, ambulatory care centers, nursing homes, home care agencies, and ground and air emergency care transport services. Since its creation in 1982, NLH has evolved into a resource for primary, secondary, tertiary, trauma, home and community-based services. NLH strives to maintain a culture of collaboration, integration and flexibility to meet the changing needs of Maine communities and to advocate on behalf of the residents of those communities. Member hospitals and other affiliates share common values and work collaboratively to ensure the highest quality care.

H.A.D. #4 was legally organized and formed by and through a Private and Special Act of the Maine Legislature in 1973 (Chapter 76 of the Private & Special Laws of 1973) and encompasses 13 towns and plantations located in Penobscot and Piscataquis Counties. These include Abbot, Atkinson (dissolved July 1, 2019), Bradford, Cambridge, Dexter, Dover-Foxcroft, Guilford, Milo, Monson, Parkman, Sangerville, Sebec, and Willimantic. H.A.D. #4 and NLH members have a long history of collaborating on clinical services in the region.

In March 2016, H.A.D. #4 issued a request for proposal (“RFP”) to solicit proposals from other healthcare organizations for the development of an affiliation partnership with H.A.D. #4. NLH submitted a response to the RFP and was selected by the H.A.D. #4 Board as the system with which to affiliate. Following months of joint meetings with administrative and Board leaders, an Interim Agreement was signed on April 11, 2017. This agreement was followed by an Extended Interim Agreement dated December 28, 2017. On March 19, 2019, after both the NLH and H.A.D. #4 Boards voted to authorize and approve the merger, the parties executed the Agreement and Plan of Merger (the “Agreement”).

NLH’s and H.A.D. #4’s care and management philosophies are community-based and well aligned. Board, management, and clinical leaders have met during the due diligence process to discuss the opportunities inherent in the affiliation. The purpose of the affiliation is to promote improved efficiencies in healthcare delivery, access, and population health in Piscataquis and Western Penobscot Counties. This CON application describes how the affiliation will benefit patients and families and improve care across the region.

Because H.A.D. #4 was formed by the Maine Legislature, legislative approval was required to enable the merger. Therefore, leading up to this application there has been an extensive and complex legislative process culminating in a bill signed by Governor Mills on June 28, 2019, which amends the state charter of H.A.D. #4 and authorizes H.A.D. #4 to merge into MRH Corp., a Maine nonprofit public benefit corporation having NLH as its sole member. L.D. 1708, the bill Governor Mills signed into law, is included herein as Attachment A. Consistent with the bill, MRH Corp. d/b/a Northern Light Mayo Hospital (“MRH”) would be governed by a community-based board and be obligated to continue serving Piscataquis and Western Penobscot counties.

Subject to successful completion of due diligence and receipt of all necessary consents and approvals, including CON approval and review by the Maine Attorney General’s office, the proposed closing date for the merger is January 1, 2020.


H.A.D. #4 admits approximately 1,220 inpatients annually and its physicians perform more than 1,260 surgeries a year. This CON application outlines the important role that H.A.D. #4 plays in offering a continuum of care in the region. Once merged, MRH will work closely with NLH member organizations such as Northern Light C.A. Dean Hospital, other providers in the region, and community stakeholders to promote and achieve the goals of the affiliation.

The Financial Feasibility section describes anticipated post-affiliation impacts and the performance improvements underway by H.A.D. #4 management. Healthcare costs within the service area will not be adversely impacted by the affiliation.


II. FIT, WILLING AND ABLE

A. Summary of the Project

As of the effective date of the transaction, H.A.D. #4 will merge into MRH and become a direct, wholly controlled subsidiary of NLH in accordance with the terms of the Agreement, included as Attachment B.

MRH will operate as a Maine non-profit 501(c) (3) tax-exempt fully licensed critical access hospital. The day-to-day operation of H.A.D. #4 will continue general as is, subject to certain joint powers reserved to NLH, including NLH approval of certain MRH financial and service initiatives, as set forth more specifically in the Agreement. Subject to the terms of the Agreement, MRH will continue to offer its current array of healthcare services.

B. Legislative Process

During years of due diligence that resulted in the H.A.D. #4 Board selecting NLH as the best system partner, H.A.D. #4 kept community members updated on its talks with NLH via annual reports to the communities and H.A.D. #4 Board members provided updates to their respective communities. The H.A.D. #4 CEO and H.A.D. #4 Board representatives started presenting to local Boards of Selectmen in October and November of 2018 to seek their support. Eight local communities endorsed the transaction by issuing letters of support. Select letters of support are included in Attachment C.

In November of 2018, H.A.D. #4 formally reached out to its legislative delegation to discuss the merger process and the need for legislation authorizing the transaction. H.A.D. #4 is a quasi-governmental entity bound by the charter for the hospital administrative district. Therefore, only the Maine Legislature may amend the H.A.D. #4 charter. Before the new legislation, the charter only contemplated the dissolution of the district, not the merger of the hospital with another entity. H.A.D. #4 and NLH representatives, including NLH’s President and CEO, engaged in multiple meetings with H.A.D. #4’s local legislative delegation about the need for the merger and the H.A.D. #4 Board’s belief that it was the best path forward to sustain high quality healthcare in the region.

In April 2019, H.A.D. #4 held four public forums to brief members of the community on the merger, answer questions, and address concerns. In the same month, the legislative delegation filed a bill compelling all the H.A.D. #4 communities to hold a special town meeting and advisory vote on the proposed merger by May 7, 2019. The bill, LD 1553, passed unanimously out the State and Local Government Committee, and then by the Maine Legislature and signed by Governor Mills. All communities voted, and hospital administration and the H.A.D. #4 Board were present to answer questions at each special town meeting. Turnout was strong. The town votes were overwhelmingly positive in support of the merger. Twelve of the thirteen towns voted in favor of the merger at special meetings (Dexter has a town council form of government, so its council voted for the merger instead). Only one community, Cambridge, was opposed by a vote of 22-12. Accordingly, 12 of the 13 towns, representing 97.4% of the population of the hospital district, indicated their approval of the merger.

Following the positive votes by the communities, Representative Norman Higgins, House District 120, sponsored legislation, LD 1708 “An Act to Provide for the Merger of Hospital Administrative District


No. 4 into MRH Corp., a Maine Nonprofit, Nonstock Private Corporation”, authorizing the merger. LD 1708 was co-sponsored by the remainder of the local delegation and required approval from Legislative Council to move forward as an after-deadline bill. This legislation creates the legal structure to allow H.A.D. #4 to merge into MRH (a private, nonprofit corporation with NLH as its sole member. required. The bill passed unanimously out of the State and Local Government Committee, and the Maine Legislature with an emergency pre-amble. On Friday, June 28th, Governor Mills signed LD 1708 into law as a private and special law effective upon her signature. Attachment A is the signed legislation.

Following Governor Mill’s authorization of the legislation, H.A.D. #4 and NLH then proceeded with next steps, including this CON application submission and Maine Attorney General office review.

C. Profile of the Applicant

Northern Light Health43 Whiting Hill RoadBrewer, Maine 04412

https://northernlighthealth.org/

NLH, based in Brewer, Maine, is a Maine nonprofit, 501(c)(3) tax-exempt corporation. NLH is a vertically integrated healthcare system serving Maine. The System at a Glance is included in Attachment D.

NLH Mission: We improve the health of the people and communities we serve.

NLH Vision: Northern Light Health will be a national leader in healthcare excellence.

NLH Brand Promise: We Make Healthcare Work for You.

Through collaboration with community organizations, better coordination of care for patients and redefining exceptional care, NLH is the architect of a promising new future of healthcare. As described herein, the proposed affiliation will support and enhance the NLH vision.

NLH’s core services network includes acute care medical-surgical hospitals, an acute psychiatric hospital, physician practices, ambulatory care centers, nursing homes, home care and hospice agency, population health management services, referral laboratory, retail pharmacies, and ground and air emergency transport services. The system’s accountable care organization, Beacon Health, was one of the initial members of the Medicare CMMI Pioneer demonstration program and has developed care management, third party administrator, and other services for patients and employers in governmental- and employer-based health plans.

NLH strives to make healthcare work for the people of Maine. In FY 2018, NLH provided over $66 million in total charity care to Mainers in need and over $221 million in total community benefit to Maine cities and towns.

The system is comprised of many organizations, including nine hospitals: Northern Light Acadia Hospital, Northern Light A.R. Gould Hospital, Northern Light Blue Hill Hospital, Northern Light C.A. Dean


https://northernlighthealth.org/

Hospital, Northern Light Eastern Maine Medical Center, Northern Light Inland Hospital, Northern Light Maine Coast Hospital, Northern Light Mercy Hospital and Northern Light Sebasticook Valley Hospital.

NLH provides services throughout Maine and employs over 12,000 people dedicated to delivering quality health care to the people of Maine. The system is licensed for 987 acute care beds and has an active roster of over 1,000 physicians, advanced practice providers and other clinicians. NLH is involved with teaching the health care workers of the future and has a history of successful collaboration with health care and community organizations. Figure 1 illustrates the system organizational chart pre and post the proposed integration.

Figure 1: Pre and Post Northern Light Organizational Chart

Other non-hospital NLH members include Rosscare, WorkHealth, Affiliated Healthcare Systems, Home Care & Hospice, Northern Light Medical Transport, and Beacon Health. Through its subsidiaries, NLH provides medical laboratory services throughout New England, operates one of the largest integrated healthcare support networks in all New England, develops cooperative retirement housing units, and holds significant ownership interests in several non-subsidiary companies providing services such as nursing home care. Profiles of NLH’s clinical members and the System at a Glance are included as Attachment D.


Northern Light Health has a long and successful history of integrating hospitals and other healthcare organizations into its system. The Maine Department of Health and Human Services’ CON Unit has consistently found NLH to be fit, willing and able to enter into affiliation transactions.

Northern Light Health Hospital Affiliations and System Development Timeline 1992 EMHS opens Acadia Hospital 1997 Inland Hospital joins EMHS 1998 Charles A. Dean Memorial Hospital (now Northern Light C.A. Dean Hospital) joins EMHS 1999 The Aroostook Medical Center (now Northern Light A.R. Gould Hospital) joins EMHS 2000 Sebasticook Valley Health (now Northern Light Sebasticook Valley Hospital) joins EMHS 2003 Blue Hill Memorial Hospital (now Northern Light Blue Hill Hospital) joins EMHS 2013 Mercy Hospital (now Northern Light Mercy Hospital) joins EMHS 2015 Maine Coast Memorial Hospital (now Northern Light Maine Coast Hospital) joins EMHS 2018 EMHS rebrands as Northern Light Health Jan 1, 2020 proposed – Mayo joins Northern Light Health

NLH Sites of CareThe sites of care map that follows, Figure 2, depicts the range and depth of NLH’s services across Maine. NLH has over 120 points of care, many of which house multiple practices and services. Beacon Health LLC, has developed an extensive provider network to provide population health services for 100,000+ Maine residents.


Figure 2: Northern Light Health Sites of Care (pre-H.A.D. #4)

D. Key Personnel

NLH has a strong governance and management team working with H.A.D. #4 leaders on affiliation transitional issues. A brief summary of the NLH Board Chair and management team and their areas of expertise follows. NLH’s Board of Directors list is Attachment E.


Northern Light Board Chair: Barry McCrumMr. McCrum is owner of McCrum & Company and the former senior vice president of Time Warner New England Division. He previously served as a trustee and former board chair for AR Gould Hospital in Presque Isle. Mr. McCrum has served as chair of the NLH Board of Directors since 2017.

He is a graduate of the University of Maine and served in the Navy from 1968 to 1972. He is an accomplished and well respected senior executive and was tapped to serve as an interim President and CEO for Maine Public Broadcasting at one point in his career, helping to restore financial stability and successful union negotiations. He was recently selected by the Governor of the State of Maine to serve on the MEMIC Board of Directors.

Northern Light Health President and CEO: M. Michelle Hood, FACHE Ms. Michelle Hood came to Northern Light Health in April 2006 from Billings, MT, where she was president and CEO of the Sisters of Charity of Leavenworth Health System, Montana Region, as well as president and CEO of its flagship hospital, St. Vincent Healthcare. As president and CEO of Northern Light Health, she focuses on health care policy and design models at the state and national levels, positioning the system to be successful in a rapidly changing healthcare environment.

Ms. Hood builds partnerships that work for Maine communities, strengthening the economic and educational climate of the state. She is an at-large American Hospital Association Board member. She is also past chair of the Maine Hospital Association Board, the University of Maine System Board of Trustees, and the Vizient New England Board. She serves as chair of Health Insights, a national membership organization focused on education and dialogue between a group of health executives and companies that support the industry.

Ms. Hood received a Bachelor of Science degree from Purdue University and a Master of Health Care Administration degree from Georgia State University. She is the proud recipient of Purdue’s School of Biological Sciences 2015 Outstanding Alumna Award along with several other community recognitions. Ms. Hood is a seasoned executive dedicated to the transformation of the health care delivery and financing models. She brings her experience in academic, national faith-based and rural health care integrated systems to the challenges of today’s rapidly changing environment.

Northern Light Health Senior V.P. and Chief Financial Officer: Anthony Filer, CPAMr. Tony Filer is Senior Vice President & Chief Financial Officer for Northern Light Health. Mr. Filer is a graduate of Susquehanna University, is a certified public accountant, and a member of the American Institute of Certified Public Accountants.

A native of Pennsylvania, Mr. Filer spent the first 10 years of his healthcare career at Franciscan Health System as a hospital Chief Financial Officer, system Director of Finance, then system Vice President of Finance. He continued in executive financial leadership roles at Ascension Health in St. Louis, Missouri, Provena Health in Mokena, Illinois, and Presence Health, Chicago, Illinois.

Mr. Filer came to Northern Light Health in 2016 from then Presence Health based in Chicago, Illinois having served as their initial system Chief Operations Officer and their Chief Financial Officer. As Northern Light Health’s system Chief Financial Officer, Mr. Filer is responsible for the financial direction of Northern Light Health and ensuring that the financial objectives are aligned with the system’s overall


needs. He works closely with the senior leadership and member organizations to achieve the delivery of high quality, cost effective patient care consistent with the mission and values of Northern Light Health.

Northern Light Health Senior V.P. and Chief Operating Officer: Timothy Dentry, MBASince December 2016, Mr. Tim Dentry has served as the system Chief Operating Officer of Northern Light Health. Mr. Dentry is also currently serving as Interim President of Eastern Maine Medical Center. Mr. Dentry is a graduate of Loyola University Maryland’s MBA and Bachelor of Science programs, as well as a Fellow in International Health from Yale University.

Prior to joining Northern Light Health, Mr. Dentry focused on international health delivery improvement, from Addis Ababa to Abu Dhabi, with institutional backing from Yale University and Johns Hopkins Medicine. This resulted in raising standards of healthcare for large communities and the creation of sustainable development and performance systems. In the U.S., Mr. Dentry has held executive positions including hospital CEO, with success in growing market presence, new service development, and physician and health system partnerships.

Northern Light Health Senior V.P. and Chief Strategy Officer: Matthew Weed, MBAMr. Matt Weed became the chief strategy officer for Northern Light Health in 2016 and is responsible for developing and implementing both short- and long-term strategies. Mr. Weed oversees marketing and communications, community health and grants, provider outreach, government relations, and philanthropy. In addition, he provides leadership and coordinates activities for the Strategic Planning Committee of the NLH Board of Directors, as well as select leadership steering committees and teams.

Before coming to Northern Light Health, Mr. Weed spent 32 years at Intermountain Health in Utah. During his distinguished career at Intermountain, Mr. Weed held a large variety of positions, including senior financial consultant and manager of costing systems; director of Physician Relations; assistant administrator; assistant vice president of Strategic Research and Planning; assistant vice president of Healthcare eBusiness; and director of Strategy, Planning, and Business Development.

Mr. Weed received his Bachelor of Arts in Political Science at the University of Utah in 1982, and his Master of Business Administration at Brigham Young University in 1984.

Northern Light Health Senior V.P. and Chief Physician Executive: Steven Berkowitz, M.D. FACCDr. Steve Berkowitz is Senior Vice President and Chief Physician Executive for Northern Light Health. He is responsible in matrix relationship with the senior physician executives of member hospitals and for overall clinical quality results.

Prior to joining Northern Light, Dr. Berkowitz served as Medical Director of a Baldrige Award winning health system in Texas. He has been a consultant with the HayGroup and SMB health consulting. He is a prominent national speaker and writer.

Dr. Berkowitz is Board certified in internal medicine and a Fellow of the American College of Cardiology.

Board of Directors NLH and H.A.D. #4 are committed to community-advised governance. Subject to the contingencies set forth in the Agreement, the Governing Boards of NLH and H.A.D.#4 have approved and authorized the


Affiliation. Directors possess a broad range of skills and background. Complete Board listings are included in Attachment E.

E. Quality, Patient Safety, Experience and Performance Improvement

NLH members are focused on continuous quality assurance and improvement. NLH reports clinical outcomes to the Centers for Medicare and Medicaid Services (“CMS”), Leapfrog and other quality and safety associations. NLH has a Quality Council comprised of subject and data experts from all members to advise and implement best practices and to measure results for patient experience, staff and patient safety, and clinical outcomes. NLH follows high reliability organization practices and periodically and regularly conducts a Culture of Safety survey to get feedback from staff and providers. NLH is rolling out Comprehensive Unit-based Safety Program (CUSP) training to all member hospitals, to empower clinical teams to make care safer through improved teamwork, clinical best practices, and the science of safety. Senior VP’s Tim Dentry and Steven Berkowitz, MD, lead quality, safety and experience efforts.

Northern Light Eastern Maine Medical Center (“EMMC”) is the flagship hospital and receives multiple referrals from the H.A.D. #4 service region. EMMC is accredited by the Joint Commission (“TJC”) which is deemed by Medicare to conduct Condition of Participation (“COP”) surveys. EMMC’s most recent survey was conducted November 1-4, 2016. Following the review, the TJC issued a letter granting EMMC accreditation through November 5, 2019. In addition to the announced survey, EMMC has had unannounced surveys conducted in March 2017 and June 2019. These do not impact the current accreditation status. EMMC’s transparent quality results can be found on the following Joint Commission related website: www.qualitycheck.org .

Quality results for all NLH member hospitals are available on publicly available websites, including CMS Hospital compare and others. Comparative information for quality related indicators is also aggregated by the State on www.comparemaine.org.

CMS Compare Results Attachment F includes select responses for Medicare patient surveys for H.A.D. #4, EMMC, Northern Light Sebasticook Valley Hospital, and Northern Light C.A. Dean Hospital as compared to State and Federal results. Data collection periods varied from 2014-2018, depending on the measure and data available. These quality measures are available at ht t p: / /w w w.hospit a lcomp a r e .hhs . go v .

These measures are categorized in select areas:Survey of patients’ experiences: How recently-discharged patients responded to a national survey about their hospital experience. For example, how well a hospital’s doctors and nurses communicate with patients and how well they manage their patients’ pain.

Timely and effective care: Heart attack: How often and how quickly each hospital gives recommended treatments for heart attack and heart failure.

Timely Emergency Department Care: Timeliness of services in the emergency room and the percentage of patients who left without being seen.

Preventive Care: Flu vaccination rates for healthcare workers and patients.


http://www.comparemaine.org/

http://www.qualitycheck.org/

Use of Medical Imaging: Appropriateness of various types of imaging tests.

Results from the compiled data show that, while positive, there are opportunities for H.A.D. #4’s affiliation to contribute to regional quality improvement programs in place at NLH.

F. Integration Process

As noted in the System Development Timeline above, NLH has welcomed multiple hospital members over the past 25 years. These hospitals reached out to NLH leadership to initiate an exploratory process to consider affiliation. Post affiliation, new member staff have access to leadership development and other career advancement courses. Executive officers are added to the System Leadership Council, and subject leaders will be added to their respective teams: nurse executives, Human Resources, Finance, etc. Executive leaders at the system work closely with Member leaders to make changes necessary to meet financial and service delivery goals. NLH’s most recently added members, Maine Coast Hospital and Mercy Hospital, with intensive work from Member and Home Office staff in the first years following integration, have each achieved positive operating margins and continue to serve their communities.

G. Rationale for Northern Light Health to Affiliate with H.A.D. #4

NLH’S Mission is to improve the health of the people and communities we serve. The brand promise is “we make healthcare work for you.” In order to succeed, NLH understands that patients and consumers value quality, access, cost, and service. As a statewide healthcare system, NLH serves as the backbone for sustainable, locally distributed care delivery as rural hospitals come under increasing economic pressure nationally and in Maine.

The NLH response to changing market dynamics is to develop a range of strategic collaboration options. Models include strategic partners, clinical relationships, accountable care arrangements, medical transport, purchasing cooperation, comprehensive population health management, as well as a path to full corporate membership. NLH is committed to advancing telehealth programs. Most rural emergency departments have tele-psych systems linked to Acadia for consultations and access to pediatric intensivists, trauma surgeons, neurologists and other specialists on a limited basis. A regional Picture Archiving and Communication System (“PACS”) radiology imaging system supports timely access to specialty radiologists. Regional providers have access to NLH electronic health records to understand the care of their patients and to assure successful transitions across sites of care.

NLH’S goal is to be a statewide system for clinically integrated and distributed coordinated service lines. As such, NLH member organizations will serve as regional integrated care centers. Through collaborations, NLH is committed to improving population health.

The affiliation will allow NLH to continue its commitment of collaboration with healthcare providers across Maine. H.A.D. #4 has developed a very strong local care network that connects patients in both Piscataquis and Western Penobscot Counties to needed health services. Linking NLH and H.A.D. #4 will create a level of collaboration that is not possible without the affiliation. Through the merger, H.A.D. #4 will join NLH as a full corporate member; this will allow for the most efficient combining of infrastructures into a single care delivery platform that capitalizes on shared learning and economies of scale. NLH and MRH will share expertise, knowledge, and relationships necessary for effective care coordination.


NLH recognizes H.A.D. #4 as an excellent affiliation partner with a similar mission-driven culture, a strong primary care network needed for population health management, and a leadership team which will add to NLH’S expertise. NLH works with member organizations to improve quality, service and cost-effectiveness. Best practices are incorporated into standard system-wide processes. NLH understands that H.A.D. #4 is not financially sustainable to serve their communities without affiliation with a larger system.

H.A.D. #4 will support NLH’S strategy to develop a stronger ambulatory care system with its strong and growing provider network. H.A.D. #4’s 43 employed physicians and advance practice clinicians, and other clinicians (see Table 5) will be welcome participants towards population health consumer-directed plan designs and delivery models for commercial- and government-insured populations.

The proposed affiliation will strengthen NLH’S corporate infrastructure by dispersing administrative costs over a larger system. NLH maintains a central treasury for optimal management of resources. This will result in more cost-effective and streamlined services throughout the system. H.A.D. #4’s attributed patients in employed primary care practices will support the growing ACO base of covered lives.

H. Regional Support The transaction is supported by community-based stakeholders. Attachment C includes letters of support from business, public health, and provider agencies.

I. Summary of Fit, Willing and Able

NLH has demonstrated the available resources to successfully integrate new members into the system to leverage resources and to sustain access to care in rural regions of Maine. NLH leadership, led by M. Michelle Hood, its Chief Executive Officer, is committed to the success of H.A.D. #4. The leadership team of H.A.D. #4, led by Marie Vienneau, its Chief Executive Officer, has done extensive due diligence and community engagement to prepare for joining the NLH family.

Northern Light Health is fit, willing, and able to welcome H.A.D. #4 as the newest NLH member hospital.


III. FINANCIAL FEASIBILITY

A. Background

Table 1 below illustrates that H.A.D. #4 was experiencing regular and accumulating losses from operations. Consistent with many community-based independent hospitals across the United States, H.A.D. #4 recognized the need to gain scale, access to capital, shared skills, and information systems upgrades. H.A.D.#4’s Board recognized that sustaining losses from operations each year was not sustainable to assure the continuation of service delivery in the region.

Table 1: Mayo Historical Financial Results

The projected H.A.D. #4 financial statements in Attachment G forecast the impact of the affiliation, including the effects on information systems, operational improvements, and other benefits derived from becoming a member organization of NLH.

Comparative financial ratios are included in the Financial Forecast attachment. Key financial ratios will improve due to the H.A.D. affiliation.

Recently, NLH outlook was upgraded to stable by Moody’s and Standard and Poor’s based on improved financial results. Audited financial statements for NLH and H.A.D. #4 are included as Attachment H. Also included in this attachment are compiled historical financial ratios for H.A.D. #4 and NL EMMC with recently available years compared to State and National benchmarks. The affiliation is expected to strengthen the financial position of H.A.D. #4 and to support NLH’s healthcare delivery mission.


B. Financial Impact Initiatives

The following key initiatives will yield improved financial results:

Table 2: Financial Impact Initiatives Post-Integration

Year 1 Year 2 Year 3Projected Post-Integration Initiative Impacts FY 2020 FY 2021 FY 2022Information Systems Upgrades (1) 218 272 303Operational Effi ciencies (2) (418) (892) (1,267)Service Contracts (3) (38) (70) (70)Facilities Incremental Depreciation (4) (10) 62 127Insurance (5) (128) (128) (128)Total Cost Impact ($374) ($756) ($1,034)

Developed by Financial Leaders: NLH and HAD#4Notes:1HAD#4 will upgrade to NLH business systems.2Operational efficiencies gained from consolidation expected in areas such as financial & rev. cycle

services, clinical and facil ities management to date.3Contract Savings gained from consolidation in areas such as marketing and legal.4Depreciation related to NLH investment in HAD#4 property, plant & equipment.5Economies of scale savings gained from consolidation.

Projected

Capital The Financial Forecast attachment includes an estimate of capital investments that NLH anticipates supporting for H.A.D.#4 in the first three years following integration. The investments include upgrades to integrate Mayo to business, human resources, and financial systems with clinical system integration to follow, as well as investments in property, plant and equipment.

Post-Transaction Financial ResultsThe projected consolidated financial statements in Table 3 below present 12 months of activity for three fiscal years post the assumed effective affiliation date of January 1, 2020. Year 1 shown is for a full 12-month period, although the transaction would include a three-month stub period as H.A.D. #4 has a September 30 year end. The projected consolidated financial statements for fiscal year (“FY”) 2019 present a full year of operations of MRH prior to affiliation.


Table 3: H.A.D. #4 Projected Financial Results Post-Northern Light Health Affiliation

Three Year Financial ProjectionPost H.A.D.#4 Integration with NLH

Baseline- Projected Year 1 Year 2 Year 3

Income Statement FY 2019 FY 2020 FY 2021 FY 2022

Total Revenue (1) $52,977 $55,113 $57,458 $59,516

Salaries, Wages & Benefits (2) 34,293 34,271 34,863 35,876Supplies (2) 5,972 6,248 6,888 7,141Other Operating Expenses (2) 13,636 13,388 13,818 14,027Depreciation (3) 2,142 2,373 2,400 2,473Interest (4) 241 0 0 0Total Expense $56,284 $56,280 $57,969 $59,517Net Profit/(Loss) from Operations ($3,307) ($1,167) ($511) ($0)

Developed by Financial Leaders: NLH and HAD#4Notes:1Net revenue is related to volumes as projected and the anticipated payer mix. 2Salaries, wages & benefits; supplies; and other operating expenses are related to volume projections and impacted by post-integration initiatives identified which have a financial impact.3Depreciation expense is related to investments anticipated in the balance sheet for PPE.4Interest expense - NHL plans to pay off HAD#4 debt in Year I post-integration.

Projected

Integration with NLH will result in needed cost efficiencies through contracting for services, compensation and benefits. Investment in information systems will advance staff development and clinical service collaborations.

Post-closing, NLH and H.A.D. #4 will more fully explore population health strategies and how to build a continuum of care across the entire NLH system to give patients improved access to services, closer to home and in a more cost-efficient manner. Also, NLH will pursue regional hub strategy to support care close to home in MRH region while adding capacity to EMMC.

C. CON Filing Fee

The CON filing fee of $7,000 is calculated based on the value of H.A.D. #4’s net assets. This table is included in Attachment G. There is no purchase price for the transaction.

D. Summary of Financial Feasibility

The financial projections in Attachment G and the discussion in this section reflect the financial feasibility of the proposed affiliation. Recurring operating losses incurred by H.A.D. #4 will be reduced based on operational efficiencies and gaining the scale and specialized skills of a larger system.

The affiliation will strengthen NLH’S financial results as well as H.A.D. #4’s, sustain rural healthcare delivery, and support population health programs.


IV. PUBLIC NEED

A. Description of Hospital Administrative District No. 4

Hospital Administrative District No. 4d/b/a Mayo Regional Hospital897 W Main StreetDover-Foxcroft, Maine 04426 www.mayohospital.com

Mission and Vision Mission Statement: To provide patients with up-to-date, high quality, compassionate and affordable healthcare.

Vision Statement: Mayo Regional Hospital will be the first choice for healthcare, partnering for healthier communities, one person at a time.

Values: Excellence, Compassion, Dignity, and Integrity

H.A.D. #4’s values are in alignment with Northern Light Health’s Values of Integrity, Respect, Compassion, and Accountability.

BackgroundH.A.D. #4 is the largest healthcare provider in the Piscataquis County region and, with approximately 500 employees, the second largest employer in Piscataquis County. H.A.D. #4 is committed to meeting the highest performance standards for patient safety and quality and has received both national and state recognition for patient safety, outcomes, and patient satisfaction levels.

H.A.D. #4 seeks to improve the health of the communities it serves by delivering a broad range of services to meet the individual needs of patients and their families. These services include: A 24-hour emergency department with specialized treatment rooms for resuscitation, trauma and

cardiac care; routine eye, ear, nose and throat problems; orthopedic injuries and obstetrical emergencies; laboratory, pharmacy and imaging services for diagnostic X-rays, ultrasound, CT scanning and magnetic resonance imaging (MRI)

A primary care network with locations in Dover-Foxcroft, Corinth, Dexter, and Milo Comprehensive Women’s Health (Ob/Gyn) services that include personalized birth plans, lactation

and circumcision consultations, family-centered OB rooms, family-centered C-sections, car seat program, adolescent care, menopause counseling, pelvic exams and uro-gynecology care

Full rehabilitation services that include physical and occupational therapy, speech therapy, a hydrotherapy treatment room, an open gym which extends into a simulation training lab, and individual treatment stations

Inpatient and outpatient surgical services that include general, orthopedic, oncologic, oral, gynecologic, obstetric, and endoscopic procedures (the surgical suite at H.A.D. #4 is open for scheduled surgery nine hours a day, four days per week; on-call emergency surgery is available 24 hours a day, 7 days per week)

Specialty care that includes cardiology, pulmonology, obstetrics, oncology, orthopedics, and urology


http://www.mayohospital.com/

Imaging capabilities include ultrasound, mammography (3D tomo), bone densitometry, CT, nuclear medicine, MRI and echocardiography.

Behavioral Health ServicesH.A.D. #4 owns and operates a freestanding psychiatry and counseling practice located in Dover-Foxcroft. The facility is staffed with licensed psychiatric mental health nurse practitioners and counselors. They provide a range of medication management services, counseling and group therapy as well as Medication Assisted Treatment (“MAT”) of substance use disorder. H.A.D. #4 also partners with the Charlotte White Center, which employs counselors that are embedded with H.A.D. #4 staff. Inpatient and ER psychiatry consultations are done in partnership with Northern Light Acadia Hospital via telemedicine.

H.A.D. #4 has counselors embedded in Rural Health Clinics who see patients at the referral of primary care providers. Last year, in order to meet community needs, the MAT program was expanded to the primary care practice in Milo. This has been very successful. H.A.D. #4 is in the process of evaluating the expansion of MAT into the women’s health program. There are over 10,000 visits per year. Even with existing services, there are over 100 people on a waiting list at any given time in need of psychiatry services. The service is utilized by all of Piscataquis County as well as part of Penobscot County.

Behavioral health services will be further enhanced with the closer connection with Acadia services.

History of Program and Facility DevelopmentDiscussions on consolidating small hospitals in Dover-Foxcroft, Dexter, and Milo into a regional hospital gained momentum in 1972. Two years later, voters in 13 area towns decided to form H.A.D. #4. A site committee chose next door to Mayo as the appropriate location to build the new hospital.

The ground was broken for construction of a 52-bed acute care hospital in 1976. The $5.1 million Mayo Regional Hospital opened to patients on April 9, 1978, with a staff of 110. The hospital name commemorates Col. Mayo, who was a wealthy businessman and philanthropist whose family owned and operated the Mayo & Son Woolen Mill—now the site of Mill Apartments & Event Center—for three generations. Col. Mayo was active in the Dover-Foxcroft community as a bank trustee, railroad officer, Foxcroft Academy trustee and Piscataquis Valley Fair Association president. His donation of a building formed the foundation of a hospital in Dover. In 1982, the state authorized H.A.D. #4 to purchase Plummer Hospital in Dexter and Dexter joined the other towns as part of the H.A.D.

In 1989, a maternity wing, later used as the hospital’s business office, was added to Mayo Regional Hospital. A medical office building was constructed in 1989 on the east side of the old Mayo building. In 2000 the hospital constructed a new ambulance garage for its Emergency Medical Service on Dwelley Avenue and began a major expansion/renovation project on the main hospital building which broke ground in May 2001. This project included a new Emergency Department, an expanded ambulatory services wing, and a Mayo Resource Center addition with space for physical therapy, business offices, medical records and conference space. The expansion project also completed renovations of first-floor outpatient service areas and the second-floor Obstetrics Department.

Since 1995, H.A.D. #4 has operated a physician practice management department, now known as Mayo Practice Associates, which manages primary care offices in Corinth, Dexter, Dover-Foxcroft and Milo. In 2001, H.A.D. #4 constructed a new office in Milo, which has become a highly-utilized Rural Health Clinic.


In 2016, H.A.D. #4 took on another expansion project in the inpatient unit and built a new Oncology clinic on the hospital’s second floor. This resulted in the expansion of the relationship with EMMC’s Cancer Care program and added two new providers and expanded coverage days. The Medical-Surgical Unit was renovated with a new nurse’s station and new SCU rooms. The remainder of the project was an investment in the building’s infrastructure.

Service LocationsH.A.D. #4 services are offered at a variety of locations throughout southern Piscataquis and western Penobscot counties. Sites of care are illustrated in Figure 3. Service locations are consistent with H.A.D. #4’s Maine hospital license, included as Attachment I.

Figure 3: Mayo Regional Hospital Service Locations


Table 4 details addresses and descriptions for H.A.D. #4 service locations. Locations on the table coincide with points on the Figure 3 and can referenced accordingly.

Table 4: Mayo Service Location and Descriptions

Location Description Point on MapMayo Regional Hospital Main Hospital Facility 897 West Main StreetDover-Foxcroft, Maine 04426Medical Office Building First Floor: Primary Care, Limited Lab, Counseling, Diabetes891 West Main Street Second Floor: Women's Health, Cardiac Rehab, General Surgery, UrologyDover-Foxcroft, Maine 04426Basket House Community Outreach, Pine Tree Hospice Offices883 West Main StreetDover-Foxcroft, Maine 04426Mayo Building Offices For HR, IT, Education, Physician Practice Management, Financial895 West Main Street ServicesDover-Foxcroft, Maine 04426Mayo Physicians Billing Offices For Billers And Coders47 Dwelley AvenueDover-Foxcroft, Maine 04426Dover EMS EMS Ground Ambulance Service5 Dwelley AvenueDover-Foxcroft, Maine 04426Counseling Building Psychiatry Services, Counseling, MAT (medication-assisted treatment)69 High StreetDover-Foxcroft, Maine 04426Corinth Medical Assoc Primary Care, Limited Lab, Counseling492 Main StreetCorinth, Maine 04427Dexter EMS EMS Ground Ambulance Service238 Spring StreetDexter, Maine 04930Dexter Internal Medicine Primary Care, Counseling41 High StreetDexter, Maine 04930Dexter Family Practice Family Medicine, Limited Lab, MAT51 High StreetDexter, Maine 04930Milo Family Practice Primary Care, Limited Lab, MAT135 Park StreetMilo, Maine 04463Mayo Orthopedics Orthopedics, Occupational Health, Pain Management Clinic, Xray45 Dwelley AvenueDover-Foxcroft, Maine 04426

1

1

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1

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1

Medical Staff H.A.D. #4’s medical staff consists of 114 providers and includes a complement of primary care and specialty care physicians and advanced practice clinicians that represent a comprehensive range of medical services. H.A.D. #4 employs over one third of the total providers. Excluding pathology and radiology, 70% of the medical staff is employed by H.A.D. #4. Table 5 includes a detailed list of providers by specialty.


Table 5: Mayo Medical Staff Composition

Department # Practices# Employed

Providers# Private Practice

ProvidersTotal

Providers% Employed

Anesthesia (CRNA) 0 4 0 4 100%Cardiology (clinic EMMC) 1 0 2 2 0%Dermatology 0 0 0 0 0%Emergency Medicine 0 10 0 10 100%Family Medicine 4 12 0 12 100%Gastroenterology 0 0 0 0 0%General Surgery 2 3 1 4 75%Hematology/Oncology (CCOM) 1 0 2 2 0%Hospitalist 1 5 0 5 100%Infectious Disease 0 0 0 0 0%Internal Medicine 3 4 1 5 80%Neurology 0 0 0 0 0%Neurosurgery 0 0 0 0 0%Obstetrics/Gynecology 1 1 1 2 50%Ophthalmology 0 0 2 2 0%Oral & Maxillofacial Surgery 0 0 2 2 0%Orthopedic Surgery (DEO)/Occupational Med 1 2 2 4 50%Otolaryngology 0 0 0 0 0%Pathology (Dahl Chase) 0 0 14 14 0%Pediatrics 0 0 0 0 0%Podiatric Medicine (CA Dean) 0 0 2 2 0%Psychiatry 1 1 3 4 25%Radiology (Spectrum) 0 0 39 39 0%Rheumatology 0 0 0 0 0%Urology 1 1 0 1 100%Total 16 43 71 114 38%Total Excluding Pathology and Radiology 16 43 18 61 70%Note: Includes active and consulting staff. Includes Advanced Practice Clinicians. Excludes telemedicine contractors or covering providers.

H.A.D. #4 Key Personnel The Governing Board usually consists of between 16 and 19 members. Each community elects at least one member to the Governing Board who serve 3-year terms. H.A.D. #4 has a strong governance and management team working with NLH leaders on affiliation transitional issues. Following is a brief summary of the H.A.D. #4 Board Chair and senior management team and their areas of expertise.

Mayo Regional Hospital Board Chair: Amanda ThomasMs. Amanda Thomas is the Board Chairperson at Mayo Regional Hospital. She has been a board member since 2012, representing the town of Guilford. During the time that Ms. Thomas has been on the board, she has served in several roles, including the Chairperson of the Strategic Planning Committee, the Board Member-at-Large on the Executive Committee, and the Board Secretary before becoming the Chairperson in 2016.


Ms. Thomas operates her own independent transcription company. She has been active in community service in the past by serving as library board trustee and a member of sports boosters. When not working or volunteering, she enjoys spending time with her husband, their son and their four dogs.

Mayo Regional Hospital President & Chief Executive Officer: Marie E. Vienneau, BSN, NE-BC, FACHEMs. Marie Vienneau is the President & CEO of Mayo Regional Hospital where she has served for the past five years. A Registered Nurse by training, she has served in progressive administrative roles in rural hospitals for over 25 years, 17 of them as a rural hospital and critical access hospital CEO. Throughout her career Ms. Vienneau has worked with Boards and communities to retain and expand access to rural healthcare clinical services, through recruitment and retention of high -quality providers, enhancing reimbursement and ensuring efficient operations to sustain care. Collaboration with other partners has been key to this work.

Ms. Vienneau serves her profession and community in many capacities including being the immediate past American College of Healthcare Executives Regent for Maine, Past -Chair of the Maine Hospital Association, Maine Hospital Solutions Board of Directors, Incoming President of the Northern New England Association of Healthcare Executives and past AHA RPB member, along with many local clubs and organizations. When not at work or volunteering she spends time with her husband and her four boys, usually at a sporting event!

Mayo Regional Hospital Chief Financial Officer: Nancy GliddenMs. Nancy Glidden is the Vice President – Finance/Chief Financial Officer. She has served almost five years in that position. Ms. Glidden’s training is in Accounting and Finance, but she has also worked in information systems and as a computer programmer/analyst. She has worked in healthcare for 39 years, 22 of them as the Chief Financial Officer at Critical Access and Sole Community Hospitals. Ms. Glidden works with her fellow senior executives to implement the strategic direction of the Board of Directors while promoting a culture of safety and improvements to financial performance. Throughout her career, she has enjoyed the opportunity to help others understand complex information and to make processes and systems more efficient.

Ms. Glidden has been involved in local Rotary clubs, participates in community events and suppers, and has served on community boards. In her free time, her favorite thing to do is spend time with her grandchildren, but she has also been known to travel the country in search of good music and theater!

Mayo Regional Hospital Chief Medical Officer: David B. McDermott, MD, MPH, CPE, FAAFP, FAAPLDr. McDermott is the VP for Medical Affairs/Senior Physician Executive. A native of Upstate New York, he attended college at the University of Rochester, medical school at the University of Vermont, and completed a residency in Family Practice at Maine Medical Center and Mercy Hospital in Portland, ME. He remains Board Certified in Family Practice. He spent four years on active duty with the US Air Force and saw combat duty in Operations Desert Shield and Desert Storm, where he served as the Medical Director of Emergency Services for an air transportable hospital in support of fighter wing operations.

He moved to Dover-Foxcroft in 1993 and has raised his family in the community. He has had many roles at Mayo from family doctor with an obstetrical practice to Emergency Physician, Director of Emergency Services, inpatient medical director, interim President and CEO, and VP of Medical Affairs. Along the way he completed his graduate studies on his MPH through the University of Massachusetts. He lives in Dover-Foxcroft with his wife and has two grown children who live out of state.


Dr. McDermott is one of only fourteen physicians in the State of Maine with the Certified Physician Executive credential granted by the American Association for Physician Leadership. He was the fourth person nationally to be certified as an Emergency Department Medical Director by the American College of Emergency Physicians. He is a past president and current member of the Maine Medical Association and the Kiwanis Club of Dover-Foxcroft.

In addition to his administrative responsibilities he remains active in the practice of Emergency Medicine and sees patients in Mayo’s Medication Assisted Treatment program providing access to buprenorphine therapy or those living in recovery from opioid use disorder.

Mayo Regional Hospital Vice President of Patient Care Services: Denise Scuderi, BSN, RNMs. Denise Scuderi is the VP of Patient Care Services/CNO. She serves as a steering committee member for Partner’s for Peace. She served previously on the Pastoral Council for OLOTS, was Board Secretary for the American Vocational Association (AVA) and has volunteered in the community for organizations such as the March of Dimes and Susan Komen. She is a Veteran of the U.S. Army.

Ms. Scuderi obtained a BSN, Cum Laude, from the Nell Hodgson Woodruff School of Nursing at Emory University in Atlanta, Georgia in 1998. She is working on an MSN, Patient Safety and Quality at Southern New Hampshire University.

Ms. Scuderi is passionate about women and infant health care. She worked as a high-risk labor and delivery nurse at Gwinnett Medical Center in Lawrenceville, GA until 2004. She relocated to Maine in 2004 where she worked as a staff nurse in the OB Department and became the OB Nurse Manager in 2008. She has served on the statewide Substance Exposed Infant Task Force since 2010 and was on the original team that helped put together the Snuggle ME Guidelines.

Mayo Regional Hospital Vice President of Quality and Education: Nicole Chadwick, RN MSN CPHQMs. Nikki Chadwick’s role as the Vice President of Quality and Education also includes being the Compliance Officer and Patient Safety Officer. Her qualifications include CPHQ -Certified Licensed Registered Nurse with a master’s degree in nursing and a graduate certificate in Healthcare Education and is ACLS certified. Her 25-year career in healthcare has been at Mayo with a nursing clinical background in critical care, 14+ years of supervisory experience, and 8+ years of Healthcare Administration experience.

Ms. Chadwick is a motivated achiever who maintains contact with patients and offers expertise in education, patient safety, quality initiatives and processes, continuing nursing and medical education, risk management, leadership education and development, and program improvement. Due to her extensive experience, she is sought after by front line staff for safety concerns and reporting.

Ms. Chadwick is an adjunct clinical instructor for local nursing programs, including University of Maine at Fort Kent and Augusta and Eastern Maine Community College. She has held certifications in many clinical areas like NRP and TNCC, as well as being certified in risk management. She is a member of the Maine and National Association of Healthcare Quality and has been a board member with the local YMCA and Tri County Healthcare Occupations Board.

A new challenge for her is leading Mayo’s new program, an adjunct nursing education site for seven local nursing students embedded at Mayo Regional Hospital, started in 2018 in collaboration with Eastern Maine Community College. This brings her love of education, mentoring and nursing together


to promote Mayo’s Nursing Program. When she is not at work, she is spending time with her husband or her four kids.

Mayo Regional Hospital Vice President of Physician Practices and Human Resources: James R. Godley, MBA, SRHM-CPMr. James Godley is the Vice President of Physician Practices and Human Resources of Mayo Regional Hospital in Dover-Foxcroft, Maine, where he has served for the past five years. Mr. Godley has 14 years of management experience, 10 of those years in a healthcare setting. He has held several high-level Human Resources leadership positions during his career that have allowed him to focus on Employee Engagement and State and Federal labor compliance. In addition to these responsibilities he has oversight of Mayo’s Marketing and Public Relations efforts.

Mr. Godley serves as the legislative chair for the Maine Society for Healthcare Human Resources Administration and is the President Elect for 2021. He also serves as a member of the Eastern Maine Community College Advisory Board and enjoys promoting health and education in the State of Maine. When not working, he enjoys family time with his wife and two daughters.

B. Board of Directors NLH and H.A.D. #4 are committed to community advised governance. Subject to the contingencies in the Agreement, the respective Governing Boards of NLH and H.A.D. #4 have approved and authorized the Affiliation. Directors include a broad range of skills and background. Complete Board listings are included as Attachment E.

C. Needs of the Community

The H.A.D. #4 Community Health Needs Assessment (“CHNA”) is part of the statewide collaborative that produces the Maine Shared CHNA. H.A.D. #4 actively participates in the CHNA process through committee involvement, sharing of information, and by providing community engagement support at community events.

A complete Community Health Needs Assessment (CHNA) action plan for H.A.D #4 is included as Attachment J, and details H.A.D. #4’s 2019 – 2021 health priorities for Piscataquis county, along with related initiatives. The action plan can also be accessed online via the following link: CHNA Action Plan 2019-2021.

The 2019-2021 health priorities identified for Piscataquis County are:

1.) Substance Abuse 2.) Mental Health3.) Access to Care4.) Obesity5.) Limited Access to Healthy Food/Food Insecurity

The H.A.D. #4 health priorities are complementary and in alignment with the 2020 – 2022 health strategy plan developed by Northern Light CA Dean Hospital for Piscataquis County. Northern Light CA Dean Hospital’s selected areas of focus include:


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http://www.mayohospital.com/wp-content/uploads/2019/07/2019-2021-CHNA-Action-Plan.pdf

1.) Social Determinants of Health2.) Substance Abuse3.) Access to Care

A complete CHNA community health strategy for Northern Light CA Dean Hospital is included as Attachment J and details the hospital’s 2020 – 2022 areas of focus for Piscataquis County, along with related initiatives. The action plan can also be accessed online via the following link: Community Health Strategy.

D. Community Benefit

Table 6 summarizes H.A.D. #4’s nearly $8 million in community benefit expenditures in FY2018. H.A.D. #4 has a long history of working with local communities on health improvement projects.

Table 6: H.A.D. #4 FY2018 Community Benefit Expenditures

Regional community engagement will be enhanced by the stronger connection with other critical access hospitals in the region.

E. Regional Clinical Collaborations for Access to Services H.A.D. #4 collaborates with numerous healthcare organizations to provide primary and specialty care services. Collaborations are bilateral, with H.A.D. #4 both contributing for and providing services. Tables 7 and 8 outline the clinical collaborations of NLH affiliates with H.A.D. #4’s Piscataquis service region. These collaborations benefit the region’s population.

It is anticipated that post affiliation, the medical staff at H.A.D. #4 will advance relationships with providers at Northern Light Eastern Maine Medical Center, Northern Light C.A. Dean Hospital and Northern Light Sebasticook Valley Hospital to ensure continued access to patient care and to build on the services currently in place, thereby improving regional care delivery. The affiliation will enhance NLH’S and H.A.D. #4's efforts to meet the healthcare needs of Piscataquis county region residents.


https://northernlighthealth.org/getattachment/Community-Health-Needs-Assessment/2019-CHNA-Reports/Community-Health-Strategy/Community-Health-Strategy_CA-Dean_Final-for-Posting.pdf.aspx?lang=en-US

https://northernlighthealth.org/getattachment/Community-Health-Needs-Assessment/2019-CHNA-Reports/Community-Health-Strategy/Community-Health-Strategy_CA-Dean_Final-for-Posting.pdf.aspx?lang=en-US

Table 7: NLH Regional Clinical Relationships with H.A.D. #4

In addition to clinical interactions with NLH members, H.A.D. #4 has relationships in place with other regional providers. Table 8 describes these relationships.

Table 8: Mayo Regional Clinical Relationships with Other Health Care Providers

NLH and H.A.D. #4 support care close to home. The clinical collaborations will be transitioned to service line and provide recruitment plans and integrated into NLH planning for services in the region.

F. Quality Programs

H.A.D. #4 is a caring family committed to excellence in people-centered care in a community setting. H.A.D. #4 embraces the recommendations of the National Quality Forum (NQF) and the National Patient Safety Goals to promote patient safety and reduce patient harm. H.A.D. #4’s Primary Care practices have been recognized by National Committee for Quality Assurance (NCQA) for Patient Centered


Medical Home (PCMH) status with the highest level of recognition, #3 level. The primary care practices have also received Diabetes and Heart Stroke recognition from NCQA.

H.A.D. #4 recognizes that it is equally essential to promote employee safety and reduce employee harm. To achieve this, H.A.D. #4 received the SHAPE (Safety & Health Award for Public Employees) recognition for employee safety from SafetyWorks. Also, to improve public access to information, accountability and transparency, H.A.D. #4 reports applicable CMS indicators. Quality and performance improvement are essential to patient safety and organizational learning.

H.A.D. #4 was recognized as a top rural hospital by Leapfrog for patient safety in 2016. H.A.D. #4 deferred reporting in 2018 and 2019 due to time constraints presented by the change of electronic health record systems. H.A.D. #4 conducts the employee Culture of Safety survey annually. The most recent survey conducted in June 2019 had a commendable 72% response rate.

H.A.D. #4’s most recent State survey was conducted in August 2018; no clinical deficiencies were noted. Facility related issues were noted and corrected as were items included in the most recent Fire Marshall surveys. H.A.D. #4 is accredited by CMS. The most recent survey was in August 2018 and no clinical deficiencies were cited. The Medicare Hospital Compare website provides a broad range of clinical, operational, experience and cost comparison information specific to Medicare patients. Attachment F provides a comparative report which includes H.A.D. #4, Northern Light Sebasticook Valley Hospital, and Northern Light C.A. Dean Hospital, along with Maine and national averages.

According to Medicare Hospital Compare measures, H.A.D. #4’s results were better than or equal to State and National averages for many indicators. One area noted for improvement involves Timely Emergency Department Care—results are presented in Table 9.

Table 9: Medicare Hospital Compare Results for Timely Emergency Department Care

While this indicator at EMMC is related to bed availability as well as efficient practices, at H.A.D. #4 the staff is working on increasing efficiencies in moving the patient from the ED to the floor. By joining NLH, there is an opportunity to manage inpatients and patients in the emergency department in a more seamless, integrated care approach to improve flow and efficiencies.

H.A.D. #4’s integration with NLH will create a stronger regional focus on improving clinical outcomes and patient safety. In a time when quality metrics are complex and numerous, H.A.D. #4 will benefit from alignment with a specialized quality team.


G. H.A.D. #4 Selection Process and Rationale to Seek Affiliation with NLH During two strategic planning events in 2013 and 2015, the H.A.D. #4 Board was advised by its consultants that the trends for rural healthcare were not positive, the hospital’s margins were declining, and that H.A.D. #4 should seek to join a larger hospital system. In late 2015, the Board voted unanimously to distribute an RFP for an affiliate partner. In early 2016, RFPs were sent to all hospital systems in Maine.

The H.A.D. #4 Board met with finalists on multiple occasions to vet the proposals and to determine what was best for H.A.D. #4 and the people in the communities served. The Board eventually selected NLH for many reasons, including NLH’s experience with critical access hospitals, the existing clinical services where H.A.D. #4 and NLH successfully collaborated, and NLH’s size and strength as a system.

In July 2016, the H.A.D. #4 Board voted on, and unanimously authorized and approved, a letter of intent with NLH. Due diligence and planning have occurred since then, leading to the February 2019 H.A.D. #4 Board vote to authorize and approve the Agreement and Plan of Merger with NLH. H.A.D. #4 and NLH entered into an Agreement and Plan of Merger dated as of March 19, 2019 (Attachment B).

Letters of support from communities served by H.A.D. #4 for the proposed affiliation are included in Attachment C.

H.A.D. #4’s rationale for affiliating with NLH include: Financial constraints

o H.A.D. #4 has had recurring annual operating losses o Further cost reductions could only be achieved through affiliation with a larger system,

which creates the ability to lower overhead and eliminate costly redundancies Access to regional specialty services

o The affiliation will sustain and support clinical services through stronger linkages to NLH specialists.

o The affiliation supports regional medical staff planning. Provider recruitment and retention is an important factor in affiliating with a larger system.

o Service line planning is enhanced across the proposed 10-hospital footprint involving physicians and other stakeholders.

o Residents of and visitors to Piscataquis and Western Penobscot Counties will continue to have access to a continuum of care as close to home as feasible.

Scaleo H.A.D. #4’s census is relatively low and lacks the scale necessary for long-term financial

success. By becoming part of a larger system, with shared clinical and administrative services, H.A.D. #4 seeks to assure continued access to specialty services in the region.

Population health o Population health focused health care delivery and payment requires a range of new skills

and resources not historically utilized by hospitals, including wellness, risk-based contracting, provider network development, predictive health analytics and state of the art care management in a range of settings. Standalone facilities are unlikely to have the capacity to develop these skills on their own. Joining NLH will further link H.A.D. #4 to Beacon Health’s population health contracts, and to population-based payment expertise.

Access to affordable capital


o Capital financing is typically more affordable in a larger scale.

The proximity to and compatibility with NLH statewide, along with EMMC, CA Dean, and SVH regionally; and with the statewide accountable care organization, Beacon Health, made NLH the appropriate choice for H.A.D. #4.

Affiliation SynergiesNLH and H.A.D. #4 are committed to care close to home. The affiliation rationale illustrated above will position NLH and H.A.D #4 to improve economies of scale, transform the delivery system and assure access to care for patients and families in the Piscataquis and Western Penobscot Counties.

By becoming part of the NLH family, H.A.D. #4 and the service region will benefit from: Cost and operating efficiencies and access to capital Population health management expertise which will enable H.A.D. #4 to offer local (connected to

statewide) choice regarding an entire care system; and complementary coordinated patient care and wellness services

Service line planning and participation in building out regional hubs to support EMMC as the tertiary care facility

Care closer to home which preserves volume and specialty care at H.A.D. #4 and advances a hub strategy of NLH to assure capacity

NLH and H.A.D. #4 are aligned in their commitment to preserving access to care in rural Maine, to advancing population health delivery, to streamlining and reducing the costs of delivering care, and to working together to support, sustain, and grow the healthcare workforce of the future.

H. Accountable Care and Population Health Beacon Health, LLC (“Beacon”) was launched after the successful completion of a grant awarded in 2010 to NLH by the Federal Office of the National Coordinator. In the past several years, Beacon developed significant expertise in population health management. Beacon’s key statistics follow:

72 employees, including 55 RN care managers 100,000 Maine people, including 18,000 NLH employees and dependents on the health plan, are

attributed to quality, cost, and engagement contracts Medicare CMS Pioneer Quality Score in the top 5 and >90% 5 Risk Bearing contracts Preferred provider network with more than 600 providers statewide

Beacon Health is licensed as a Maine Third Party Administrator, which enables Beacon to provide those services not only to NLH but to other employers as well.

Medicare CMS Shared Risk ModelsNLH was one of the original 32 organizations across the United States invited to participate as a Pioneer Accountable Care Organization (“ACO”) through a Medicare demonstration project administered by the Centers for Medicare and Medicaid Innovation. Maine’s demographics made it difficult to succeed in the Pioneer Program, especially for the critical access hospitals. Beacon Health made the strategic decision to transition out of the Pioneer ACO into the Next Generation ACO, and ultimately into the Medicare Shared Savings Program (“MSSP”) as the most realistic approach in order to continue the


system’s evolution into value-based care through a high value network. As of July 1, 2019, MSSP participants include NLH members AR Gould, EMMC, Maine Coast, Inland, and Mercy with more than 12,000 Medicare beneficiaries attributed to the program.

Accountable Care beyond MedicareBeacon participates in risk-based arrangements with Maine businesses, insurance companies, and other governmental agencies such as the MaineCare Accountable Community Initiative. Beacon’s strong leadership team is contracting with non-member regional hospitals and FQHCs in addition to NLH members to help support a larger transformation across Maine that focuses on population health to help ensure high quality affordable care is available to Mainers, now and for generations to come.

H.A.D. #4 and BeaconOver the past three years and currently, Beacon is spending significant time and resources evaluating existing population health capabilities at H.A.D. #4. H.A.D. #4 shows a commitment to delivering high quality care for its communities in its region while also providing a good experience that is affordable. In Beacon’s assessment, Mayo’s teams are engaged (both clinically and administratively) and understand what is necessary to implement the necessary workflows, policies, and procedures required to participate in risk arrangements.

Currently, H.A.D. #4 is participating with Beacon in low risk arrangements (Cigna/Anthem). After joining NLH, H.A.D. #4 would participate in additional risk arrangements (Medicare Advantage, MaineCare Accountable Communities, etc.).

NLH and H.A.D. #4 recognize the value in adding Maine residents to a shared accountable care strategy.

I. H.A.D. #4 Service Areas and Market Overview

H.A.D. #4’s primary service area is defined to include sufficient contiguous zip codes to capture 84% of H.A.D. #4’s discharges, using data from the Maine Health Data Organization’s (MHDO) inpatient database. A secondary service area was defined to represent an additional 8% of H.A.D. #4’s discharges. Primary service area (“PSA”) and secondary service area (“SSA”) details are presented in Table 10.


Table 10: Mayo Patient Origin by Town to Derive PSA/SSA Regions

H.A.D. #4’s total service area (PSA plus SSA) covers southern Piscataquis County and limited portions of Somerset and Penobscot Counties as shown in Figure 4. Combined, the PSA and SSA zip codes include 16 towns. H.A.D. #4’s service area is not anticipated to change as a result of the affiliation with NLH.

Figure 4: Mayo PSA/ SSA Service Area


H.A.D. #4 is the only acute care facility operating in the Dover-Foxcroft hospital service area (“H.S.A.”). According to the MHDO CY2018 inpatient dataset, 43.6% of the Dover Foxcroft HSA residents’ discharges are served by H.A.D. #4. Northern Light Eastern Maine Medical Center, the regional tertiary-level hospital servicing the northern two-thirds of the State, provides specialty inpatient services. Patient movement is not expected to change significantly as a result of the affiliation, although NLH does see H.A.D. #4 as integral to establishing a hub community hospital in the service region. Supporting services close to home in Dover-Foxcroft will result in creating capacity at EMMC to serve higher acuity patients. Table 11 provides an assessment of discharges by hospital service area.

Table 11: Regional Market Volumes and Shares

Figure 5 illustrates that primary service areas are contiguous but not overlapping. All regions integrate with EMMC’s regional referral center services. Referrals to EMMC are coordinated within member organization’s service to keep care close to home when feasible.


Figure 5: Northern Light CA Dean, Northern Light Sebasticook Valley, and Mayo PSA’s

Table 12 shows CY2018 historical inpatient market share for H.A.D. #4’s service area. According to MHDO information, H.A.D. #4 had a 43.1% share of inpatient discharges from residents of the PSA and an 11.7% share of discharges from residents from the SSA. The hospital service area is defined by the state while the PSA/SSA is defined by the zip codes which represent the highest volumes to the hospital.


Table 12: Mayo Historical Inpatient Market Share - PSA/SSA – CY 2018

J. Health Professional Shortage Areas and Medically Underserved Areas/Populations

Several areas of Piscataquis County have been federally designated as medically underserved and/or as a shortage area for primary care/behavioral health/mental health services, as detailed in Table 13. As addressed in the “Needs of the Community” subsection of this CON application, H.A.D. #4 and Northern Light C.A. Dean Hospital have put forth community health strategies that align with the needs of Piscataquis county residents. Additionally, the affiliation will support healthcare work force development opportunities to maintain access to care in H.A.D. #4’s service area.

Table 13: Piscataquis County Health Professional Shortage Areas (“HPSA”) and Medically Underserved Areas/Populations

HPSA designation reinforces the importance of working together on preserving access to care and building a strong workforce with the skills to succeed in the healthcare delivery system of the future.


Primary care is key to population health management; H.A.D. #4’s emphasis on its primary care network will address the challenge of the shortage regions.

NLH and H.A.D.#4 serve rural residents of Maine in underserved regions by preserving access to a range of health care services.

K. Socioeconomic and Market Share Information for the Service Area

Population DemographicsAs noted in Table 14, the total population in H.A.D. #4’s service area and across Piscataquis County is projected to decrease gradually through 2031 according to the Maine State Economist. Consistent with other areas in Maine, the population of residents aged 65+ is projected to grow significantly, while the number of residents under age 65 is expected to decline.

Table 14: Mayo Service Area Population Trends to 2031

According to the Maine Center for Workforce Research and Information’s June 2019 Unemployment and Labor Force report, the unemployment rate for Piscataquis County was 3.3%. While this most recent rate represents an improvement of 0.5% from a year ago, it remains higher than the State’s unemployment rate of 2.8% (rates are not seasonally adjusted). By county ranking, Piscataquis has the fifth largest unemployment rate in Maine.


As shown in Table 15, the median household income in Piscataquis County was 71% of the Maine median household income. While the county’s median household income is projected to grow by 12.6% through 2023, as a ratio of the State’s median income, it is projected drop to 70.6%. The health care sector is an important economic engine in Piscataquis County, supporting the visitor and seasonal populations, as well as year-round residents. As noted, H.A.D. #4 is the second largest employer in Piscataquis County and generates significant economic impact in this relatively low-income county.

Table 15: Piscataquis and Penobscot County Household Income Trends to 2023

Drive Times between HospitalsH.A.D. #4 is the sole acute care facility within the Dover-Foxcroft hospital service area. The nearest hospitals to H.A.D. #4 are Northern Light C.A. Dean Hospital (Piscataquis County) and Northern Light Sebasticook Valley Hospital (Somerset County)—both over a 45-minute drive away. Northern Light Eastern Maine Medical Center is the nearest tertiary care facility to H.A.D. #4, located about an hour away. Table 16 details hospital drive times from H.A.D. #4.

Table 16: Maine Hospital Average Travel Times from Mayo

L. H.A.D. #4 Historical and Forecasted Service Statistics

The following table sets forth a summary of historical utilization data for H.A.D. #4 for fiscal years 2017, 2018 and 2019 (projected). As shown in Table 17, H.A.D. #4 provides a significant range and volume of services to service area residents.


Table 17: HAD #4 Historical Inpatient and Outpatient Statistics

Actual Actual Annualized1

Statistic 2017 2018 Projected 2019Admissions (excludes newborns) Acute Care 1,045 1,118 1,114 Swing and Custodial Beds 111 105 105 Total 1,156 1,223 1,219

Patient Days Acute Care 3,618 3,521 3,287 Swing and Cust Beds 927 829 1,174 Total 4,545 4,350 4,461

Average Daily Census 12.4 11.9 12.2

Acute LOS 3.5 3.1 3.0

Births 100 121 104

Surgical Procedures Inpatient 156 117 107 Outpatient 1,094 1,246 1,154 Total 1,250 1,363 1,261

Radiology Exams Inpatient 1,400 1,329 1,188 Outpatient 18,788 19,516 19,103 Total 20,188 20,845 20,291

MRI-Included in Above Totals 1,215 1,223 1,378

Laboratory Tests Inpatient 18,842 17,806 17,810 Outpatient 106,807 107,084 99,250 Total 125,649 124,890 117,060

Physical/Occupational Therapy Procedures Inpatient 7,069 5,959 5,513 Outpatient 19,876 17,516 16,509 Total 26,945 23,475 22,022

Emergency Room Visits 10,704 11,030 10,671

Ambulance Runs 4,034 3,829 3,790

Oncology Visits 1,376 1,499 1,466

Behavioral Health (counseling/psychiatry) Services 12,487 11,230 10,091

Physician Office Total Visits 50,559 48,038 48,485Source: HAD#4 Internal Data1 Projected based on actual FY19, annualizedInpatient and outpatient projection assumptions and methods are describedin public need section of application.

HAD#4 Historical and Projected Inpatient an Outpatient Volume


H.A.D. #4’s inpatient admissions and patient days are projected to remain essentially flat, as shown in Table 18. Though the service area’s overall population is projected to decrease as discussed earlier, some offset can be anticipated by the increase in population age 65+, who tend to utilize services at higher rates. The projections assume no significant changes in market share and were developed using market scenario planning tools from the Advisory Board Company for H.A.D. #4’s primary service area. The Advisory Board Company is a national research and consulting firm.

Inpatient growth projections centered around seven key drivers: population, demographics, insurance, disease prevalence, technology, readmissions and care management. Factors that will tend to increase inpatient volume in the primary service area are demographics (aging of the population) and epidemiology. Factors that will tend to decrease inpatient volume are innovation and technology, reductions in potentially avoidable admissions, the shifting of care to less acute settings, and more assertive case management.

Table 18: Mayo Projected Inpatient Statistics

H.A.D. #4 outpatient service volumes are also projected to remain relatively flat, with very modest incremental growth. Table 19 outlines projected outpatient service statistics for H.A.D. #4. Outpatient service volumes were projected based on combined methodologies from the Advisory Board’s service line projections for H.A.D. #4’s primary service area, and historical volumes and local expertise of service utilization trends at H.A.D. #4.


Table 19: Mayo Projected Outpatient Statistics

Forecasted volumes are integrated into the financial projections in Appendix G.

M. Summary of Public Need

The needs of the health care needs of community will be addressed by the affiliation. NLH will strengthen H.A.D. #4’s current role as a community-based care provider by lowering costs, preserving local services, and enhancing primary care. The H.A.D. #4 service area is not expected to change as a result of the affiliation.

The affiliation will ensure that H.A.D. #4 remains an integral primary and specialty care provider to residents of Piscataquis and Western Penobscot Counties. H.A.D. #4 will benefit from the cost savings related to economies of scale. The projected savings are included in the financial analysis report included within this application.

Participation in NLH quality improvement programs will allow H.A.D. #4 to work with new colleagues on continuous improvement, care integration and benchmark results among NLH hospitals. Northern Light EMMC will support care close to home and sustain capacity for highly specialized services.

In summary, the affiliation will improve quality outcomes, address identified community needs, maintain clinical services, support and build healthcare workforce, and engage H.A.D. #4 providers in the accountable care transformation of service delivery and payment models. This affiliation is needed to sustain quality care in this rural region in Maine.


V. ORDERLY AND ECONOMIC DEVELOPMENT

A. Benefits of H.A.D. #4 and NLH Affiliation As the result of an extensive H.A.D. #4 Board and management planning process, H.A.D. #4 determined to pursue affiliation with NLH in order to facilitate sustainable financial viability, improve integration of the delivery of healthcare services to the Piscataquis County region, improve access to capital, greater information technology expertise, and create the scale needed to be successful under population health and value-based payment systems. Initially, H.A.D. #4 identified the following goals in pursuing an affiliation with an existing system in order to improve the prospects for longer term success in a dynamically changing healthcare environment:

Establishing infrastructure for delivering accountable care Right-sizing care delivery network/continuum Growing covered lives and patient population Increasing scale to improve operating efficiency Gaining improved access to capital

H.A.D. #4 concluded that, properly structured, forming a strategic partnership would enable it to:

Achieve greater scale, consolidate activities, and improve operational efficiencies Elevate information technology, especially electronic medical record platform and modern

business systems Improve cost management of specialty care Offer ties to a statewide provider network Engage in risk sharing for value-based pricing for covered population Develop medical homes Integrate accountable care competencies with respect to:

o Care managemento Risk sharing o Predictive Health analyticso Provider network development and management

H.A.D. #4 conducted a thoughtful and thorough process in its consideration of affiliation options. H.A.D. #4 ultimately chose to partner with NLH because NLH best enabled H.A.D. #4 to achieve the goals identified during its strategic planning process. Additionally, there is a cultural congruity between both organizations’ commitment to designing the healthcare of the future: keeping populations healthy, rather than focusing primarily on the treatment of patients after they become ill. NLH will benefit from its new relationship with H.A.D. #4, with its strong provider network, resulting in economics of scale, and the opportunity to build on a statewide accountable care organization.

All the benefits and savings related to the affiliation have not yet been fully quantified; however expected benefits of the affiliation include quality improvements, efficiencies, and cost savings including, but not limited to: Physician and Clinician Staff : NLH has an integrated system-wide physician/clinician recruiting

program. Physician recruits often consider employment opportunities with integrated systems to be more attractive than employment opportunities with stand-alone rural hospitals.


Workforce development : Having a larger employee base will support a broader range of training, engagement, and advancement opportunities and streamline employee benefit costs.

Care close to Home – Piscataquis County patients who need higher acuity care have traditionally elected to receive services at Northern Light Eastern Maine Medical Center. H.A.D. #4 will be supported to provide targeted services, thereby enhancing patient access and patient experience, while at the same time freeing up capacity at EMMC for higher acuity cases that go elsewhere when there are no available beds at EMMC. This strategy could increase volumes at H.A.D. #4.

Rural Healthcare Services: Rural healthcare delivery is increasingly challenging to sustain. By affiliating with a larger system, H.A.D. #4 will further utilize NLH’s telemedicine programs as one form of outreach for provider to patient, provider to provider, and provider to consumer services.

Administrative function integration : NLH supports member organizations by providing a range of administrative services, including communications and marketing, information technology, accounting, planning, human resources and employee benefits, legal, compliance and revenue cycle services. By adding H.A.D. #4, NLH will be able spread expenses for a high performing expertise and systems among a larger base of member organizations.

Health information technology : NLH is a national leader in health information technology. Sharing best practices with H.A.D. #4 is expected to not only improve clinical outcomes but reduce duplicate tests and re-admissions as the shared clinical data becomes available to more providers.

340B Drug Discount Program : H.A.D. #4 is currently eligible for the 340B program for inpatient, outpatient, and retail pharmacy. Because NLH has technical expertise and dedicated staff who focus on the 340B Program, there are likely opportunities for optimizing and expanding its financial benefits.

Clinical quality : NLH has long-standing committees comprised of providers, nurses, clinical and IT experts who develop care path protocols based on evidence-based medicine which are integrated into the electronic medical record system and clinical policies. As Medicare and other payors continue to move towards value-based payments, NLH and H.A.D. #4 will be better positioned to provide high quality care to more Maine residents.

Population Management and Contracting : NLH’s Beacon Health has significant experience in contracting with CMS/CMMI on a variety of population health payment programs. Beacon has developed needed expertise to manage multiple contracts with governmental, commercial and self-insured payors. This includes contracting, legal, care management, analytical and population health expertise. H.A.D. #4 has a strong primary care network, as do the NLH member hospitals. Adding H.A.D. #4’s covered lives to NLH’S Accountable Care Organization (ACO) will spread the infrastructure investment and allow the system to advance integrated care for patients.

Service line development : NLH is working to develop system wide service lines to assure access to a full range of services delivered in a cost-effective way. H.A.D. #4 will participate in developing and integrating service lines.

NLH is a leader in managing the health of the communities it serves and using leading edge health information technology to improve the quality and safety of care. Both systems are known for providing high-quality, safe care in a continuum of care settings.

B. Quality Improvement

NLH, its members, and H.A.D. #4 post affiliation will all continually monitor multiple process and clinical outcome indicators. NLH has a quality team skilled in Press Ganey patient experience surveys and data, quality data, safety data and improvement, claims-related data, process measurement related to indicators such as patient falls, and clinical outcomes which are available via the Cerner electronic health


record. H.A.D. #4 leaders will be participating in system work related to quality improvement and measuring results.

The NLH Quality Council works closely with an integrated care management team to improve management of patients along the care continuum. This team focuses on re-admissions, care variation and compliance with clinical bundles built around best practices.

H.A.D. #4 recently upgraded and consolidated its electronic health record and revenue cycle to Cerner Community Works. Although this system is not the same as NLH’s upgrade to the Cerner Millennium platform, there is potential to integrate H.A.D. #4 data to Cerner’s electronic data warehouse for quality reporting and identification of quality improvement initiatives.

C. Governance Post-AffiliationHistorically, each community in the hospital administrative district elected members to the H.A.D. #4 Board who serve 3-year terms. The H.A.D. #4 Board usually consists of between 16 and 19 members. Post-affiliation, a local board will continue to be involved in the oversight of H.A.D. #4 after it becomes a member of NLH. Both organizations believe in strong local governance that ensures the voices of the community are at the table when decisions are made about their healthcare needs. Article 2 of the Agreement (Attachment B) describes the governance impact of the transaction.

When the merger of H.A.D. #4 into MRH Corp. occurs, MRH Corp. will be the surviving corporation and H.A.D. #4 will cease to exist. MRH Corp. will be a Maine non-profit public benefit corporation formed under the Maine Nonprofit Corporation Act. The governance of MRH Corp. will be the same as the governance of all NLH member organizations, consistent with the format of a bylaw uniformity project that was completed in 2014. The principal elements of NLH hospital member organization governance are as follows:

Fiduciary community-based Board of Trustees (11-19 members); Staggered three-year terms The President and CEO of NLH serves as a Trustee ex officio with voting power. Each of the MRH Corp. president and the president of the medical staff serve as Trustees ex officio

with voting power No more than 49% of the Trustees may be “financially interested” as defined in 13-B M.R.S. 713-A. Majority of Board members must meet independence requirements Standing Committees: Governance/nominating, Quality and Professional Affairs, Joint Conference,

Finance Enumerated matters are subject to NLH joint initiatory authority

D. Alternatives

As described earlier, during its strategic planning process, H.A.D. #4 considered a complete array of scenarios before concluding that the NLH affiliation presented the best possible alternative for H.A.D. #4 and the communities it serves.


NLH and H.A.D. #4 are well suited to affiliate. Early analysis indicates that the transaction will have no negative effect upon other providers in the service area. This affiliation is necessary to secure H.A.D. #4’s position as a financially viable provider over the long term. Additionally, NLH brings to H.A.D. #4 all the financial, operational and strategic resources that were identified in its strategic review process. The discussions between the two organizations revealed a close alignment regarding mission and values. Ultimately, this affiliation presented the best alternative for key constituencies including patients, medical staff, employees, volunteers, payors, employers and healthcare consumers.

Alternatives evaluated are described as follows.

Alternatives Considered Remain independent: Given recurring losses from operations, there were no other ways for H.A.D.#4 to improve financial results and sustain services to their region. This option was fully vetted but was determined as unrealistic.

Work with other independent hospitals: There are few independent hospitals operating in rural Maine. Other smaller community hospitals are also experiencing losses. Collaborating would not bring about financial sustainability for H.A.D. #4. This option was considered but determined as unrealistic.

Affiliate with another Maine system: H.A.D. #4 considered affiliation with other Maine based multi-hospital systems. As described in other sections of the application, the Board conducted extensive due diligence. After consideration, it was determined that an affiliation with NLH was best suited to assure the continuation of health services in an accessible, financially feasible way.

Downsize or Cease Operations: H.A.D. #4’s core services provide access to primary and specialty care in a very rural area of Maine. The business community and residents rely on H.A.D. #4 for care and for the economic benefits of a strong community hospitals. This alternative was determined as unacceptable given the needs of the service region and the goals of both organizations.

Summary: After a review of alternative options, H.A.D. #4 leaders decided that affiliating with a larger health delivery system, and specifically NLH, is the only choice towards meeting the health care needs of the service region and fulfilling the mission of the hospital.

E. Service Regions

Market Impact The total service area is served by EMMC for specialty services. The outlined region in red in Figure 6 represents the combined service area for H.A.D.#4.


Figure 6: NLH and H.A.D. #4 Service Areas

F. CMS notification H.A.D. #4 has commenced the process of fulfilling CMS Form 855 requirements necessary in this transaction.


G. Payor Mix Assumptions Table 20 and Attachment G include the revenue projections by payor mix incorporated into the projected financial statements. Net revenues are based on current payments from governmental and commercial payors.

Table 20: Payor Mix Assumptions

Payors will not be adversely impacted by the affiliation.

H. Summary of Orderly and Economic Development

The proposed affiliation is consistent with the orderly and economic development of Maine’s healthcare system as demonstrated by: The affiliation will facilitate NLH’S and its affiliates’ success under population health payment models

by advancing the population health network throughout Maine The affiliation will add to the scale needed to streamline administrative costs, create specialized

skills and training, and provide access to affordable capital. Community health will be improved through collaboration and community benefit activities. No providers or payors in the region will be adversely affected. After extensive review, H.A.D. #4 is certain an affiliation with NLH is the alternative that most

effectively provides enhanced access to services, improves population health, and reduces costs. NLH has demonstrated success in assisting Maine hospitals through its previous affiliations and

cooperative initiatives, including Northern Light Mercy and Northern Light Maine Coast results.

NLH will provide H.A.D. #4 with access to affordable capital, operating efficiencies, and a statewide accountable care network.

H.A.D. #4’s leadership team will advise on improving the integration process in the future.


VI. OUTCOMES AND COMMUNITY IMPACT

A. Quality Improvement

NLH and H.A.D. #4 have an established record in the pursuit of quality care. NLH and H.A.D. #4 have Board Quality Committees and are addressing quality inclusive of clinical outcomes of individuals and populations, patient experience, employee engagement, and reduction in care variation. NLH and H.A.D. #4 are committed to assuring patients, payors and providers of their commitment to provide the highest quality and safety in all aspects of care.

H.A.D. #4 also focuses significant efforts on achieving quality outcomes. NLH’S quality programs will link H.A.D. #4 to quality and performance improvement initiatives including the following: improving care transitions; medication safety; chronic disease management and hospital acquired infection reduction.

The affiliation will enhance NLH’s efforts in addressing important issues related to population health. Post-affiliation, H.A.D. #4 will participate in these quality improvement initiatives, among others: Chronic Care Management and Screening Rate notification and Care Management programs Beacon Health programs: joining NLH will accelerate the application of care management and the

use of population health analytics Patient safety training : training for improved care safety at departmental and team level Patient experience training : system-wide focus on improving experience for patients and families

The NLH Board Quality committee reviews quality data and outcomes. These metrics include: National Quality Forum Measures CMS Core Measures Patient Satisfaction Data

H.A.D. #4 will participate in all NLH sponsored clinical integration programs. These include: MRH Corp. Quality Committee (QPAC) CMS and Joint Commission data submissions regarding process and outcomes of care. Patient satisfaction data (Press Ganey) Participation in the Annual Leapfrog Group patient safety survey Integrated Care Management Team Quality Council

Quality and patient experience measures are consistently monitored to assess opportunities for improvement. Many indicators are publicly available and transparent to patients and consumers.

The affiliation will support the public’s demand for access, choice and cost- efficient care in H.A.D. #4’s service areas. H.A.D. #4 will become part of a fully aligned healthcare system, focused on Maine-based clinical and quality improvement initiatives and programs. This will allow H.A.D. #4 to shift resources, standardize process improvement and simplify reporting structures. The combined resources of the quality and clinical teams of H.A.D. #4 and NLH will enable continuous quality improvement.


B. Region’s Capacity for Services The proposed affiliation will not result in any adverse change in the range or level of services H.A.D. #4 or NLH offer in the region. This proposal is not expected to adversely affect other providers. The methodology for defining these service areas was reviewed in Section IV. As discussed in other sections of this application, with H.A.D. #4’s participation in the NLH ACO, access to care will be improved.

C. Summary – Outcomes and Community Impact

The affiliation will integrate quality of care improvements across NLH’s proposed ten hospital system. The system will continue to focus on improvements in clinical outcomes, patient experience, and patient and staff safety and identify needed changes based on available data. H.A.D. #4 will be added to the NLH Quality Council which engages member organizations in transparent discussions about what to measure and how to improve results. Practice patterns are not expected to change significantly, other than patients will have the advantage of improved care management and information flow as common care management practices and electronic health record and business systems are adopted. This affiliation meets the criteria of assuring that care will be positively impacted by the providers.

Community health will be improved by stronger regionwide efforts to address identified community needs through health care service delivery and/or by working with community agencies and public health services.


VII. SERVICE UTILIZATION

The residents of Piscataquis and Western Penobscot Counties will benefit from the affiliation, with access to a larger growing primary care network and integrated specialty service lines. NLH’s intention is to provide care close to home whenever possible, the right care in the right place.

A. Utilization Data

The historical and projected utilization of H.A.D. #4 is reviewed in Section IV. Tables 18 and 19 show anticipated volume changes, which are incorporated into the financial projections in Attachment G. A summary of key service statistic assumptions is as follows:

Inpatient volumes in the region are projected to essentially stay flat with the base year. The upward pressure on utilization rates from an aging population will be offset by population health management strategies from NLH and others.

Outpatient, emergency and ambulatory surgery are projected to see modest increases with some growth in provider visits and therapies.

B. Summary of Service Utilization

The Public Need section describes patient care utilization patterns in the region. The affiliation will not result in inappropriate increases in service utilization. There is no conflict between the proposed affiliation and any other proposed project in the area. This affiliation will retain services in a financially sustainable way in a lower cost setting.


VIII. TIMELY NOTICE

NLH and H.A.D. #4 will comply with notification timelines required by CON regulations. Key dates to date are as follows: June 14, 2019: Letter of intent/reviewability sent. July 1, 2019: Technical Assistance meeting with Healthcare Oversight staff and representatives of

Mayo Regional Hospital and Northern Light Health. August 19, 2019: Application filed and declared complete.


IX. CONCLUSION

This proposal meets the required review elements of the CON review process: NLH is fit, willing, and able to complete this project as described and will continue to improve

the quality of care provided to residents of their service areas. The project is economically and financially feasible. H.A.D. #4’s financial position will improve

post-integration. There is a documented public need for all aspects of this project including supporting primary

and specialty services in a rural region in Maine. The affiliation will integrate a culture of patient focused care and population health management.

The proposed services are consistent with the orderly and economic development of health facilities and health resources for the State as evidenced by the data included in the Public Needs Section, the Letters of Support from regional stakeholders, and the financial summary presented. Alternatives have been considered and affiliation remains the best opportunity for sustaining healthcare services for the service region.

Outcomes and community impact will be positively impacted due to the affiliation. CHNA priorities are consistent and will be managed across the region.

Service utilization statistics are reasonable; volumes anticipated will support the NLH and H.A.D. #4 combined.

The proposed affiliation considers the evolution of care in hospitals in Maine, recognizes the financial constraints of purchasers of healthcare services, puts the financial resources of H.A.D. #4 and NLH and the surrounding communities to good use, and assures continuing access to patient centered care in Piscataquis and Western Penobscot counties.


X. LIST OF ATTACHMENTS

A. LD 1708 – Maine Act to Provide for H.A.D#4 to Merge into MRH Corp.

B. Membership Substitution Agreement

C. Letters of Support

D. Profiles of NLH Clinical Members

E. NLH and MRH Board Member Lists

F. Medicare – CMS Compare Report

G. Financial Forecasts

H. NLH and MRH 2018 Audited Financial Statements - 1) NLH 2) MRH 3) GASB to FASB

I. H.A.D. #4 License

J. Community Health Needs Assessment (CHNA) Action Plans - 1) MRH 2) CA Dean


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