CoxHealth and Bolivar-based Citizens Memorial Hospital have signed a letter of intent that provides the framework for bringing the two health-care systems together, a news release from the organizations said.
“After a great deal of consideration, we feel that forming a partnership with CoxHealth is in the best interest of CMH’s future,” CEO and executive director of CMH Donald Babb said in the release. “This is a strategic partnership that will expand CMH’s mission and values and further our ability to make a difference in our local communities.”
At a press conference Friday morning, Babb said all CMH employees are “guaranteed their positions.”
CoxHealth CEO Steven Edwards added that seniority will be respected for CMH employees, based on the day they began working at the Bolivar hospital.
Financially, CMH is doing better than ever, Babb said, adding that 2015 was the “best year we’ve ever had.”
“Our net bottom line was in excess of $7 million this last year. This is not a distress call,” Babb said.
Babb said becoming part of the CoxHealth system will allow CMH to better weather the Medicare changes coming in the future.
Edwards agreed, adding that the deal benefits Cox-Health as well.
“There are a lot of stressed hospitals in the state of Missouri and CMH is not one of them,” Edwards said. “Having a partnership where we are both strong, there are advantages for us.”
CMH will retain its board, current employees, management and medical staff and also its name in a co-branded format with CoxHealth, the release said.
“The CMH name has a lot of strength and we would never want to move away from that,” Edwards said.
CoxHealth will make an investment of $50 million with $40 million paid to CMH. The remaining $10 million will be paid to an independent charitable foundation, the letter of intent summary said, which will be broken down in the following ways:
• $6 million can be used by the independent charitable foundation in its discretion, subject to certain restrictions, including setting aside $1 million for medical student, nursing and allied health scholarships for residents of the CMH service area and employees and children of CMH employees.
• The remaining $4 million is restricted for CMH operations and to reimburse CoxHealth for up to $1 million of pre-closing CMH liabilities, if any.
The letter of intent will allow CMH and CoxHealth the ability to exercise due diligence before both organizations’ boards of directors recommend a final agreement for approval.
The parties will then negotiate the final agreements with a goal of closing mid-2017, the release said. Over a seven-year period, Cox-Health will commit $70 million for strategic projects and routine needs.
“These relationships are built on trust more than any kind of contract,” Edwards said. “Don (Babb) and I have known each other for decades. My father has known Don before that. There is such a relationship and connectivity between us.”
According to Edwards, Babb will maintain the CEO position.
“Hopefully he’ll never retire,” Edwards said.
Once the partnership is finalized, the release said CMH will become part of CoxHealth while maintaining independence. The two organizations will act as one entity for purchasing, contracting and other business-related matters.
The release said once an agreement is reached, various government approvals may also be required.
“One of CoxHealth’s key goals is to strategically expand our footprint to serve our communities by exploring collaborative relationships with other health systems,” Edwards said in the release. “We are honored to join with an organization with such an excellent reputation and one that has made such a profound impact in the community it has served for more than 34 years.”
CoxHealth said one of the organization’s key strategies is expanding their footprint by exploring partnerships with other health systems. In 1993, St. Vincent’s Hospital in Monett was acquired — now known as Cox Monett. After the completed purchase, CoxHealth added obstetrics and orthopedics to their services.
Springfield locations of Columbia HCA — a for-profit health system — was purchased by CoxHealth in 1998, which included the now Meyer Orthopedic and Rehabilitation Hospital. This facility was updated significantly and became the first dedicated orthopedic and rehabilitation hospital in Springfield, Cox-Health said.
In 2013, Skaggs Regional Medical Center and Cox-Health merged to form Cox Medical Center Branson, which CoxHealth said led to capital improvements, a successful physician recruitment effort and significant investments in the health of the community.