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OMC CEO seeks to save money through network of hospitals

Wednesday, January 9, 2013

Photos by Richard irby OMC President and CEO Dave Zechman (standing) has worked for two years to put together a network of hospitals in Arkansas and Missouri, who could save money by working together. On Wednesday, Jan. 16, Fulton County Hospital officials will be among representatives of five hospitals who will meet in Houston, Mo., to discuss the idea.
By Richard Irby


On Wednesday, Jan. 16, a group of hospital executives, including some from Salem and West Plains, will gather in Houston, Mo., to discuss banding together in an attempt to stay independent and survive in a very uncertain time for health care.

The new health network is the brainchild of Dave Zechman, President and CEO of Ozarks Medical Center, the West Plains Hospital that also manages the Fulton County Hospital.

"As you all know, I have been working over the past two years to put together a group of independent hospitals along the "(Highway) 63 corridor" from northern Arkansas to Rolla," Zechman said in a Dec. 17 memo to the Fulton County Hospital Board. "The idea would be to form an affiliated network of hospitals that would allow us to share some functions but remain independent and not merge "bottom lines."

Zechman's letter was a pitch to encourage FCH board members to attend the meeting where five hospitals interested in joining what will be called the "Hopewell Exchange Network" will meet to hear a formal proposal as to how the network would work, and how it could possibly benefit those involved.

So far, Zechman and Red Rock Health Ventures, an Iowa consulting company he has been working with, have not had much success in attracting Arkansas hospitals. The Fulton County Hospital is the only one. Besides OMC, hospitals in Houston, Salem, and Rolla, Mo. have been invited to the organizational meeting.

Zechman adds, however, health networks have been popping up all over the country as major health care reform approaches. "Our consultant tells us that he has talked to eight other hospitals in Kansas, Iowa, Michigan and Missouri who are interested in joining our network. This is very exciting," Zechman said.

When Zechman first discussed the network of hospitals at a FCH Board meeting in July, board member Danny Perryman called the idea, "very interesting," one with potential.

However, Board member Jerry Blevins questioned the $18,000 annual membership fee the hospital would pay.

In July, Zechman explained that the consultants could open an office for the network and coordinate a number of shared services, including physician recruiting, physician sharing, risk management, legal assistance and other services that hospitals could save money on by pooling resources.

Perhaps the most important service would be seeking and applying for grants. Red Rock is already working on a federal grant application for $85,000, which could provide seed money to help the network get established, and, according to FCH CEO Tony Thompson, perhaps help lower the annual fee the local hospital would have to pay.

Zechman said the annual fee for membership in the network will be based on a hospital's size. FCH would get off easy at $18,000. Zechman estimates that OMC would pay about $75,000 the first year.

One of the questions to be discussed is how long it would take for a health network to start paying off.

While Blevins called the network "a risk," board member Bill Pace pointed out the hospital has paid $30,000 to $50,000 to physician recruiters in the past, only to receive little positive result, so, perhaps, it is a good idea to try a new approach.

CEO Thompson has said, because of all of the uncertainties of health care reform, small, rural hospitals must work together to survive.

Zechman put it this way, "It's our response to health care reform. We are trying to do all we can to remain independent at a time when capital is shrinking and reimbursement (for services) is shrinking."

However, Zechman has said that he did not know whether the health network would happen or not.

After the Jan. 16 meeting at the Texas County Hospital at Rolla, he may have a better idea as to whether there is enough support to get the network off the ground.

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