Berger Health starts formal merger talks to become OhioHealth’s 12th hospital

Berger Health starts formal merger talks to become OhioHealth’s 12th hospital

Via Columbus Business First >>

Berger Health System has entered formal negotiations to join the OhioHealth system after a three-year affiliation and more than six months of hospital tours and community meetings. The talks will continue into fall.

The choice is not a surprise, but wasn’t a foregone conclusion. Circleville voters in November cleared the way for Berger to lease out its business assets to a private entity, but CEO Tim Colburn said then that the system would look to other partners if Columbus-based OhioHealth could not meet healthcare needs in Pickaway County.

Berger formed a working group with city and county residents and elected officials that since January has visited other community hospitals that joined OhioHealth, including the former MedCentral hospitals in Mansfield and Shelby and Athens-based O’Bleness Hospital.

Members interviewed patients, hospital board members and elected officials in those communities, Colburn wrote in an op-ed that appeared last weekend in the Circleville Herald.

“After extensive meetings, countless hours, and much discussion, our work group developed an aligned perspective on what is needed to retain vibrant, local healthcare for years to come,” he wrote. “Recently, we shared this perspective with OhioHealth, officially starting negotiations for Berger to become part of the OhioHealth system.”

I’ve left messages seeking comment with both systems.

Berger Hospital and its outpatient network would become the 12th hospital in Central Ohio’s largest health system. The 11th will be OhioHealth Grove City Methodist Hospital, a small surgical hospital under construction and set to open in October.

Berger joined an exclusive affiliation with OhioHealth in January 2015. That meant help recruiting and placing physicians, a new telemedicine unit, savings on supplies and operations consulting when Berger requested it.

However, the agreement came with legal constraints on how much each system disclosed about finances and other inner workings, Cheryl Herbert, OhioHealth senior vice president of regional operations, told me after the November vote.

“There is a significant amount of due diligence that needs to take place,” she said then. “Until we really understand from them what their goals and objectives are, now that they have the ability to negotiate a different kind of relationship, we’re not prepared to talk about what that might look like.”

Ohio’s only hospital with joint city and county ownership may lease its assets and business operations to a nonprofit entity – essentially keeping public ownership but freeing it from the strictures of public governance – under the city ordinance approved in November. City but not county voters got a say in the ownership because of a 2010 ballot initiative.

Berger has signed a six-year contract with MediGold, the Medicare Advantage plan of Columbus-based Mount Carmel Health System, that says its members can’t be forced out of network if Berger joins a larger entity.

Berger had an operating surplus of $1.8 million on $86.6 million in revenue in 2016, the second year of positive margins since the affiliation, according to its audits. It had an operating loss in 2014. The 2017 audit should be released by early next month.

OhioHealth had operating surplus of $272 million on $3.79 billion in revenue, according to the 2017 audit for the year ended June 30.

Berger’s goal, which OhioHealth has supported for its other members, is to provide more specialty services in Circleville so patients don’t have to leave the county, or the Berger system.

Rural hospitals have come under increasing pressure as federal reimbursements shrink; two Ohio hospitals announced this year they would close.

Meanwhile competitors are nibbling at Berger’s territory: Besides OhioHealth’s small hospital, Mount Carmel is building a 210-bed hospital in Grove City, and Chillicothe-based Adena Health System has opened an outpatient center in Circleville.

Carrie Gose

Staff Reporter

Columbus Business First