Portage Health takes on partner

HANCOCK – In an effort to strengthen its financial state and increase its ability to expand services to the community, Portage Health has partnered with a national hospital chain, according to Jim Bogan.

Bogan, who is president and CEO of Portage Health, conducted a public forum on the new partnership between the health care system and Nashville, Tenn.-based Life Point Hospitals.

Life Point partners with 57 hospital systems in 20 states, Bogan said. Under the new agreement, Life Point will have majority ownership, and Portage Health will have minority ownership. There will be no name change once the partnership is finalized.

The nine-member Portage Health board of directors will remain after the partnership is finalized, but will be advisory only.

An eight-member governance board will consist of five appointed by Portage Health and three appointed by Life Point. Governance of the new entity will be split evenly, which Bogan said is important for the community.

“We have preserved local autonomy,” he said.

During the annual report to the community about the status of Portage Health in January, Bogan said hospital officials were looking for a partner to help them face the challenges of the coming changes in health care presented by the Affordable Health Care for America Act.

Because the health system was financially sound, Bogan said Thursday they could negotiate from a position of strength.

“What’s going to happen out of this partnership is our financial strength is going to improve,” he said.

There are many uncertainties about what will come from health care reform in the United States and what it will mean for health care systems, Bogan said, and a strong partner can help them face those issues.

Bogan said the choice of Life Point as a partner was made because that organization is a good fit, operationally.

“It’s philosophically aligned with Portage on several points,” he said.

Bogan said those similarities include a dedication to quality care and service, a dedication to collaboration with medical staff, a commitment to preserve jobs, an understanding of the importance for local involvement and governance, and an established and growing commitment to support the health and well-being of the entire Upper Peninsula.

With the new partnership, Bogan said Portage Health’s contribution to the local tax base will increase.

With the completion of the partnership, Bogan said Portage Health will become a for-profit company, but that won’t change the commitment of the health system to community involvement and commitment to providing care for those who are unable to pay for it.

“There will be no change in the institutional thinking,” he said.

Bogan said Portage Health and Life Point have signed a non-binding agreement for the partnership. In the next 60-90 days both sides will conduct due diligence to determine if the partnership should be finalized, and if both approve the agreement, it will become finalized 60 days after that.

After Bogan’s presentation he took questions from the audience.

In response to a question about whether the proposed partnership has been reviewed by Michigan Attorney General Bill Schuette, Bogan said it has.

“We expect to meet the expectations of the attorney general,” he said.

Another audience member asked if Portage Health’s long-term care facility, Portage Pointe would be affected.

“There’ll be no change,” he said.

In response to another question, Bogan said although exactly what will happen won’t be determined until after the partnership is finalized, there will be some capital improvements within the health system.

“The capital investment will be substantial,” he said.