The Dexter Leader
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Chelsea Hospital operates merger
Partnership studied with St. Joseph Mercy Hospital
By Edward Freundl, Staff Writer
PUBLISHED: March 27, 2008
Strengthening a bond that has existed for years, Chelsea Community Hospital (CCH) has agreed to study the possibility of a formal merger with St. Joseph Mercy Health System (SJMHS).
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"The reality is, we've had a longstanding collaboration throughout our history," said Kathleen Griffiths, President and CEO of Chelsea Community Hospital.
"We determined we needed a closer affiliation, so for the past year or so we've been talking about it more seriously."
Griffiths' counterpart, Garry Faja, president and CEO of St. Joseph Mercy Health System (SJMHS), noted the deep-rooted ties between the Ann Arbor and Chelsea hospitals.
"We've been working together for years," Faja said.
"This is a continuing enhancement of that relationship."
The two hospitals released a carefully worded joint public statement on Friday detailing the accord, but Griffiths distributed an internal memorandum about the agreement to CCH employees on March 12.
"Throughout our history Chelsea Community Hospital has been very fortunate. We had founders with the vision to create a hospital in Chelsea when few thought it possible," the memo stated.
"We have been able to attract some of the area's finest physicians and to have a group of highly competent and caring employees and volunteers who have made Chelsea Hospital the wonderful organization it is today.
"Because of our good fortune we have been able to remain independent much longer than many hospitals our size.
"Our board has taken this step to ensure that we will be able to continue to provide exceptional health care to Chelsea and surrounding communities for years to come."
The directors of the hospitals signed a non-binding "Letter of Intent" to spend the next three to four months looking at each other's operations and hammering out details.
The bottom line is, "Chelsea will become a member of the St. Joseph Mercy Health System," Griffiths said.
"The hospital is an important community resource and it will continue."
Faja noted that staffing will not be affected at the Chelsea facility.
"We don't anticipate any jobs being lost as a result of this merger - and it is a merger," Faja said.
Both CEOs were careful to point out the benefits the merger will bring to the people of Chelsea.
"We've been fortunate in that the community has been extremely supportive of this hospital and its visionary founders since 1970," Griffiths said.
"The residents can expect the same high-quality health care, and we expect the affiliation will bring even more services to the community, such as oncology services, enhanced cardiology services and others that we will identify when they are ready.
Faja added: "The relationship between this community and this hospital has been a special one for a long time, and we want to preserve that."
Financially, the merger of CCH has a distinctive David-and-Goliath look to it.
SJMHS currently consists of four hospitals - in Ann Arbor, Saline in 1990, Howell in 1991 and, in late January, St. Mary Mercy Hospital in Livonia.
It is itself part of a much larger Catholic hospital system, Trinity, with affiliated hospitals and clinics across the nation.
For fiscal year 2007 (January to December 2007), net patient revenue for CCH was $82 million, resulting in net income of $728,000.
For SJMHS, whose fiscal year ran from July 2006 to June 2007, net patient revenue was $758 million and net income was $53.6 million (not including figures from St. Mary's Livonia).
Nevertheless, the CEOs said the Chelsea hospital won't be swallowed up by its larger partner.
Unlike some of its other hospitals, Faja noted, people will not see a sign that reads, "St. Joseph Mercy Hospital-Chelsea."
"Every one of our hospitals is different, and each is approached differently," he said said.
"We want to preserve the name of Chelsea Community Hospital; it has a lot of equity in the community."
Griffiths added: "It was very important to us to preserve our name and our identity."
In an effort to do that, the structure of the hospitals' boards of directors will continue to have a local focus.
"We think it's important to have governance to oversee the connection," Faja said.
Griffiths expects the current CCH board of directors to continue, with a minor modification.
"We will continue to have local governance through the board of directors, but there will be some powers reserved to St. Joseph," she said.
The long affiliation between the two hospitals has led to "a significant overlap already" in the services provided and the professionals who provide them, according to Faja, and that will only increase under the agreement.
Griffiths said each hospital has certain things that can benefit the other.
"Many doctors at St. Joseph also practice at Chelsea, and there are many specialists and services like radiology, anesthesia, emergency room and laboratory," Griffiths said.
"One service that we offer here is distinctive: Our head pain treatment program sees people from all over the country."
SJMHS can also bring Chelsea up to speed in the area of advanced technology.
"St. Joseph in Ann Arbor is a large, tertiary referral center, we have specialists not available (in Chelsea)," Faja said.
For example, Faja described an innovative device known as a "cyberknife," which uses robotic technology to pinpoint and radiate tumors of the head and neck with an accuracy and safety not possible with traditional methods.
"It's the only one in the state, but it's expensive," Faja said. "A place like Chelsea could not even consider such technology on its own."
St. Joseph can also offer advances in information technology that will benefit Chelsea, such as an electronic patient record-keeping system that increases accuracy while greatly reducing the amount and redundancy of paperwork.
"Chelsea does not have that yet, and that's one of the things we hope to acquire," Griffiths said.
The Chelsea hospital CEO said the three or four month time frame in the letter of intent will give each entity an opportunity for due diligence.
"There will be an exchange of information, plans, details of contracts in place that we didn't have access to, and details on financial performance," Griffiths said, and noted that there will be an opportunity for the public to be involved and bring their concerns to hospital officials.
"Toward the end of that three-month period we will hold a community forum to describe and explain the plan in more detail, and answer questions that people may have," Griffiths said.
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