GRAND HAVEN — In deciding to merge into the large Trinity Health ecosystem, North Ottawa Community Health System potentially stands to reap one immediate benefit: a greater ability to attract physicians.
Like most small health systems in small towns, North Ottawa often cited difficulty in recruiting physicians, particularly specialists, because of the low patient volume for many specialties or concerns about future financial stability.
By becoming part of Trinity Health on Oct. 1 when their merger closes, North Ottawa can offer physicians the ability to practice in adjoining markets where Trinity Health operates, ensuring they have the patient flow and income they desire, along with the backing of a large health system.
“It just gives the stability that all physicians want,” said Shelleye Yaklin, North Ottawa’s president and CEO who will remain as president of Trinity Health Grand Haven. “When they say they want to consider relocating themselves and their family, they don’t want to keep jumping from organization to organization.
“All independent hospitals are faced with the challenge that a physician may say, ‘Well, it looks really nice today, but what’s it going to look like in five years or 10 years? Because when I come, I want to invest myself and my family in the community.’ Now we’ve removed that ‘what if’ from the equation for doctors. I think we’re going to see a tremendous opportunity for both recruitment and retention.”
Executives said last week they have signed a final agreement to merge North Ottawa into Trinity Health, ending more than a century of independence for the small Grand Haven health system. Once the deal closes, North Ottawa Community Health System will become known as Trinity Health Grand Haven and maintain all existing operations.
The merger includes all of North Ottawa’s operations, including the 81-bed hospital in Grand Haven, the Heartwood Lodge nursing home in Spring Lake and hospice care services.
Through the merger, North Ottawa aligns with a major health system in an era when costs are rising rapidly, finances are tight, and recruiting and retaining talent has been an increasingly difficult proposition for small hospitals.
“The founders put us here 103 years ago to take care of this community and we take that charge very seriously,” Yaklin said. “In today’s age of constant regulatory change and staffing challenges and reimbursement challenges, the best way for us to continue to carry out that mission is to have a very strong partner — and Trinity is that partner.
“It allows us to continue to take care of the people that quite honestly we’re honored to take care of.”
West Michigan foothold
The Livonia-based Trinity Health in turn gets a stronger foothold in the growing northern Ottawa County health care market that’s adjacent to its market presence in Muskegon and offers plenty of opportunity to leverage the operations of both.
North Ottawa will become the ninth hospital in Michigan for Trinity Health, whose portfolio also includes Saint Mary’s in Grand Rapids. The Catholic health system operates 92 hospitals in 22 states with more than 120,000 employees, 5,300 physicians and $4.1 billion in annual operating revenues.
In Michigan, Trinity has 24,000 employees, 2,233 inpatient beds and 5,290 physicians and advanced practice providers.
For years, North Ottawa and Trinity have tried to forge deeper ties in the lakeshore market. They formed a strategic alliance in 2016, which was followed two years later by Trinity Health acquiring North Ottawa’s physician group.
“This is a very natural next step in the evolution of a nice relationship between North Ottawa and Trinity,” Trinity Health Michigan CEO Rob Casalou told MiBiz. “This now shores up access (to care) on the lakeshore and the Grand Haven community and in Ottawa County. Now you have two organizations that can really start to work closely together in serving that whole part of the community.”
After the deal closes, Trinity Health will immediately look at where it can leverage administrative operations to generate cost savings in areas such as human resources, information technology services and finance.
Using Trinity’s purchasing power alone will generate large cost savings for North Ottawa, Casalou said.
“Right out of the gate, when North Ottawa joins Trinity, it gets immediate access to all of our system services. The value of the economies of scale is huge for smaller hospitals like North Ottawa that had to buy everything separately, whether it’s supplies or I.T. services or access to capital. You tremendously lower the cost to the North Ottawa system by virtue of becoming part of Trinity,” he said.
Given the tight labor market and labor shortage in many professions, the merger will not result in any job losses at the 650-person North Ottawa, even after some consolidation in administrative positions.
“There is not a single function or department at any of our hospitals that isn’t short-staffed,” Casalou said. “The opportunities are going to be abundant for the staff at both Trinity and North Ottawa to come together in some of these functions and we desperately need them to come together because we have a lot of open positions.”
Clinically, Grand Haven will become part of the joint ventures that Trinity Health Michigan has with University of Michigan Health-West for cancer and cardiac care networks, Casalou added.
“The opportunity to bring those types of expanded services and sub-specialty services out to the lakeshore in a more strong manner is something that is important to all of us here,” Yaklin said.
As well, Trinity Health can use North Ottawa’s surgical capacity for low-acuity procedures now performed in Muskegon where volumes are high and “we are stretched really thin on resources in capacity for surgery,” Casalou said. Some orthopedic surgeons in Muskegon have already been using North Ottawa for procedures, he said.
The merger also allows the two organizations to better coordinate patient referrals between Grand Haven and Muskegon and to look at joint medical services, “as opposed to just this arm’s length referral relationship,” Casalou said.
Another possibility from the merger is basing a long-term acute care unit in Grand Haven, Casalou said. A 31-bed long-term acute care unit in Muskegon operated by Select Specialty Hospital closed two years ago when inpatient care at the Hackley campus was consolidated at the Mercy hospital campus on Sherman Boulevard.
More mergers ahead
North Ottawa in March signed a non-binding letter of intent with Trinity Health to “discuss the feasibility” of a merger.
State lawmakers in June enacted legislation to accommodate the merger and allow North Ottawa to transfer to a new owner without a second public vote.
In 1996, more than two-thirds of local voters approved transferring North Ottawa from a public authority to a private, nonprofit corporation. The change in the state law eliminated a requirement for another public vote for a subsequent ownership transfer.
North Ottawa is among a dwindling number of independent health systems in Michigan, whose ranks also include hospitals in Holland and Sturgis.
Given the deep financial pressures and the difficulty attracting and maintaining medical talent, more small and rural hospitals and mid-sized health systems are likely to pursue a partnership with a larger counterpart, said Brian Peters, CEO of the Michigan Health and Hospital Association.
“There are only a handful of small, independent hospitals left in the state of Michigan. The expectations would be that many of those, certainly not all, will join systems for a variety of reasons,” said Peters, who expects consolidation to continue among mid-size and larger health systems with multiple hospitals to create a much broader footprint.
“That push toward greater scale is going to continue and the pandemic really showed a very bright light on some of the fragility from a financial perspective in even some of our larger organizations in the health care ecosystem,” he said. “I do expect that you’re going to hear more and more about these sorts of mergers and acquisitions activities.”