Potential partners: Concord Hospital and LRGH have commonalities

LACONIA — LRGHealthcare is looking for a larger healthcare organization that can help it solve crippling financial problems, and in some ways, Concord Hospital would seem to fit the bill.

In an interview Tuesday, Concord Hospital President and CEO Robert P. Steigmeyer said he couldn’t be specific about future plans, but talked about how much the two organizations have in common.

“We’re both community based, not-for-profit institutions,” he said. “We think in a similar way, delivering local care to meet the community needs. We think the missions are very congruent.

“We know deep down our genetics are similar. We’re in a similar place and have a similar mission.”

Both are charitable organizations.

LRGHealthcare, which runs Lakes Region General Hospital and Franklin Regional Hospital, said in an annual report issued last year that it invested $33 million of community benefit back into the Lakes and the Three Rivers in 2018. Concord Hospital said in a report that it had $82.6 million in charitable achievements in 2019.

In its financial report for 2018, LRGH, the biggest employer in the Lakes Region, listed total net operating revenue of $216.6 million and total expenses of $229.9 million, resulting in an operating loss of $13.3 million.

To illustrate the importance of LRGH to the local economy, salaries and benefits to its 1,500 employees was $124 million, or more than $82,000 per worker.

It has long-term debt of nearly $110 million, and it paid $5.2 million just in interest on that debt. LRGH President and CEO Kevin Donovan said the debt is high for an institution of this size and has been an impediment to finding a merger partner.

An independent auditor’s report for Concord Hospital showed it had revenue of $528.8 million in 2019, and expenses of $512.2, leaving income from operations at $16.6 million.

Steigmeyer said Concord Hospital, along with hospitals around the state and nation, saw major revenue declines starting last month when elective procedures were temporarily discontinued to create capacity for an expected surge in coronavirus patients.

Despite these declines, Steigmeyer said his hospital’s financial picture should be good as normal operations resume.

“Our system here at Concord Hospital has been very strong,” he said. “We run it in a way that builds financial strength.

“We clearly need to get through the pandemic and reactivate our systems to meet patient demands. We think every day about those not getting what they need. Most all systems in the state have focused on emergency care and COVID-19 care, creating backlogs that need to be solved, including preventative services and fairly urgent procedures.”

He said he and other hospital officials are now working on plans to reactivate normal services while protecting patients and staff. Gov. Chris Sununu said a return to elective procedures at hospitals may be one of the first parts of the state’s economy that returns to some semblance of normal.

Concord Hospital has been handling some LRGH patients who saw services decline after 600 hospital employees were furloughed early this month amid financial difficulties stemming from ending elective services.

“We actually have seen patients from the Lakes Region come down, including for infusion therapy services,” Steigmeyer said. “I have to tell you we have a very good partnership in oncology and hematology.

“Everybody engaged in chemotherapy services can continue to receive them.

“I’ve always seen the Lakes Region and Concord as part of a larger region that works together. We’ve been together for 20-plus years with cardiology care, cancer care, maternity care, vascular care and also urology and advanced urological care.”

Mark Bonica, assistant professor of health management and policy at the University of New Hampshire, said a merger between Concord Hospital and LRGH would seem to make sense. Both are independent organizations.

“I’ve been in New Hampshire since 2015,” he said. “When I got here most of the hospitals were independents.”

Since then, mergers have been the rule.

“We’ve been playing musical chairs,” he said. “Everybody is pairing up and nobody wants to be left out at the end. Looking at the national trend, New Hampshire is the same as the rest of the country.

“Five years from now, we'll probably have three big systems in the state, maybe less.”

When hospitals merge, the smaller hospital often provides primary care, and sends patients to the larger institution for more advanced specialty care.

For example, when LRGH closed its maternity ward in 2018, it continued to provide prenatal services and postpartum care but Concord Hospital generally became the facility for actual deliveries.

Hospitals save money by merging, Bonica said.

“You eliminate some of the overhead and a lot of administrative costs,” he said. “You can share things like electronic health records, which are very expensive and only cost effective when you have large enough populations.

“It’s all about bringing down fixed costs. They have to find some way to do that.”