State gives Concord Hospital green light to purchase LRGH

CONCORD — The New Hampshire attorney general’s office will allow Concord Hospital to move forward with its $30 million acquisition of financially troubled LRGHealthcare.

On Tuesday, the attorney general’s Consumer Protection and Antitrust Bureau entered a final judgment with terms for the transaction. The AG’s Charitable Trusts Unit had earlier determined it would not oppose the deal.

Robert P. Steigmeyer, president and CEO of Concord Hospital, said getting state approval was key. A May 1 transaction date is now anticipated after final court orders are entered.

“When May 1 comes, I’ll take a deep breath,” he said Wednesday. “Then starts the real work of building the health care system. That’s work we’ve done before. I can’t wait to get that fully rolling.

“We’re excited. I wouldn’t say it’s easy but it is work we understand really well. That’s why we are in this situation. We know we can do it. These communities rely on us to get it right and we’re going to get it right.”

Six months ago, LRGH filed for Chapter 11 bankruptcy in federal court after years of operating losses amid crippling debt. An auction was scheduled for its assets, including Lakes Region General Hospital in Laconia and Franklin Regional Hospital. Concord Hospital emerged as the only bidder.

When the deal closes, signage will change to reflect new names: Concord Hospital-Laconia and Concord Hospital-Franklin.

The Charitable Trusts Unit set 21 conditions for the sale.

One of those conditions called for Concord Hospital to strengthen “its plan and care continuum and coordination with respect to obstetrical services” in the Lakes Region. Lakes Region General Hospital ended its labor and delivery service in 2019.

There are no plans to restore labor and delivery services in Laconia, but Steigmeyer said generalized improvements will be made.

Another condition was for Concord Hospital to begin a planning process for the future of clinical programs and services provided by HealthFirst Family Health Center in Laconia.

“We believe the 21 conditions are supportive of Concord Hospital’s plans to provide quality, affordable care to our communities moving forward,” LRGH President and CEO Kevin Donovan said. “These conditions include expectations on negotiations with payors and maintenance of an open medical staff for the two hospitals, Concord Hospital — Laconia and Concord Hospital — Franklin.”

Donovan said the overwhelming majority of LRGH employees have accepted jobs with Concord Hospital.

“As of this moment, 1,138 individuals have been offered and accepted jobs with Concord Hospital, including medical staff,” he said. “There are a handful of individuals who decided not to accept positions and there were approximately 50 individuals who did not receive offers.”

Donovan and Steigmeyer said they envision the deal will be sustainable and benefit residents of the Lakes and Three Rivers regions for many years to come.

Under the purchase agreement, Concord Hospital commits “to continue to operate the existing hospitals in Laconia and Franklin for at least 5 years from the closing “providing at least the level of service which exists as of the closing provided that the hospitals maintain a reasonable operating margin, sufficient to cover their expenses.”

A big drain on LRGH’s operating margin was the cost of servicing its outsized debt, the biggest component of which was a $111 million facility mortgage owed to Key Bank and insured by the U.S. Department of Housing and Urban Development.

The bankruptcy will allow debt to be discharged.

Many hospitals in New Hampshire and across the nation have joined in mergers and acquisitions to realize economies of scale, and that will be the case in this situation as well, Steigmeyer said.

Also, hospital contracts and agreements will be examined to find cost savings.

Steigmeyer said an estimated $25 million is required to be spent in capital improvements, and a big part of that will be bringing the new facilities under Concord Hospital’s information technology system.

Part of the plan will be to restore local orthopedic services in Laconia, Steigmeyer said without providing specifics. An orthopedic group in the city closed on March 31.

The decision to disband Advance Orthopaedic Specialists came after Concord Hospital chose not to renew its provider service agreement.