Erlanger closer to deal with North Carolina hospital

Erlanger closer to deal with North Carolina hospital

January 23rd, 2018 by Elizabeth Fite in Local Regional News

Erlanger President and CEO Kevin Spiegel speaks during a Topping Out ceremony at the Children's Outpatient Center at Erlanger on Thursday, Nov. 9, 2017 in Chattanooga, Tenn. The Topping Out ceremony is a traditional builder's milestone, signifying that the final beam is put into place. The outpatient center is set to open in December 2018.

Photo by C.B. Schmelter

Erlanger Health System is one step closer to extending its services into North Carolina after the hospital's Budget and Finance Committee members approved a resolution to acquire Murphy Medical Center at a meeting Monday evening.

"We've been dating for two years, and we've set a wedding date," Robert Brooks, Erlanger executive vice president and chief operating officer, said of the two hospitals' relationship. Now the deal awaits votes from Murphy's board on Tuesday and Erlanger's board on Thursday, which he equated to everyone "showing up to the altar."

If the deal goes through, Erlanger will acquire its first hospital outside Tennessee, about 400 new employees and a market area consisting of 45,000 residents in Cherokee, Graham and Clay counties in western North Carolina beginning April 1, 2018.

Brooks said more than 60 percent of Erlanger's patients come from outside Hamilton County and typically are referred from other hospitals and physicians.

"Why is that important to Erlanger? Because we don't own or operate any of those facilities," Brooks said. "So all of those patients, more than 60 percent of our business, is at risk of going somewhere else if we aren't the provider that will be there for them."

While Murphy Medical showed a profit in fiscal year 2017 and is now breaking even, Murphy CEO Michael Stevenson said alignment with a large health system was necessary to avoid the likely inevitable fate of many other rural hospitals, which are closing at alarming rates around the country, particularly in the South.

"So often it happens in health care, when things are going bad, they tend to go bad very quickly — this is preventative," Stevenson said.

Small hospitals like Murphy aren't able to weather hardships as well as large health systems, but Erlanger can use its corporate resources to do things Murphy alone can't, like recruit doctors and install an electronic medical records system.

Erlanger President and CEO Kevin Spiegel said rural hospitals that partner with larger systems fare better than those that don't, and treating patients close to their home in Murphy when it's appropriate will improve care and lower costs.

"Rural hospitals for the most part in the United States lack an alignment strategy," he said. "The ones that have partnered have been successful, the ones that have not partnered with a larger system just can't get it done."

The full Erlanger board will meet Thursday evening to vote on the Murphy Medical resolution and several other items.

Contact staff writer Elizabeth Fite at efite@timesfreepress.com or 423-757-6673.

Document: Change of control agreement

Erlanger plans to acquire its first hospital outside of Tennessee as it continues to expand its footprint by taking over the Murphy Medical Center in western North Carolina.

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