Concord Hospital CEO Discusses Potential LRGHealthCare Buyout
Rather than watch as a nearby health system financially collapsed, Concord Hospital officials felt compelled to act.
“Folks have thought (about this) very mission-like,” Robert Steigmeyer, the CEO of Concord Hospital, said during a roundtable discussion Tuesday. “That we can’t stand by and let a system fail next door to us.”
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LRGHealthcare, which owns Franklin Regional Hospital and Lakes Region General Hospital, had been financially struggling for years. Franklin Hospital shut its surgical facility in 2018, and in 2019 both hospitals closed their maternity wards.
But when the pandemic started, closing down profitable services while costs increased, the provider was bleeding about $1 million a month. LRGHealthcare finally declared bankruptcy last week.
Concord quickly swooped in with a $30 million bid for the hospitals and accompanying ambulatory services.
Steigmeyer said the driving force behind the bid was a sense of mission to save an organization with similar “genetics” since both providers are charitable nonprofits. He said he thinks the public sees it that way too.
The roundtable was the first of many, in which upper administrators at the hospital field questions from the public about the potential merger. Roundtables of this sort have threatened deals in the past – a merger of Elliot Hospital and Catholic Medical Center in Manchester along with St. Joseph Hospital in Nashua, fell apart after four years due in part to community opposition.
However, Steigmeyer said the response from the public and hospital employees has been overwhelmingly positive.
LRGHealthcare has been seeking merger partners for two years: In a statement filed Monday the company said it had “reached out to 43 potential partners, which resulted in five non-binding indications of interest in 2018,” and was close to reaching an agreement with Concord Hospital when the pandemic upended everything.
In the roundtable, some expressed concern that acquiring an organization with so much debt would damage Concord Hospital’s financial standing. Steigmeyer said they only agreed to consider partnering if LRGHealthcare filed for bankruptcy, which eliminates their debt aside from an underfunded pension plan.
“It’s not easy work, and it will take time, but we are confident that the system can be a sustainable system and it will not put Concord Hospital’s viability at risk,” he said.
Scott Sloane, the chief financial officer of Concord Hospital, assured listeners that health care costs would not increase as a result of the merger.
Critics of hospital consolidations have argued they often lead to higher prices for care. Without competition to drive down prices, hospital mergers increase the average price of hospital services by between 6% and 18%, according to a report for the National Council on Compensation Insurance.
Some experts point to consolidation as one of the main reasons the United States spends significantly more on health care than other countries.
“We know health care is too expensive in America and it’s too expensive in New Hampshire,” Sloane said. “We’re going to do everything we can to keep costs the same and actually work to lower costs.”
Steigmeyer also said the hospital will not change its name if the deal goes through, despite extending beyond Concord. Instead, they plan to extend the brand they have already built throughout the state.