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Clyde, N.C. and Sylva, N.C. – Mike Poore of Haywood Regional Medical Center (HRMC) and Mark Leonard of WestCare Health System (WestCare) jointly announced today that both governing boards have approved a Letter of Intent (LOI) to establish a Joint Operating Agreement uniting the two organizations. WestCare approved the LOI on July 14 and HRMC approved the LOI on July 23. An update FAQ can be found here.

Representatives of the two healthcare organizations have been working on the details of the LOI since April of this year, when a public announcement was made regarding plans to integrate. Mike Poore, President and CEO of HRMC, said the LOI incorporates a number of fundamental agreements that will enable both parties to complete the integration process in an orderly fashion.

"This agreement in principle," he said, "lets the community know that both boards are in accord regarding basic issues, such as hospital management, shared financial responsibilities, and matters of indebtedness and liability."

Mark Leonard, President and CEO of WestCare, noted that the LOI also establishes the structure and responsibilities of a Joint Operating Company that will manage the day to day affairs of the integrated system. For example, it calls for establishing a 12-member board of directors with equal representation from both HRMC and WestCare. 

The agreement states that HRMC and WestCare will negotiate exclusively with each other; gives each hospital access to the financial and operational records of the other property for purposes of conducting due diligence; and stipulates a mutual confidentiality clause. In addition, both hospitals have agreed not to institute any significant changes, such as major staff reorganizations, changes in service lines or new construction, until negotiations have been completed.

The LOI assumes completion and commencement of an affiliation agreement by January 1, 2010, with a deadline extension possible based on mutual consent. "There are some details yet to be worked out," said Leonard. "But at this point we are all very comfortable with the timeline."

Leonard added that ultimate governing responsibility will be vested in a newly formed Joint Operating Company board; however, the individual hospital boards will remain in place with authority to oversee specific reserved functions. For example, the individual hospital boards will continue to approve credentials for the respective medical staffs; to make decisions regarding sale, lease or distribution of current assets; and to approve new members of the Joint Operating Company.

Once the terms of the affiliation agreement are finalized, they will be disclosed to the public. In accordance with prior announcements, it is expected that the newly integrated system will sign a Management Services Agreement with Carolinas HealthCare System.

Poore said he was pleased with the pace of progress and grateful for the time and effort invested by members of the Joint Study Committee. He emphasized that discussions have been based on a strong consensus that consolidation of facilities and resources was the best way to ensure the continuation of comprehensive services to local residents. He noted that approximately 75 percent of North Carolina’s hospitals now maintain some type of affiliation with a larger system.

Leonard noted that both organizations have focused on "finding a new arrangement that will allow us to not only preserve but grow and improve our service capabilities, while retaining a strong focus on local needs and concerns."

"The relationship involving WestCare, Haywood and Carolinas HealthCare," he added, "will ensure that high quality medical services remain available close to home. It will enhance our ability to attract the very best physicians, nurses and technicians to our area, along with other benefits that include increased access, reduced costs and better patient outcomes."

The next step in the consolidation process will be the finalization of a Joint Operating Agreement. That agreement will specify arrangements for combined operations and governance in much greater detail than the Letter of Intent. The Joint Operating Agreement is expected to be approved by both governing boards before the end of 2009.