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November 21, 2016 Focus: Health care

Harrington HealthCare sets its sights on Connecticut

Harrington President and CEO Edward Moore's next move for the continued health of Harrington HealthCare is a potential move into Northeast Connecticut.
While other Central Massachusetts hospital systems are shedding services or weighing mergers, Southbridge-based Harrington HealthCare System is considering an out-of-state expansion. 
Harrington President and CEO Edward Moore said the healthcare system serving South Worcester County and parts of Northeastern Connecticut is in the midst of negotiating contracts with Connecticut health insurers in order to position Harrington to treat more patients living there. Moore said Harrington is more than halfway through the process.

“Over the next six months, I’m hoping that will all be completed, and then we’ll be able to go look at specific office space for specific programs,” Moore said.

Moore said Harrington has a shot at gaining some patient volume in the Connecticut towns that border South Worcester County, including Thompson and Woodstock. Thompson directly borders Webster, where Harrington’s Remillard Family Emergency Center is located. Much of Northeastern Connecticut are primarily served by Putnam-based Day Kimball Healthcare.

Behavioral health, urgent care eyed

Though hospital executives haven’t determined which services Harrington might add in Connecticut, Moore said they would be outpatient offices rather than hospital facilities. He named behavioral health and urgent care services as two possibilities, along with other in-demand specialty services.

Meanwhile, Moore said Harrington is talking with doctors in Northeastern Connecticut about growing by treating patients at Harrington facilities.

Those doctors are pursuing licensure to practice in Massachusetts, he said.

More details by summer

A marketing survey of Northeastern Connecticut consumers over the summer showed people in the region are open to a new provider, said Moore. Harrington will complete a formal survey of healthcare needs next summer.

“I don’t think we will be ready to open anything, but I think we will have surveyed and have a strategy down there about how to move into that market,” Moore said.

Because Harrington is not considering building a hospital facility, the system does not have to seek licensure from the State of Connecticut to open doors.

Preparing for risk-based health care

Expanding into Connecticut would be a shrewd move for Harrington, said Lynn Nicholas, president and CEO of the Massachusetts Health & Hospital Association. She said Harrington, one of the state’s stronger community hospital systems, is likely trying to position itself for the industry’s migration to risk-based insurance contracting by increasing the size of its patient population with out-of-state expansion.

Such contracts, which encourage providers to take care of patients on a budget, work better as systems grow, Nicholas said. State lines are becoming increasingly permeable, with consumers going back and forth from Massachusetts to Connecticut, New Hampshire and Rhode Island.

“This is a wise move and also increasingly common,” Nicholas said, though she noted she’s not aware of other systems weighing out-of-state expansions.

While Nicholas agreed that Harrington facilities would not require the same vetting as a hospital facility in Connecticut, she said the Massachusetts Health Policy Commission may want to review any expansion plans once they’re formalized to ensure they don’t create the potential for increasing the cost of health care in Massachusetts.

Nicholas believes it would have the opposite effect, since a stronger financial position may ultimately lower the cost of care for patients.

Expanding services in the market

Northeastern Connecticut has long been on the outer reaches of Harrington’s service area, but Harrington does not have any locations in Connecticut. Like many providers, Moore said Harrington wants new patients because of cost pressures.

Harrington itself has been able to remain financially solvent and has even thrived in the years since Moore’s arrival, rolling out new services and locations to become a health are system rather than just a hospital.

In November, Harrington opened a new urgent care location in Oxford. That facility is meant to capture new patients on the edge of Harrington’s Massachusetts service area and act as an entry point for Connecticut residents who live minutes away from Oxford.

In the coming months, a new inpatient behavioral health unit will open on the Webster campus, and the Remillard Family Emergency Center was unveiled in January 2015, also in Webster. The investments are symbols of the progress Harrington has made since it took over the campus, formerly Hubbard Regional Hospital, in 2009.

Most profitable community hospital

Harrington Memorial Hospital, the system’s flagship in Southbridge, is the most profitable community hospital in Central Mass., with a $9.3 million profit in fiscal 2015, according to state data.

Moore said the entire Harrington system, which includes a physician group, actually had an operating loss of about $2 million but Harrington has maintained its position thanks to a strong balance sheet. Revenue for the whole system has increased from $55 million in 2007 to a projected $170 million in fiscal 2017, Moore said.

Harrington has maintained its status as an independent community hospital. But with a realistic outlook, Moore said if Harrington is ever forced to affiliate with another hospital system, as many smaller players have, he wants Harrington to be seen as an asset.

“My whole philosophy here is, let’s be stronger and then if we need to partner or affiliate with somebody, we do it on our terms,” Moore said.

Day Kimball vulnerable

Day Kimball Healthcare, on the other hand, has treaded water as state budget cuts have caused large reductions in Medicaid payments to Connecticut hospitals. Resulting staff and service cuts have been widely reported, though stakeholders successfully lobbied for some funding to be restored to smaller hospitals.

Meanwhile, the Connecticut Hospital Association (CHA) has taken the state to court and petitioned the Centers for Medicare and Medicaid Services over a ballooning hospital tax implemented during a 2011 budget crisis the CHA says has resulted in nearly 1,400 job cuts statewide.

Despite these challenges, Day Kimball Healthcare President and CEO Robert Smanik said he’s optimistic. Though final year-end results are pending, Smanik believed the system, which experienced a $6-million operating loss last year, is turning around.

Medicaid cuts are not unique to Connecticut providers, and Smanik said the cost pressures similar to those Day Kimball and others in his state have faced are prompting Harrington to prod Connecticut for growth potential.

Day Kimball has put out feelers in Harrington’s South Worcester County territory, sending a mailer along the border highlighting Day Kimball Hospital’s new emergency room.

“Looking to expand one’s reach is something that, I suspect, is on every organization’s agenda in a sense – including ours,” Smanik said.

Competitors or partners?

As for Harrington, Smanik said competition is healthy, saying portions of  Day Kimball’s region are underserved. He said patients may welcome Harrington if it can provide services that are lacking.

“I don’t know that it has to be a detraction from Day Kimball in Northeastern Connecticut,” Smanik said, noting Day Kimball, founded in 1894, has the advantage of brand loyalty in the community.

For its part, Day Kimball has plans to add new services and is actively recruiting new physicians. It’s not impossible that Day Kimball will join forces with Harrington in the future. Asked whether the system, which last year halted plans to affiliate with Hartford HealthCare due to Medicaid cuts, might seek affiliation with Harrington, Smanik said he wouldn’t rule it out.

“We’ve had conversations with them over the years,” Smanik said. “We’re always open for conversation, but at this point there are no specific plans.”

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