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Community agrees to absorb Howard Regional

January 31, 2012

Kokomo’s Howard Regional Health System has signed a letter of intent to join the Community Health Network less than four months after it broke off a merger deal with Indiana University Health.

Howard and Community officials said the decision was driven by “dramatic changes” spurred by the 2010 federal health reform law.

“Although health care reform initially promised health care for all, the details of such a plan have not been finalized,” said Howard Regional CEO Jim Alender in a prepared statement. “Obviously, with the changing demographics and the challenges of the future for the Kokomo area, it is in our region’s best interest for Howard Regional to be able to maintain care for those who can’t otherwise afford it.”

He added, “Community Health Network, with its compatible mission and values, and track record of successful partnership arrangements, is the natural decision for both our hospital and our community at large.”

The letter of intent, which was approved by Howard Regional’s board of directors on Jan. 26, calls for Howard Regional to join its finances with Community’s, yet retain a local board with at least two-thirds of its members living in Howard or contiguous counties.

Indianapolis-based Community Health has similar affiliations with Community Hospital of Anderson and with Westview Hospital in Indianapolis.

Because Howard Regional is a county-owned hospital, the agreement still requires approval of the Howard County Council and the Howard County Commissioners.

In May, Howard Regional announced that it would merge with Indianapolis-based IU Health, in large part because deteriorating employment in the Kokomo area had pinched the hospital’s operating margins.

But in October, the two hospitals called off that deal—although they promised to continue to work together. At that time, Alender also blamed health care reform for calling of the deal with IU Health.

“There are several reasons we changed our strategic direction,” Alender said. “Many of these relate to the uncertainty surrounding health care reform and the long-term forecast for the health care industry. We know change is coming, but we do not know the form of these changes given the ongoing debates in Washington and the litigation over health care reform.”

Indianapolis-based hospitals—including Community, IU Health and St. Vincent Health—have been active in acquiring county-owned hospitals throughout Indiana. These smaller hospitals say they need IU Health’s help recruiting physicians, particularly specialists, as well as help in bearing the costs of sophisticated electronic medical record systems, which the federal government is now effectively mandating.

The Indianapolis hospitals also are interested in securing a steady stream of patients to support their flagship campuses, as well as earning profits at outlying hospitals.

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