Members of the IRMC Board and Hospital District Board of Trustees are working together to identify a partner for Indian River Medical Center in order to secure the strongest future for IRMC, and the best possible healthcare for our community.

Over the coming months, we will review proposals from potential partners, which could include for-profits, not-for-profits, national hospitals companies and regional systems.

We anticipate that by the beginning of 2018 we will identify a single organization with which to negotiate towards a partnership. We are committed to doing what’s right for our community and will continue to share updates as we evaluate the partnership options before us.

While we are not considering a sale, under a partnership, an outside organization would very likely have control of managing IRMC. The structure of that arrangement is still to be determined.

There are a number of different structures that hospitals and health systems create to operate in a partnership, and we are exploring those. The governance structure would be one of the items subject to negotiation before a partnership is finalized, but we intend to maintain local input into the operation of the medical center.

The healthcare industry is rapidly changing and, in response, hospitals across the country are collaborating with others to continue to fulfill their missions – especially standalone, community medical centers like ours.

IRMC is working from a position of strength, and in order to respond to these changes in the industry we’re taking the future into our own hands so we can continue to help our friends and neighbors receive top-notch medical care, and manage their health and wellness right here in Indian River County.

We are fortunate to have the opportunity to be proactive about building a long-term strategy for success by identifying a partner that shares our values.

There are two national trends that are particularly challenging for standalone community hospitals, including IRMC:

Population Health

The United States spends about 18% of its Gross Domestic Product on healthcare, a percentage that is forecast to rise. That is far higher than the rest of the world and is economically unsustainable. What’s more, the quality of healthcare we get for our spending, while good, lags a number of other countries.

To lower costs and increase quality, the basic model of U.S. healthcare is changing to what is called value-based healthcare.

Currently, the majority of insurance reimbursements to healthcare providers are based on a fee-for-service model – providers are reimbursed for individual services to individual patients with little regard for the quality of the treatment.

Under value-based healthcare, providers are reimbursed a lump sum for providing for care needs with adjustments to the payment based on quality. Although there are a number of variations on value-based healthcare, perhaps the most significant is what is known as population health.

In this model, providers assume responsibility for all the care needs of a large population. They are reimbursed a lump sum, with adjustments based on quality.

This can present a substantial financial risk for providers if many patients require extensive, expensive care. To spread that risk and make this model financially practical, a hospital must be responsible for caring for a very large population.

As a standalone provider, IRMC is not able to draw on a large enough pool. A larger partner is needed to address this challenge.

Large capital needs

IRMC, like many community hospitals, needs substantial investment to position ourselves to care for this community for decades to come. In our case, we need a new tower to replace our main building, which is about 40 years old.

The cost of a new building is estimated at $185 million, and even with substantial donations, IRMC does not have the financial resources for this project – and there are other large capital needs as well, totaling about $50 million.

A larger partner could provide the investment this community needs to continue receiving high-quality care.

Thanks to the dedication and great work of our physicians, nurses and staff, and the generosity of our donors, we are on strong financial footing.

Our numbers are good and our care is exceptional.

By doing this now, while we are strong financially, we are in a great position to take our future into our own hands and chart the best course for our community’s health.

We project that for 2017 our revenues will exceed expenses by $1.87 million, and in 2018 our projection is that revenues will exceed expenses by $5.5 million.

Our financial position is enviable compared many other standalone, community hospitals. This partnership search is all about ensuring that we can sustain this strong financial position over the years to come, enabling a continuation and expansion of the high-quality care IRMC provides to our community.

IRMC represents an excellent opportunity for another healthcare organization.

We are in an attractive market, and are on very sound financial footing. We strongly believe that IRMC is a strong investment for a potential partner.

We believe a partnership is the right solution for IRMC. Under the law, the sale of a hospital involves a much more complicated, time-consuming process than creating a partnership, and with less certainty that the transaction will ultimately be finalized.

Changes in healthcare are occurring quickly, and we believe it is important to evaluate partnership candidates quickly and thoroughly to begin positioning IRMC to navigate the changing industry.

Both the IRMC Board and the Hospital District Board are strong supporters of seeking a partner, and we have engaged with Juniper Advisory, an investment banking consultant with a strong track record of assisting not-for-profit organizations, to help find that partner.

With the boards’ commitment and Juniper’s expertise, we believe the timeframe we have outlined is realistic.

The IRMC Board and the District Board of Trustees have approved 11 strategic objectives for the process of selecting a partner, and high on the list is to continue to strengthen the clinical quality of IRMC’s services and programs.

We believe we are in a strong negotiating position to meet our objectives, and our commitment is to have the right kind of partnership or there will be no partnership.

As we look to identify the right partner we have established 11 strategic objectives. They include continuing to strengthen the clinical quality of IRMC’s services and programs and positioning IRMC as an employer of choice for staff.

Meeting these objectives would not be consistent with large expense cuts. While we can’t say that a partner wouldn’t seek some efficiencies, IRMC has been operated very efficiently and is financially strong, and we would expect a partner to fully recognize that as it operated the medical center.

As we look to identify the right partner we have established 11 strategic objectives. including positioning IRMC as an employer of choice for staff.

While we can’t guarantee that every benefit will remain exactly the same under a new partner, we are confident that a partner will recognize the strong value of our excellent staff, and will seek to compensate them fairly so that they will stay with IRMC.