Our Path Forward

With widespread community support and the dedication of our physicians, nurses and staff, IRMC is in an exceptional position of strength to seek a new partner and chart the best course for our community’s health. Our numbers are good. Our care is exceptional.

Members of the IRMC Board and District Board of Trustees are working together to secure the strongest future for Indian River Medical Center.

Why We Are Seeking a Partner

The healthcare industry is rapidly changing, presenting complex challenges to hospitals and health systems. In response, many of these organizations are collaborating with others to continue to fulfill their missions – especially standalone community hospitals like ours.

Over the last 10 years, the number of independent hospitals has dropped 11% nationally.

Like many other independent hospitals, IRMC faces two particularly strong challenges:

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, estimated at $50 million.

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

Our Road Ahead

In the face of these challenges, IRMC has decided to take a proactive stance. We realize that the status quo is not an option, and we are taking matters into our own hands to create a better future for us all.

With a partner that shares our values, we look to build a long-term strategy that will provide for the health and wellness of our friends and neighbors right here in Indian River County.

As we look to the future, IRMC has engaged Juniper Advisory, an independent investment banking consultant that works exclusively with not-for-profit hospitals and health systems, to help guide the process of identifying a partner. Juniper has completed more than 130 transactions in 40 states and is widely respected as a leader in the field.

What We Are Looking For in a Partner

The  IRMC Board and the District Board of Trustees have established 11 strategic objectives that any prospective partner must meet:

  • Promote an IRMC organizational culture that embraces accountability, excellence and a patient-first focus
  • Maintain and enhance the long-term financial viability of IRMC
  • Continue to strengthen the clinical quality of IRMC’s services and programs
  • Enhance IRMC’s ability to recruit and retain high quality physicians
  • Implement an efficient and effective governance structure that best insures achievement of the corporate charter and mission
  • Position IRMC as an employer of choice for staff and clinical partner of choice for the entire medical community
  • Strengthen IRMC’s capacity to make needed investments in technology, facilities, programs and people
  • Broaden and deepen community support and engagement with IRMC’s mission
  • Enhance IRMC’s market position
  • Strengthen IRMC’s population health capabilities
  • Maintain and expand access to needed service lines of care for all residents of Indian River County

Next Steps

IRMC is taking the time to do this right, with careful, thoughtful consideration to identify a potential partner, and then negotiate an agreement that assures that our mission continues and that maximum resources are available to assure high-quality care.

Over the coming months, potential partners, including for-profits, not-for-profits, national hospitals companies and regional systems will be assessed based on the 11 strategic objectives. A short list of candidates will be established by mid-fall.

We anticipate being able to identify a single partner around the beginning of 2018, and then working to complete a mutually beneficial agreement that passes regulatory review by mid-year.

Timeline

Here is a timeline of steps to be taken in selecting a partner for IRMC. Some of the timing may change based on events during the process.

Approach market - October 2017

  • Juniper Advisory prepares an “instruction letter” that informs other healthcare organizations that IRMC is accepting proposals from potential partners, outlines the strategic objectives of the IRMC Board and Hospital District Board of Trustees, and provides other relevant information.
  • Instruction letter delivered to potential suitors by Juniper.

Initial proposals - November 2017

  • Initial proposals from suitors received by Juniper with a deadline of Nov. 10.
  • Juniper reviews proposals, and prepares a summary comparing the proposals to the criteria established by each board.

Select finalists - November 2017

  • Proposals and summary are presented to the IRMC Board and to the Hospital District Board on Nov. 17, followed by separate votes by each board to select finalists.
  • If the lists differ, all selected finalists on each list will advance.

Visits with finalists - December 2017

  • One or more members of the IRMC Board and the District Board of Trustees conduct visits at the locations of finalists.

Refined proposals - December 2017-January 2018

  • Hospital District Board holds public meeting to discuss if any additional information is needed from finalists. IRMC Board requests any needed information.
  • Juniper sends information requests to finalists and establishes a deadline to receive final proposals.
  • Juniper receives final proposals from finalists. Juniper reviews, and prepares a summary comparing the proposals to the criteria established by each board.

Select partner - January 2018

  • Final proposals and summary are provided to the IRMC Board and to the Hospital District Board; finalists make presentations to the District Board and the IRMC Board. The boards each select a preferred partner in separate votes.

Letter of Intent - February 2018

  • Attorneys, in consultation with Juniper, draft a letter of intent to create a partnership.
  • District Board and IRMC Board approve the letter of intent at separate public meetings.
  • Letter of intent signed by the preferred partner and each board.

Definitive Agreement - February-May 2018

  • Definitive agreement negotiated with preferred partner.
  • “Big picture” items and concepts to be addressed in negotiations are approved by District Board at a public meeting and by IRMC Board.
  • District Board and IRMC Board each approve definitive agreement at separate public meetings. (Transaction to close upon receiving all necessary approvals.)