A Merger for Region-Tailored Care

With new nuances to digital health emerging every day, Tim Belisle of Mountain States Health Alliance tackles a complicated merger that will benefit both of its Tennessee and Virginia communities

When Tim Belisle first started at Mountain States Health Alliance, the company was known as Johnson City Medical Center Hospital, Inc. In 1998, the company closed a deal that added six hospital facilities, strengthening the backbone of Mountain States. Since then, the Tennessee-based Mountain States and Belisle have gone through a series of transitions and acquisitions, resulting in an expansion of its services beyond Tennessee.

In 2006, Mountain States acquired its first facility in Virginia, which was also its first outside Tennessee. Expanding into a different state required Belisle to lead legal and compliance responsibilities in a different way—from adhering to Virginia laws, to leading different personnel. Through each acquisition, Belisle has taken away similar valuable lessons, which he plans to put to use with an upcoming merger.

Tim Belisle, SVP, Chief Compliance Officer & General Counsel, Mountain States Health Alliance

Wellmont Health System and Mountain States signed a formal letter of intent to merge in April 2015. Since that time, the two organizations signed a definitive agreement in February 2016, and are developing the structure for a new company. Once plans are finalized, and pending issuance of approvals from both Tennessee and Virginia, Mountain States will merge with Wellmont Health System to form a new company with 50/50 governance.

As Mountain States’s senior vice president, chief compliance officer, and general counsel, Belisle will oversee all the legal services for the merger from the Mountain States side. “I’m like the coach of the team on our side,” he says.

Belisle is in charge of coordinating Mountain States’s legal efforts with those of the Wellmont team. He also acts as a translator of legalese into business language that will allow the Mountain States board and management team to be as informed as possible as they make decisions leading up to the closing of the merger. As these two hospital systems each have several facilities and their own unique structures, Belisle and his team have to meticulously navigate state laws for both Tennessee and Virginia, which presents another set of challenges.

One of these challenges is a Tennessee statute permitting issuance of a certificate of public advantage and a very similar Virginia statute. In both states, the statutes authorize healthcare transactions upon proof that the advantages of merging outweigh any disadvantages resulting from the consolidation of competitors in the market.

This is the first major hurdle in uniting the legal permissions. Wellmont and Mountain States have teams comprised of people internally and externally dedicated to pursuing the approvals. These teams have also developed an integration council—made up of senior executives from each company—charged with recommending integrations of different components of the merging companies, which will be part of the written applications in Tennessee and Virginia.

In addition, there is a joint board task force that will eventually become the board of directors for the newly formed company, following the states’ approval. “The structure is designed to help us as we move forward,” Belisle says. “It will steer how we make decisions, how we progress toward achieving the merger’s great promise of substantial community benefits, and what the new company will look like. It will also be how we overcome obstacles and how we live up to the requirements that the states have each placed on us as conditions for granting the approvals we need.”

The states’ approval can take 120–150 days to process. After that decision, Belisle expects to close in 30–45 days.

Some days, Belisle says, the work that goes into preparing for the successful merger of these two companies exhausts him, but he anticipates an explosively positive impact on the total community. The newly merged company will reap the benefits of large efficiencies that reduce costs, allowing the region to maintain many rural services that would not be as secure and affordable to healthcare consumers if both companies remained independent.

Between the two organizations, Wellmont and Mountain States will run and maintain ten rural hospitals, which will ensure healthcare access to those communities. This is a huge impact for the communities because those hospitals tend to be a financial burden on the healthcare system.

The merger will also allow for partnership with the local academic institutions in Tennessee and Virginia. The intention is to undertake the training of healthcare providers and establish opportunities for research.

“This is a region that’s mid-Appalachia,” Belisle says. “It’s generally a rural and lower socio-economic community, and it has a poor health status. Northeast Tennessee and southwest Virginia have the second-lowest Medicare wage index in the country. Given that fact, on top of the other pressures on payment and costs for healthcare, this merger will help both companies to be more sustainable in the long term to overcome these challenges.”

Though Belisle didn’t grow up in this community, his last thirty years within the region and with Mountain States have allowed him to see the importance in staying locally governed.

He also sees the advantage to eliminating duplicative healthcare resources and approaching the health issues that are specific to the region.

“This is a community that is very dear to me,” Belisle says. “I’ve been involved in the community for many years with the purpose of trying to help build, improve, and sustain it. This merger offers a very real possibility of advancing the entire region. It’s a project that can result in a thriving, growing community for many years to come.”