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Morehead Memorial partners with Novant

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EDEN — Morehead Memorial Hospital, one of the last independent hospitals in the Piedmont Triad, has signed a partnership agreement with health care giant Novant Health.

Morehead’s leaders say the “shared-services agreement” will save money and allow the hospital to grow stronger.

It’s definitely not a merger, they say.

Novant, based in Winston-Salem, operates Forsyth Medical Center in Winston-Salem and medical centers in Kernersville, Clemmons and Thomasville. It owns and manages hospitals and similar partnerships in a four-state area.

The shared-services agreement, Novant and Morehead leaders say, will allow the hospital to save money on supplies and equipment and tap into Forsyth’s deep medical and management expertise.

It will also allow Morehead to benefit from the large discounts that Novant can negotiate with medical suppliers.

Morehead, with operating revenue of just under $90 million a year, has run a deficit for several years.

Rockingham County’s high unemployment rate and cuts in Medicaid forced the 108-bed hospital to provide more care without payment.

The new agreement will help to balance the books and allow Morehead to collaborate with medical services in the Winston-Salem area, said Scott Barham, a certified public accountant and the chairman of the Morehead Memorial board of trustees.

Dana Weston, the director of Novant Health Shared Services, said this partnership is not a merger.

Novant operates a variety of partnerships with hospitals, Weston said.

“Mergers and acquisitions are one end of the spectrum,” she said.

“At this time, our focus is using the shared services agreement to improve the operations of Morehead Memorial and make it a viable resource for the people of their territory,” Weston said.

“As we develop our partnership, who knows what options are out there?” she said.

“That is the beauty of partnerships,” she said, “the conversation is always ongoing.”

Morehead has deals with other health providers. Its cancer and cardiology clinics are affiliated with Greensboro’s Cone Health, and its critical care unit is affiliated with Winston-Salem’s Wake Forest Baptist Health.

Weston would not say whether that will change.

“There is nothing that we come in automatically thinking that has to shift or has to change,” she said.

In the corporate world, some shared services agreements lead to layoffs when executives find they don’t need two operations with similar functions.

“At this point we’re not expecting that,” Barham said. “That’s not been something that’s been discussed.”

Novant’s Weston would say only that each partnership has different results.

“The important thing to remember is that the goal of the partnerships is to make health care more affordable, to lower the cost and to make sure that the hospital can remain viable,” she said.

Carl Martin, Morehead’s former chief executive officer, predicted in May 2013, that the hospital would have to explore stronger alliances with larger health care groups.

And he left all options open.

Eden's Morehead Memorial Hospital and Winston-Salem's Novant Health have entered a shared services agreement.

The agreement will allow the two groups to work together in planning, supply chain operations and corporate resources, Novant said today. 

Novant, a four-state network of physicians and hospitals, said the two groups will "optimize the supply chain."

In many cases, hospitals have joined forces with larger medical operations to get cheaper medical supplies through the bulk discounts those large organizations can negotiate.

It is unclear whether this move is a full merger, but Morehead has been struggling as an independent hospital.  

In May, 2013, Morehead, Rockingham County's only independent hospital, was operating with a $1.4 million deficit, but said it had no plans to affiliate with a large medical operation. 

The News & Record will provide more information as it becomes available. 

Contact Richard M. Barron at (336) 373-7371, and follow @BarronBizNR on Twitter.

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