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Kalispell Regional’s offer to buy Shelby facilities OK’d

by Kianna Gardner
Daily Inter Lake | June 28, 2020 1:00 AM

The Toole County Commissioners recently accepted a proposal from Kalispell Regional Healthcare to purchase the Marias Medical Center, Marias Care Center, Brittain House and Heritage Center in Shelby.

The commissioners had released a request for proposal for the Marias Medical Center system several months ago. Benefis Health System in Great Falls submitted a proposal in addition to Kalispell Regional Healthcare.

The three commissioners discussed the proposals at length on June 11 and heard public comment. According to meeting minutes, three individuals spoke at the public meeting and all of them said they thought Kalispell Regional was the better choice.

One doctor said he preferred Kalispell because “they have already been involved with the hospital and helped the hospital” and another doctor said he “feels actions speak louder than words,” and that “Kalispell has sent help during our time of need and has been willing to help manage things for awhile.” One citizen, Sara Lee, said she preferred Kalispell Regional because of “all the help we have received from them, before, during and after the COVID-19 episode.”

Commissioner Don Hartwell made a motion to approve Kalispell Regional’s proposal and Commissioner Mary Ann Harwood seconded the motion. According to meeting minutes, Harwood also opened a signed proxy from Commissioner Joe Pehan who also voted in favor of Kalispell Regional.

In a letter addressed to the Toole County commissioners, Kalispell Regional President and CEO Craig Lambrecht wrote, “this historic decision and ensuing opportunity will allow us to create something profound for both organizations and give Marias Medical Center an expanse of interdisciplinary knowledge that will ensure the hospitals, providers and community will prosper.”

In an email to staff announcing the proposal approval, Lambrecht stated “in our interactions with the Commissioners, we found them to be insightful, thorough and incredibly thoughtful with the health and well-being of their citizens. We are very appreciative of the confidence they have given us by making this decision and we are looking forward to welcoming the Marias family of caregivers into our system.”

Lambrecht also said Kalispell Regional will be working through a “period of due diligence (comprehensive appraisal)” over the coming months that will hopefully lead to the relationship between the two entities being finalized by early 2021.

The purchase and new partnership with Marias and the other facilities appears to be part of a long-term vision for the Kalispell Regional Healthcare System. According to the hospital’s request for proposal (RFP), officials started engaging with several health-care entities to “listen to their needs and challenges” last fall. Those local entities included not only the Marias Medical Center and Maris Healthcare network, but also Northern Rockies Medical Center in Cut Bank, Pondera Medical Center in Conrad, Blackfeet Community Hospital in Browning and others.

According to the RFP, Northern Rockies Medical Center and Pondera Medical Center “have signed letters of intent to explore a deeper relationship with Kalispell Regional.” It continues, “a regional network of Marias Medical Center, Northern Rockies Medical Center and Pondera Medical Center provides a unique opportunity to plan, share knowledge and resources, to enhance clinical services, create sustainability plans, advance patient experience and work on quality goals.”

BOTH BENEFIS Health System and Kalispell Regional Healthcare submitted extensive RFPs to the Toole County commissioners.

Benefits offered, among other things, a $3.7 million acquisition bid and according to the hospital’s RFP, was planning to invest another $4 million in upgrades over the course of several years. But Benefis only wanted the Marias Medical Center and Marias Care Center.

Kalispell Regional also put in an offer for those two facilities, but also included the Brittain House and Heritage Center in its proposal.

According to the hospital’s RFP, Kalispell Regional will establish a new 501(c)(3) called “Critical Access Hospital New Corporation,” or Newco, to acquire the assets of Marias Medical Center and “assume debt associated with the Series 2016 Revenue Bonds and defease bonds,” which as of June 30, 2020, are expected to have a principal balance of about $1.5 million.

Newco will also assume notes payable and capital leases totaling $1.05 million and an asset known as “Mobile MRI” will transfer to the Newco balance sheet for $1.2 million. Kalispell Regional will also “commit to additional capital of $1.5 million over five years related to infrastructure improvements and increased access to health-care services in Toole County” and will “provide sufficient working capital to operated facilities — estimated at $1.4 million.”

With the exception of staff that do not meet Kalispell Regional’s standard hiring protocol, the RFP states all employees will be retained and shifted to a Kalispell Regional Health pay scale and benefits, and those with accrued paid-time off will have those balances transferred.

According to the strategic planning portion of the RFP, “Marias Medical Center would become a subsidiary of Kalispell Regional and operate as part of the overall Kalispell Regional Health System.” Kalispell Regional will also provide oversight through a regional management structure with a regional operations leader and the Marias Medical Center Board will have delegated authority and will continue to function as the local community advisory board. A representative of Kalispell Regional Healthcare will attend all local board meetings.

Reporter Kianna Gardner can be reached at 758-4407 or kgardner@dailyinterlake.com