FREMONT, Neb. — Fremont Health has been a loner, the only independent health system of its size in the greater Omaha region — and one of a handful in the state — that wasn’t part of a larger organization.
That’s a challenging position in today’s health care market, where payments from Medicare, Medicaid and commercial insurers are stagnant or shrinking. Mergers have become a way of life as systems have sought economies of scale and reduced operating costs. Fremont Health also faced increased competition from hospitals in Omaha and the rest of the region.
About 18 months ago, the local system went looking for a partner. On Tuesday, Fremont Health officially became a part of the Omaha-based Methodist Health System with the signing of an affiliation agreement.
“This affiliation is going to make both of us stronger and better,” said Steve Goeser, Methodist Health System’s president and CEO.
People are also reading…
Patrick Booth, president and CEO of Fremont Health, said Methodist brought “absolutely the best offer.” And, the organizations proved a good fit.
“If we selected them, we’d be joining a team,” he said.
The agreement creates a new organization called Methodist Fremont Health, which will be a Methodist subsidiary. The new organization will lease the Fremont Health Medical Center and a nursing home from Fremont Health for 50 years. Under the lease, the new subsidiary will pay $3.3 million a year for 20 years, totaling $67 million, and have the option of purchasing the properties after that time for $1.
Under the agreement, all current Fremont Health employees and physicians will be hired by Methodist Fremont Health, Methodist Physicians Clinic or both. Key clinical programs and services will continue in Fremont; patients also will have access to a larger network of specialists and programs.
Goeser said the Methodist staff who toured the hospital during the process were impressed with the care the staff provides and with the facilities.
Booth said Fremont Health invested $40 million between 2013 and 2015 to update the hospital’s inpatient nursing units and the nursing home.
The health system, he said, was thinking long term with its investment. But when its market began to erode, Fremont Health determined that it was time to make another move toward securing its future by finding a partner. It studied other hospitals that waited too long to make such a move.
“We just thought it made sense to look for a strategic partner while we were still strong,” he said.
A handful of independent specialty hospitals, such as Madonna Rehabilitation Hospital, are still operating in the Omaha area.
Under the agreement, seven Fremont-area residents will sit on the new subsidiary’s board, made up of nine to 12 members, and two of the seven members would have seats on Methodist’s board.
Goeser said Methodist has worked with Fremont Health over the years, including providing cardiology care for about two decades.
The new subsidiary is to begin operations in October. The first task will be to update the Fremont system’s electronic health records, which Methodist can bring in at a lower price.
The health system hopes to expand local services, he said, working with the medical staff to determine what makes sense.
“It almost seems like it was meant to be,” Goeser said.
