The Dodge County Board of Supervisors approved a strategic partnership plan between Fremont Health and Nebraska Methodist Health Systems (NMHS) at its meeting on Wednesday.
After initially hearing details of the proposal by representatives of Fremont Health during its July 3 meeting, the county board unanimously voted to approve the partnership agreement which will create a new organization known as Methodist Fremont Health that will be a subsidiary of NMHS.
According to county board Chairman Bob Missel, the initial decision to hold off on a vote of the proposal during the July 3 meeting was to allow the public time to address and share concerns about the partnership agreement.
“The board chose at our last meeting to let this settle a little bit and allow our constituents time to come forward,” he said. “Personally those that have spoken to me about this since that time, I’ve received nothing but positive remarks and generally my sense is that the community is pleased that we are merging with such a well-renowned health system in Nebraska.”
As part of the affiliation agreement, NMHS has agreed to name the new organization Methodist Fremont Health for the foreseeable future and that organization will operate the Fremont Health Medical Center, Fremont Health Clinic, and Fremont Health Partners.
Fremont Health will be renamed as Fremont Community Health Resources and will remain in existence to manage net proceeds, manage the current pension plan and ensure that agreements with Methodist Fremont Health and NMHS are fulfilled.
Methodist Health System will lease the hospital and nursing home facility from Fremont Community Health Resources, formerly Fremont Health. The span of the lease is for 50 years, with the option to purchase after 20 years.
Fremont Health President and CEO Patrick Booth, spoke about the 18-month-long process of finding a potential partner that eventually led to the agreement with NMHS, as well as to why the decision to pursue a partnership with a larger healthcare system was made.
“The market in healthcare has become very challenging,” he said. “We (Fremont Health) are the only small independent health system that runs a community health system in the Greater Omaha area that is independent, every other one is part of a larger system. That makes it very difficult for us to be efficient and to compete, so by joining a larger system we get strength in numbers, we gain operational efficiencies, and gain access to their expertise.”
NMHS President and CEO Steve Goeser also spoke about the process of affiliation agreement discussions with Fremont Health, saying the process solidified the belief of NMHS leadership that Fremont Health was a great fit – bearing many similarities to the NMHS mission and culture.
“We certainly looked at facilities, services, their medical staff and programs, but for us mission and culture are very important,” he said in a released statement. “As our discussions continued, it became very apparent this partnership would be beneficial to both organizations, but more importantly to the communities we serve. We were honored to be chosen by Fremont Health during their search for a strategic partner and welcome them to the Methodist family.”
According to Booth and members of the Fremont Health Board of Trustees, one aspect of the affiliation agreement that was enticing for Fremont Health is continued local control over the management of the hospital and other medical services.
“Our local board will still be making decisions with the community’s best interest at heart,” he said. “The other proposals we received were not as attractive as far as local governance, one offered no local board and the other offered a local board that would only be advisory in nature.”
Some aspects of continued local control over the new Methodist Fremont Health organization will include:
- Seven Fremont-area residents will sit on the Methodist Fremont Health board consisting of 9-12 members, and two of those seven members will have seats on the overarching 18-member NMHS board.
- Fremont Community Health Resources will be governed by a three-member board that will be appointed by the Dodge County Board of Supervisors. At the meeting on Tuesday, the members of that three-member board were identified as Linda McClain, Larry Shepard and Steve Pribnow.
- Key services will continue to be provided for at least 10 years, with changes after that time needing local board approval.
- Fremont Health Foundation will remain in place, with all current gift agreements being honored including naming recognition.
Other key aspects of the proposed partnership include:
- Fremont Health will lease land, buildings, etc. to the new subsidiary of NMHS — Methodist Fremont Health — for a 50-year lease term. The lease will include yearly rent of $3.3 million a year for 20 years, totaling $67 million. Methodist Fremont Health will then have the option to purchase the land and buildings after 20 years of rent payments for $1 subject to the pension plan obligations having been satisfied prior to exercise of the purchase option.
- Methodist Fremont Health will also purchase substantially all of the assets of Fremont Health and assume all of the liabilities of Fremont Health other than its pension plan assets and liability. Fremont Health will retain $5 million in cash, working capital in excess of $13.5 million and cash and assets limited as to use in excess of $16 million. Methodist Fremont Health will assume all liabilities of Fremont Health including bank debt except for the pension plan liability.
- All employees in good standing will be offered employment at comparable wages and benefits, and medical staff privileges will be preserved.
- Methodist Fremont Health will invest at least $30 million in capital over the next 10 years, with charity care guidelines remaining similar to the current Fremont Health guidelines.
The affiliation agreement will become official at 2 p.m. July 24, when a document-signing press conference will be held at Fremont Health Medical Center.