The future of MedWest Health System is up in the air after the WestCare governing board voted this week to adopt a resolution to dissolve MedWest.

The action came in the face of growing discontent from the physicians in the MedWest-Harris and MedWest-Swain hospital systems.

The resolution passed 13 to one with WestCare Board Chairman Bunny Johns unwilling to state who the dissenting board member was.

“It was a very difficult decision. We’ve considered every proposal that has been brought to us, and we tried to make it work,” Johns said. “The integration of the hospitals has not gone well. Neither hospital is in a better financial situation than it was before MedWest formed.”

Growing discontent

The board’s action comes after a July vote by the WestCare medical staff, which stated the physicians’ belief that the interests of Harris and Swain hospitals would be best served by dissolving MedWest and returning their governance to the WestCare board.

While the physicians’ opinion certainly came into play in the WestCare board’s decision, Johns said that ultimately it came down to the fact that MedWest had not achieved the main objectives for which it was created — those being financial stability, access to capital and a clear path to a sustainable future.

“We’ve been focusing on what’s best for Harris and Swain. We feel the need to be able to pursue a structure that works best for the community. We would like to see good medical care in both of our communities,” she said.

Ultimately, the final decision on whether the MedWest system will be dissolved or remain intact comes down to the MedWest board, made up of 14 members — half from Haywood Regional Medical Center and half from WestCare. The board would have to have a three-fourths majority to dissolve the affiliation.

“Really, this is just the start of the decision-making process. What happens depends on what happens with MedWest over the next few weeks or months,” said Steve Heatherly, president of operations at MedWest-Harris and MedWest-Swain. “I think it’s regrettable that the board had to make this type of decision.”

Although Heatherly said everyone had hoped for better results from the formation of MedWest, which is managed by Carolinas HealthCare Systems, the alliance has not been working.

“Something different needs to be done,” he said. “It’s management’s job to execute the decisions of the board, and that’s what we’ll do.”

As things stand now, WestCare is in a good position to move forward in a way that is most beneficial for them, he said, and no major staffing changes are expected to occur in the short term.

“We’re already operating with a (management) team that’s specifically dedicated to Harris and Swain,” he said.

Johns agreed and said, “We feel like we have the right people in place.”

The same operating system is also expected to continue for the physicians practices purchased by MedWest.

“Even though MedWest physicians work together, we really operate the practices as part of the home hospital. We expect that to continue,” Heatherly said.

As to whether WestCare will be able to remain with Carolinas HealthCare System, Johns said they would like to, but that option doesn’t look likely because CHS has so far been unwilling to move outside of the MedWest affiliation.

“We suggested to CHS that we manage the hospital separately, meaning dissolving MedWest. They did not want to do that,” she said.

However, WestCare will probably need to join with some sort of management system in the future.

“No small rural hospital can survive on it’s own in these times,” Johns said.

“We’re not jumping into a new affiliation, but WestCare is unlikely to remain a two hospital system,” Heatherly said, explaining that future affiliations are just speculation until the MedWest board makes a decision.

Haywood Reaction

On the Haywood side of things, not much will be known until the Haywood Regional Medical Center governing board, which will not meet until 6 p.m. Wednesday, Sept. 26.

“That’s their resolution. That’s not necessarily ours,” said HRMC Board Chairman Cliff Stovall, adding, “Obviously, I’m disappointed. We were obviously one of the two parties that put (the affiliation) together.”

The issue will be a closed session discussion, Stovall said, as it is about a contractual matter.

“There are so many options on the table, it would be premature to mention them,” he said.

Right now, WestCare’s decision doesn’t necessarily mean anything for the future of MedWest-Haywood or HRMC, said Mark Clasby, a member of the MedWest governing board and its former chairman during the time when MedWest was formed.

“WestCare made their feelings known to the MedWest board that they want to dissolve the affiliation. That’s a desire, but now we need to hear from the Haywood board what their desire is,” he said.

It’s a decision the HRMC board might not come to quickly since WestCare’s board came to their decision after several months of deliberation.

Once HRMC makes it’s decision known, it is then up to the MedWest board to finalize the dissolution of the affiliation or find a way to keep it intact. That action cannot be taken until January 2013.

When the three hospitals that make up the core of MedWest were integrated, the legal agreement included a review of the contract three years after its formation. Before that point, the contract cannot be broken.

Clasby said this “waiting period” was done based on anti-trust laws, but it also gave all parties a chance to see if the system would work.

“In three years (we) could go back and review it. Is this working? Do all parties agree or not?” he explained. “It took us almost a year to put (MedWest) together, so you can’t just dismantle it quickly. There are a lot of legal issues. The process wouldn’t be that simple.”

As to what would happen to shared assets, such as the many physicians practices purchased under MedWest, Clasby said it is too early to know how that might be handled if MedWest is eventually dissolved.

And if MedWest is able to stay together, Clasby said there would obviously need to be some “fence mending” done with WestCare, although he cannot say what measures would need to be taken at this point.

Personally, Clasby said he is disappointed with WestCare’s decision.

“I would like to see (MedWest) succeed. I think it’s best for the region for patient care,” he said.

Timeline Sidebar:

2006-2007

• WestCare sees a loss of physicians, which results in constrained access and loss of market share.

2008

• Haywood Regional Medical Center loses its certification.

• Michael Poore is hired to serve as the chief executive officer of HRMC

2010

• On Jan. 1, 2010, MedWest is formed through an affiliation of WestCare Health System and Haywood Regional Medical Center. Carolinas HealthCare System is chosen as the management partner.

• Michael Poore is hired to serve as the CEO of the entire MedWest organization.

2010-2011

• Hospitals attempt to come together under one system-wide management team

• The MedWest brand is launched and the WestCare and HRMC brands are diminished.

2011

• At WestCare, some medical staff discontentment begins to occur and by October, accounts payable slows noticeably.

• Extra capital costs system-wide and reduced patient volumes prompt MedWest to embark on a $10 million cost-cutting program, including layoffs and positions remaining unfilled through attrition.

• MedWest invests in the future by purchasing numerous physician practices throughout the service area, partnering to build a new urgent care center in Canton, an in-patient hospice facility and an outpatient care center in Clyde, building a new urgent care center in Sylva, adding a wide-bore MRI at MedWest-Harris and a cardiac catheterization lab at MedWest-Haywood.

2012

• In January, WestCare co-signs a $10 million line of credit for MedWest-Haywood with Carolinas HealthCare System. The money was needed to meet current expenses after a costly year of settling past legal claims, purchasing a new generator, dealing with an IT failure and implementing a federally mandated electronic records program.

• In January, CFO leaves organization and MedWest senior leadership is split to focus on strengthening individual hospitals. Michael Poore is named president of MedWest-Haywood while Steve Heatherly is named president of MedWest-Harris and MedWest-Swain. John Young serves as system CEO for MedWest.

• In April, Michael Poore resigns and John Young is named interim CEO at MedWest-Haywood.

• In April, WestCare physicians address the Jackson County Commissioners with concerns about MedWest’s impact on Harris.

• In July, MedWest-Haywood reports that is has regained 62 percent of the market share in the county — the level it was at before its decertification in 2008 and a return to profitability.

• In July, Harris and Swain medical staff convey to the WestCare Board a desire for MedWest to be dissolved.

• In August, the WestCare board considers the medical staff’s vote and proposals from CHS to continue the MedWest affiliation.

• In September, the WestCare board states its position that MedWest has not achieved the primary objectives for which it was created and calls for the dissolution of MedWest.