Johnston Memorial CEO Explains New Relationship with Mountain States Health Alliance

By: Debra McCown/Bristol Herald Courier | TriCities.com
Published: March 03, 2008

Johnston Memorial Hospital Chief Executive Officer Sean McMurray on Monday explained some of the details of the hospital’s planned partnership with Mountain States Health Alliance.

“It’s going to create a new legal entity, and 50.1 percent of it will be owned by Mountain States, and 49.9 percent will be owned by JMH,” McMurray said of the partnership announced last week. “But then the entity that they jointly own and operate will be doing business as Johnston Memorial Hospital.”

The hospital will contribute all of its assets to the partnership, McMurray said, and these assets will make up the 49.9 percent of the partnership, which will be owned by a community foundation yet to be created. Mountain States will contribute the rest.

“Because they have a majority interest or controlling interest, they can consolidate it onto their financial statements,” McMurray said of Mountain States. “It allows us to be integrated into their system.”

However, he said, governance of the partnership will be 50-50, with half the board members coming from the hospital board and half from Mountain States.

For approval of some major decisions, majority votes will be required from both groups of trustees, he said. It has not been determined how the board would avoid a standstill on other decisions if its members are divided, according to McMurray.

An evaluation will determine the hospital’s net worth, and a figure will be agreed upon before the deal takes effect, McMurray said. The transaction is also pending approval of state and federal agencies.

Plans are also moving forward for a $100 million hospital to be built beside the new cancer center on Lee Highway, and for an outpatient surgery center to open near the new urgent care center on Russell Road.

“I am certain that one of the first orders of business will be we’ll sit down and re-evaluate our strategic plan,” McMurray said of what will occur after the partnership is formed.

“In terms of other future programs, it will be determined by a strategic plan and community need.”

dmccown@bristolnews.com | (276) 791-0701

Johnston Memorial CEO Explains New Relationship with Mountain States Health Alliance

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