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Three Maryland Hospitals Will Continue to Explore Initiatives for Cooperation

Oct. 2, 2013—Frederick Regional Health System, Meritus Health and Western Maryland Health System announced today that a Letter Of Intent (LOI) has been signed among the three organizations in which the parties agree to explore new initiatives for cooperation and mutual support that will advance key components of health care reform, such as better care, reduced cost and a focus on population health management for the western Maryland region.

The health systems began discussions about collaboration earlier this year and completed a feasibility study that evaluated the merits of a possible affiliation in June. Using the results of the study conducted by the Berkeley Research Group (BRG), the governing boards of the three health systems evaluated the report as it related to their individual organizations. At their respective meetings this September, the governing boards authorized their chief executive officers to move forward with pursuing an alliance.

"The Affordable Care Act (ACA) will dramatically change how hospitals provide care to the citizens they service," said Thomas A. Kleinhanzl, president and CEO of Frederick Regional Health System. "Hospitals will be held to new standards of care provision and they will be rewarded for community outreach efforts that measurably increase the health profile of entire populations. The citizens of western Maryland will benefit greatly from an alliance that focuses our collective resources and expertise on the health and well-being of the regional communities we serve," Kleinhanzl added.

The LOI describes the process for the parties to work together in four initiatives—to form a regional alliance board to guide discussions, to initiate a Management Services Organization (MSO) to reduce costs following the delivery of a business plan to further identify areas of opportunity, to improve quality and to examine expanding Meritus' existing Accountable Care Organization (ACO). The LOI acknowledges that the parties have not at this point formalized the affiliation and that no party is bound until final documents have been approved by the various boards. These documents will be developed during the next several months.

"One of the first orders of business is to create a Regional Health Alliance Board," said Joseph P. Ross, president and CEO of Meritus Medical Center, Inc. "The Board will serve as a working committee to explore further affiliation and new initiatives for cooperation. Those activities may include partnering to achieve greater clinical integration in the region or assessing ways to enhance community benefits for the citizens we serve," Ross added.

Barry P. Ronan, president and CEO of Western Maryland Health System said, "The Regional Health Alliance Board will evaluate the merits of forming a Management Services Organization, or MSO, to manage and consolidate administrative functions. In addition, we all agree that population health management in the form of a regional Accountable Care Organization (ACO) will go a long way toward enhancing care delivery. It is equally important to develop regional quality initiatives that will govern the delivery of care to the communities we serve."

The community will continue to be kept informed of progress as the three health systems move forward, working together to ensure that high quality health care services remain available to residents of the western Maryland region.

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Frederick Regional Health System operates health care facilities and services in Frederick County, Md., including Frederick Memorial Hospital. Meritus Health operates health care facilities and services in Washington County, Md., including Meritus Medical Center. Western Maryland Health System operates health care facilities and services in Allegany County, Md., including Western Maryland Regional Medical Center.

Contact:

Mary Rizk, Meritus Health, 301-367-8831
Harry Grandinett, Frederick Regional Health System, 240-566-3323
Kathy Rogers, Western Maryland Health System, 240-964-8008

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