Benefis Health System

The forerunner of Benefis Health System was Benefis Healthcare. Benefis Healthcare was formed when 145-bed Columbus Hospital (a Catholic Church-owned hospital founded in 1892) and 339-bed Montana Deaconess Medical Center (a hospital founded in 1898 by the Methodist Episcopal Church) merged in July 1996. The two hospitals first considered merging in 1994, but a traditional merger was held up by prolonged disagreements (which lasted 20 months) with state and federal antitrust officials over the legality of the merger. The hospitals finally merged in July 1996 under a so-called "certificate of public advantage" (COPA), a provision in Montana state antitrust law which permitted hospitals to merge prior to examination of the merger under state antitrust laws, provided that the state issued a certification that the merger met public need (the COPA) and further provided that the merging hospitals agreed to certain conditions imposed by the state. The U.S. Federal Trade Commission dropped its objections to the merger after the COPA was signed. Columbus and Deaconess hospitals were the first hospitals in the United States to merge under a state COPA statute. The name "Benefis" was chosen because, although it was not a word found in any dictionary, it sounded similar to words such as beneficence, beneficial, and benefit. Another restriction prohibited Benefis from entering into any joint ventures which would permit existing services to be transferred to the joint venture (thus enabling Benefis to skirt the COPA agreement). The merged entity was originally named Benefis Healthcare. ==Corporate history==

Just a year after its formation, Benefis challenged the construction of specialty surgical centers in Great Falls. Both the Central Montana Surgery Center (an ambulatory care facility founded in 1996 by local Great Falls businessman Harold Poulsen) and the Great Falls Clinic (a physician-owned group practice founded in 1917) announced they intended to build outpatient surgery centers in the city. After two months of negotiations, the state amended the COPA to allow Benefis to raise prices faster than originally permitted (generating $12 million in revenues), and reduce cost savings returned to the community by $39.5 million. The term of the COPA (its initial terms were to end in 2006) was not changed. In August 2000, Benefis signed an agreement with Treasure State Healthcare Network, an independent practice association (IPA) representing about 30 percent of the physicians practicing in Great Falls. The agreement created a 50-50 for-profit partnership which marketed Benefis and the IPA to large employers and health care trusts. It sought a second revision to the COPA agreement, (Instead, Poulsen ended up transforming his existing outpatient center into a hospital.) Benefis sought to reopen the COPA before Poulsen's announcement, but its pleas became more urgent after the competitor's plans were announced. Benefis refused, and in 2004 Providence Services declined to issue a corporate bond that would have financed construction of a new cancer center in Great Falls. Benefis sued to prevent the transaction, arguing that the new owners intended to run the facility as a specialty hospital in contravention of a 2005 state law banning further construction of these types of facilities and that the Clinic and Essentia did not apply for the required health care facility license. Benefis also said it stood to lose $4 million a year in revenues if Central Montana Surgical Hospital was licensed as a general hospital. Benefis filed an emergency motion with the Montana Supreme Court three days later, appealing the district court's ruling. However, the state supreme court declined to rule on other issues raised by Benefis' lawsuit, and left open the door for the company to continue litigation in the district courts. On November 6, 2006, Benefis declined to appeal the high court's ruling and said it would not bring the other issues back to the district court. A state judge ruled in September 2007 that Benefis must pay these fees. Also in 2006, the Clinic bought out Benefis' 49 percent ownership in the Great Falls Clinic Surgery Center. In August 2006, Benefis' Sletten Cancer Institute added a CyberKnife nuclear radiosurgery system for treating tumors and other medical conditions (at the time, making Benefis the only hospital to own a cyberknife in the Idaho, Montana, Oregon, Washington, and Wyoming areas). Benefis' separation from Providence Services was finalized on September 30, 2006. Benefis also gave Cascade County near on Benefis Court in exchange for of land near 15th Avenue South and 25th Street in September 2006. A month later, the United States Department of Agriculture's Rural Development grant program awarded $380,000 to Northcentral Montana Healthcare Alliance to expand telehealth throughout the area, a grant which was matched by a $700,000 grant from Benefis. On February 7, 2007, a Benefis Mercy Flight Beechcraft Super King Air 200 twin-engine fixed-wing aircraft crashed a short distance from Gallatin Field Airport (near Bozeman, Montana) around 9 p.m., killing the pilot, a registered nurse, and a paramedic. Members of the victims' families contended the contractor which operated the flight, Metro Aviation, failed to adhere to safety and training procedures. In June 2007, Metro Aviation reached a confidential, out-of-court settlement with the family of paramedic Paul Erickson. In April 2009, the family of nurse Darcy Dengel also reached an out-of-court settlement with Metro Aviation. These talks continued for two years, and expanded to include discussions that included Benefis buying the Clinic outright. But although the talks continued into February 2010, the Clinic eventually rejected the confidential purchase price and terms offered by Benefis. 2008 saw Benefis expand even further. It opened its new Hi-Line Sletten Cancer Center in Havre in August. The same month, it partnered with the 10-physician Great Falls Orthopedic Associates to break ground on the $17 million, Orthopedic Center of Montana, an ambulatory and outpatient surgical center offering physical therapy, sports medicine, and urgent care services. The new building permitted Benefis Quick Care, an existing urgent care center, to move into larger quarters on the health system's west campus. In December, Benefis began construction, cost, and marketing studies aimed at building a continuous-case retirement community on south of its east campus. The first phase of the project (which would replace its traditional nursing home, built in the early 1980s) would construct several seven-to-10 person cottages over a four-year period to provide long-term nursing care, dining facilities, and recreation. In 2009, Republican Congressman Denny Rehberg secured federal spending earmarks for Benefis that included $300,000 to subsidize construction of the pediatric care areas, $900,000 for the cardiac care suites in the new tower, and $143,000 for electronic medical recordkeeping and telehealth. Benefis began construction of a $17 million, four-story, medical office building next to the Orthopedic Center of Montana on its east campus in August 2010. The building was intended to house Benefis Medical Group (formerly called Benefis Physician Associates), a group of 53 physicians and 18 other healthcare providers the health system created in late 2007. In September of that year, it also outsourced its medical records functions to Precyse, a medical records transcription, coding, and filing company in Pennsylvania. In April 2011, Benefis announced it would build a $5.5 million, 40-unit low-income housing project for senior citizens. The health care company sought housing tax credits from the Montana Board of Housing for the project (only the third time since 1996 that such credits had been sought for a project in Great Falls). Benefis also said that the cost of its long-term care cottages and assisted living housing, which began construction in November 2010, would be about $21.5 million. Benefis also said in April 2011 that it would spend $3.5 million to expand and renovate its Peak Health & Wellness facility, a for-profit joint venture with private investors. ==Ownership changes==

Under the terms of the merger, Benefis affiliated with Providence Services, a Catholic-owned health care system based in Spokane, Washington, and founded by the Sisters of Providence. A local board of directors provided leadership and oversight for Benefis, although the Providence Services maintained some corporate control. In July 2008, a holding company known as Benefis Health System was created to hold title to the growing variety of services offered. Deregulation battle The COPA permitting the merger of Columbus and Deaconess hospitals in 1996 was due to expire in 2006. On December 3, citing internal studies which showed Benefis could lose $2.4 million a year due to competition, Benefis asked McGrath to reconsider his decision. McGrath declined to do so and said he would neither affirm or overturn his decision until the upcoming legislative session ended. Benefis focused its lobbying efforts on prices, and pledged to keep its prices in the lower 50th percentile for large Montana hospitals. At legislative hearings in the state senate, more than 20 individuals testified for three and a half hours about the merits of the bill. The bill passed the state senate by a vote of 39-to-11. On April 2, 2007, Montana Governor Brian Schweitzer signed the legislation ending state oversight of Benefis through the COPA process. Benefis said in 2008 that it saved $300,000 to $600,000 a year in interest rate payments on its bonds after being freed from the COPA requirements. It also saw another $120,000 a year in savings by no longer having to engage in COPA reporting and oversight, or for reimbursing the state for COPA oversight. But Benefis also said its costs fell 2 percent in the 2008-2009 period, and another 8 percent in 2010. Benefis denied the accusation, saying the 16 percent figure was overstated because much of that number came from a discontinuation of health care price breaks the health system used to provide. Benefis officials also said their charges for inpatient care were still 2.6 percent below those of its peers, while charges for outpatient service were 29.2 percent lower. Benefis also said it would implement no price increase in 2011, and hoped to reduce costs another 5.2 percent. ==Market size and economic impact==

In 2006, two-thirds of all Benefis patients came from Cascade County, Montana, with the remainder coming from the remaining counties in north-central Montana. Benefis has more of an economic impact on the city of Great Falls than any other industry or employer. In 2008, it was the north-central Montana region's largest private employer. As of 2008, Benefis was considered the "sole community provider" by the Centers for Medicare and Medicaid Services, which resulted in a $1.5 million annual federal payment to the health system. If total hospital admissions at any other healthcare facility in the community rises above 8 percent, Benefis would be required to share that payment equally with the other provider(s). The same year, Benefis said Medicare patients accounted for 48 percent of the health system's admissions, but contributed only 40 percent of its revenues. Patients with private insurance represented 26 percent of admissions but accounted for 40 percent of revenues. Benefis said that it lost money on its dialysis, emergency room, and inpatient mental health services. Benefis Health System was the largest hospital in Montana as of March 2011. ==Cardiac services==

In July 2005, Benefis announced it was partnering with MedCath Corp. to construct an $11 million cardiac hospital on its east campus. MedCath owned 49 percent of the cardiac hospital, and had the option to invest in the physical property as well. The tower was originally expected to cost $50 million, Construction on the now seven-story medical tower began in September 2006. Private donations paid for $3.5 million of the cost, while federal earmarks contributed another $1.2 million. ==Charity care==

In 2008, a report on the amount of public benefit hospitals returned to the community, released by the Montana Attorney General's office, said that Benefis ranked eighth out of 11 hospitals in the state. The report said Benefis received $7.5 million in tax breaks in 2006, but donated less than $4.7 million in charity care. Although Benefis gave charity care to more people (4,082) in 2007 compared to 2006 (3,493), it donated $4.68 million in charity care (a decrease of $11,000 from the previous year). Based on the ratio of charity care to operating budget, Benefis ranked fourth-highest among nonprofit hospitals in the state. ==Accreditation==

Since its founding, Benefis had been accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) In January 2012, Benefis announced it would no longer seek accreditation by JCAHO, saving the hospital roughly $80,000 every three years. Benefis said it would seek direct accreditation from CMS, which was provided free of charge. ==Awards==

Benefis has received numerous awards for its provision of health care. In 2005, HealthGrades (a company which ranks quality of care) listed Benefis as among the top 5 percent of hospitals in the nation for the quality of its care. In 2006, HealthGrades listed Benefis' cardiology and gastrointestinal services "number one" in Montana. HealthGrades also listed Benefis among the top 5 percent of hospitals in the country for the quality of its orthopedic services, and in the top 10 percent nationally for joint-replacement surgery and treatment of stroke. The Sletten Cancer Institute received the Outstanding Achievement Award from the American College of Surgeons for the quality of its cancer care. It won the accolade a second time in 2008, one o only 66 cancer centers in the entire United States to achieve the honor. ==Footnotes==