Months of negotiations lie ahead to determine whether the University of New Mexico and a Texas firm will partner with a small, regional hospital in Gallup, all parties in the proposed joint venture said.
Rehoboth McKinley Christian Health Care Services is reaching out for partners to help strengthen its financial position and expand medical care in one of the poorest regions of the country, a spokeswoman said.
Rehoboth operates a 69-bed hospital that treated nearly 11,000 emergency visits in the first six months of 2013, according to a hospital news release. During the same period, the nonprofit hospital had net operating income of only about $31,000, it said.
The hospital’s need for capital and specialty physicians prompted its search for an affiliation with a large system, said hospital spokeswoman Ina Burmeister.
“More and more smaller hospitals are affiliating around the country,” she said. “The reality is, in rural settings, having enough providers is a challenge.”
LHP Hospital Group, Inc., based in Plano, Texas, specializes in joint ventures with not-for-profit hospitals, a company spokeswoman said.
The privately owned firm has formed joint ventures with six hospitals in Idaho, Florida, New Jersey and Texas since it began in 2008, LHP spokeswoman Pat Ball said.
Rehoboth, UNM and LHP are drawing up a letter of intent that will allow the parties to share financial information and perform “due diligence” that could lead to a joint venture, Ball said. Negotiations are likely to continue into early 2014, she said.
UNM Health Systems and LHP issued a joint proposal after Rehoboth McKinley issued a request for proposals in February seeking an affiliation with a large health system, Ball said. Rehoboth’s board of trustees selected the LHP/UNM proposal in July.
LHP would provide management expertise and access to capital, Ball said. UNM Health Systems would contribute medical expertise to the partnership, she said.
Regents approved a measure July 27 allowing UNM Health Systems “to engage in regional and local hospital affiliations,” clearing the way for UNM to begin negotiations.
Health Sciences Center Chancellor Paul Roth said last week that UNM is “in the earliest of all possible discussions” about the joint venture.