LMH Health President & CEO Provides Update on LEMA Negotiations

In the Board of Trustees meeting this morning, LMH Health President and CEO Russ Johnson provided an update on the contract process for hospitalist and Emergency Department (ED) professional services.  

Johnson shared the principles that have guided the LMH Health team during these discussions over the last few months—people first, provider engagement, clinical excellence, and financial stewardship. He reminded the board that he added a fifth principle -- loyalty and community. 

“We have a responsibility to be thoughtful stewards of this charitable enterprise, but we also need a principle around loyalty, longevity and community—that is worth a premium,” said Johnson, in reference to reopening conversations with LEMA, Lawrence Emergency Medicine Associates, in June. 

LEMA has requested that the hospitalist services be provided under a separate agreement with direct employment by LMH Health. As such, LMH Health has entered into negotiations for employing the hospitalist physicians and advanced practice providers.  After revenue is accounted for, this arrangement will result in an annual investment of $2.7 million, but Johnson said he believed this was the right approach for the community. 

Separate negotiations continue with Dr. Scott Robinson and LEMA surrounding emergency services. Johnson said that while there are bound to be differences during any negotiation, he believes LMH Health and LEMA are in agreement on the major elements of the contract and the remaining issues can be worked through favorably.

“I know both Scott and I want to find a fair and reasonable agreement and that gives me a lot of confidence,” he said. 

Johnson shared with the board an overview of areas under discussion, including LMH Health’s agreement to provide a $600,000 annual financial subsidy to support emergency room services and a $500,000 transition loan to LEMA—both transactions are meant to enable a successful transfer of billing responsibilities from LMH Health to LEMA. The parties have also targeted a three-year term for emergency services. 

LMH Health and LEMA will continue to discuss a number of areas, including the length of termination notice for the contract and financial responsibility for a medical director for the practice. Additionally, in the interests of care continuity and supporting the providers’ ability to continue working at LMH Health, LMH Health has proposed it have the opportunity to hire LEMA providers who wish to remain at the hospital, should the contract come to a close.  

Both LMH Health and LEMA have agreed that the arrangement must protect our patients, continue our quality service and ensure fair and accurate billing of patients. Johnson said there is a lot of concern over balance billing sometimes referred to as “surprise billing” which happens when a provider does not participate in a specific insurance program because they aren’t able to agree on terms

"In that situation, a patient comes to the hospital, where they are covered by insurance for hospital services like imaging and nursing, but not the physician’s services administered in the ED,” said Johnson.  “This can result in surprise billing, where the patient gets a bill for the entire provider charges, because the provider is not getting paid by the insurance company. Those bills can be very high.

“I know that Dr. Robinson is also committed to ensuring that their services are covered fairly by the health plans so that patients don’t receive bills above their copay and deductibles that they normally expect. I feel very confident that we are in the same place there, and that we will reach an agreement. Dr. Robinson has been in the community for 25 years, and the patients they serve are just as personal to them as they are to us, and I know that he is committed to them.” 

LMH Health Trustee Bob Moody said that he appreciated Johnson’s focus on the organization’s charitable responsibility. “I’m also very uplifted that you are looking out for healthcare costs,” said Moody. 

Board members discussed the terms of the proposed loan and the relative uncertainty created by the COVID-19 pandemic and suggested consideration of a shorter contract. They also stressed the importance of open dialog and disclosure of LEMA’s operations in order to ensure hospital funds are being used according to the terms of the agreement, as well as the need to see the subsidy decline over time. 

The Trustees also commented on the relative risks the hospital may take on in this arrangement with LEMA. Johnson said that while nearly every hospital subsidizes its hospitalist service, many hospitals do not provide a subsidy for emergency room services. 

“We are entering into this new arrangement trying to balance and hedge some risk, and under the proposal, if LEMA captures more revenue than anticipated, that would reduce our stipend,” said Johnson. “We feel like transparency and fairness are important, and I believe Dr. Robinson shares the belief this has to work for both parties--he’s repeated that a number of times. If LEMA’s experience is better, our exposure goes down.” 

Johnson said that as the hospital navigates the next steps, they are proceeding in good faith. 

“Of course, we cannot lose sight of our hospital’s purpose – to provide charitable care to this community. This is a $25 million annual commitment, and this mission makes it absolutely vital for us to steward funds conscientiously,” said Johnson. “I am proud of the way our team has handled this, and I am looking forward to subsequent conversations with Dr. Robinson. We believe we will find a mutually agreeable arrangement that centers around what’s best for our patients and community. I am personally still quite confident in this negotiation process.”

LMH Health President & CEO Provides Update on LEMA Negotiations

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