Dan Moen, CEO, says that the company was born out of a recognition that most acute-care hospitals are nonprofit, and many of them are in need of capital to take advantage of opportunities and meet their organizational goals. “Eighty-five percent of acute-care hospitals are not-for-profit, and that hasn’t changed much in the last 30 years,” he says. “We saw a need that we could address by working with them to provide capital and our management expertise.”
As outlined by its business model, LHP enters into joint ventures to build, replace or acquire facilities with nonprofit hospitals and provides the majority of the equity, but both LHP and the nonprofit share governance of the venture equally. LHP oversees the day-to-day management of the facility. An LHP management team will lead the hospital and employees will be LHP employees, but the nonprofit partner reserves the right to hire or fire the facility’s CEO.
“Basically, LHP would put up 80 percent of the equity, and the nonprofit hospital would provide 20 percent. But, we share governance of the JV equally, which is very unique given we contribute the majority of the capital,” says Mr. Moen.
In Idaho, LHP provided capital to a nonprofit hospital looking to replace its aging facility. The hospital began construction on a replacement facility, but needed a partner after access to the bond market became difficult due to the economic downturn. LHP formed a joint venture with the existing facility and provided capital for a $150 million replacement facility, which is currently under construction. Among other projects, LHP is also working with a New Jersey nonprofit hospital to acquire a competing hospital, which it plans to renovate and reopen pending certificate of need approval.
Mr. Moen describes LHP joint ventures as having “collaborative” cultures. “Working with others is the way we do business. We work with all stakeholders to share in the decision-making of the hospital,” he says. LHP joint venture hospital boards are required to consist of six medical staff and six community leaders in order to ensure the voice of both parties are an active part of the hospital’s leadership. LHP also holds monthly physician roundtable meetings with medical staff to discuss the hospital’s operations and seek their input on decision making, according to Mr. Moen.
“Physicians have a choice about where they take their patients, and satisfied physicians will keep bringing their patients to our facility,” says Mr. Moen. “Having some control of the environment in which they work builds the medical staff’s trust and confidence in management.”
Mr. Moen formerly served as executive vice president for development at Triad Hospitals and has been in the healthcare industry for more than 30 years.
Learn more about LHP Hospital Group.
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