Executive bonus pay on the line if Ballad Health fails to meet Tennessee, Virginia's merger terms

Johnson City, Tenn.-based Ballad Health executives may not receive bonuses or incentives if the system fails to comply with terms outlined by regulators in Tennessee and Virginia, according to News Channel 11.

Ballad Health, which launched Feb. 2, is the result of a merger between Johnson City-based Mountain States Health Alliance and Kingsport, Tenn.-based Wellmont Health System.

The systems were required to obtain approval from state regulators in Virginia and Tennessee to complete the merger. The Tennessee Department of Health gave the final approval necessary to complete the merger last week.

However, the certificate of public advantage filed in both states requires Ballad Health to comply with several specific conditions. If the 21-hospital system fails to meet the necessary requirements, Virginia and Tennessee may intervene in Ballad Health's operations in a variety of ways. According to the Tennessee COPA filing, state officials may prohibit the payment of bonuses or incentives to executives. In Virginia, state regulators may take the health system to court or terminate its cooperative agreement altogether, according to the report.

"There's a very significant system that's been created that includes state oversight, that includes oversight within Ballad itself and some external monitoring as well," said Tennessee Department of Health Commissioner John Dreyzehner, MD, who attended the system's launch Friday. "There are a number of very important pieces of that regulatory structure, newly created, that are actually already in operation. That will continue to be built as time goes on."

Ballad Health Executive Chairman, President and CEO Alan Levine previously said Wellmont and MSHA, in agreeing to the state officials' terms, were forced to cede more control than they had initially hoped, the report states.

"The Certificate of Public Advantage has enforceable commitments that we've made and we intend to keep those commitments," said Mr. Levine. "Each state has the capacity to enforce the documents if we're not in compliance and there's due process in there for us in the event we don't agree with the actions they want to take."

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