Three consulting firms did their best Monday to woo members of Indian River Medical Center’s Collaborative Committee, vying for the job of helping the cash-strapped hospital find a partner to bail it out.
The fees they proposed for trying to find the right match for IRMC were all over the lot, ranging from a monthly retainer of $20,000 up to a billing rate of as much as $170,000 per month.
No formal winner was named, but the non-verbal reaction of committee members may be enough to assume at least one of the consultants is already out of the running.
That would be Chicago-based Juniper Advisory, which made the first presentation. Consultants James Burgdorfer and Barry Sagraves laid out an ambitious 11-month timeline that would have the hospital select finalists within the next 90 days, select a partner by early December and hammer out an agreement by the end of April 2018.
The pair suggested soliciting 20 potential partners which, over time, would be whittled down to 15, then 10 before choosing 2-5 finalists. They said they would charge a monthly retainer of $20,000, plus other fees.
Collaborative Committee members seemed underwhelmed.
Up next was another Chicago firm called Chartis. The three-man team told the group, “If you’re a hot property, you’ll get the interest you want.”
Chartis pointed out that IRMC breaks even on Medicare, a feat the consultants referred to as “the mantra in the industry.” On the downside, they noted that much of IRMC’s physical plant is now in its fourth decade of use.
They also noted that IRMC’s profit margin is more dependent on ambulatory services. “Is there a partner that can really deepen the clinical capability?”
“These are not mutually exclusive,” responded Marybeth Cunningham, the chair of the collaborative committee. Added committee member Tony Woodruff: “We’re not for sale. We’re looking for a partner.”
Chartis sought a much larger monthly fee, asking for $160,000-$170,000 per month. The representatives also pointed out that the company’s work in the final phase of the process could be “very significant,” costing as much as $600,000.
The third contestant was a familiar face – Maine-based Stroudwater Associates, which has been guiding the hospital through the early stages of the change process, including public meetings, and is now competing to stay on as the partner-selection consultant.
David Whelan, former president of Stroudwater, said the hospital is “driven by what you’ve established. We will bring you innovative solutions.”
Worried Stroudwater was stretched too thin for this next phase, Cunningham asked how many clients Stroudwater was currently working with. Jeff Sommer noted they had two projects in Georgia, two in Texas and one each in Wisconsin and New York.
Sommer offered reassurance, telling Cunningham “we are committing our most senior folks to this project.”
Committee member Tony Woodruff was blunt in a question to Sommer: “What’s exciting about us?”
“Significant size and scale,” Sommer replied. “$250 million in revenue. A good chassis on which to build.”
He went on to talk about Stroudwater’s role in the process.
“We monitor the due diligence, advise the client on how to deal with issues, and negotiate a resolution with the partner.”
Sommer also laid out a 12-month timeline, but said it could be done in as few as nine months. He quickly conceded the shorter timeline was unlikely given IRMC’s multiple boards. The company’s fee for the job? Up to $390,000.
