Community, Montrose hospitals commit to pursue partnership that will not compromise their independence

Tim Harty, The Business Times

Jeff Mengenhausen

If two area hospitals see the $19 million to $31 million they stand to save via a cost-saving partnership, their respective CEOs may want to grab a handful of that cash and buy Angelina Salazar a nice dinner.

It was Salazar in her role as CEO of Western Healthcare Alliance who figured out Community Hospital CEO Chris Thomas and Montrose Regional Health CEO Jeff Mengenhausen were looking for each other. They just didn’t know it, because they’d been looking in their back yards for a solution that actually was just a little farther down the road.

Both were looking for a hospital to partner with on things like buying supplies and sharing IT services. Thomas thought that partner might be Family Health West in Fruita, but he said talks never gained much traction. Mengenhausen thought that partner might be in Delta or Gunnison. No luck.

Salazar heard from each CEO about their experiences and knew who they needed to talk to instead.

As Thomas tells it, “She basically posed a question: Why don’t you two guys start talking about what you can do together?”

As Mengenhausen tells it, he was conversing with Salazar when she told him, “You know, you both are wanting kind of the same thing. Jeff, you should talk to Chris.”

Mengenhausen said he then texted Thomas something like, “Hey, let’s go have breakfast.” So, they did.

Chris Thomas

Mengenhausen said that was in July 2025, “and we started just talking, and it’s like, ‘Oh, you know, I’m struggling with IT, and Chris is like, ‘Our IT department’s awesome.’ And I’m like, ‘Oh, they’re struggling with revenue cycle. Well, my revenue cycle, we got that figured out.’ So it really just started to mesh things organically like that.

“And cultures between Montrose and Community, we’re finding out, are so similar. And we’re both focused on high-quality care, high patient experience and our unwavering commitment of independence and keeping it local, not being part of a system.”

That led to approximately seven months of talks that brought them to early March and a commitment to pursue a partnership.

“What we’re doing,” Thomas said, “is we are creating a parent company, which is yet to be named. The board of directors this past week of both the Montrose hospital and Community Hospital approved the execution of a letter of intent to form this new partnership. And so it was a unanimous vote of both boards to move forward.”

Thomas added, “We have a lot of work to do. This is just the start and marks the beginning of our exploratory process that we hope to close and have a definitive agreement by late this fall.”

The agreement would be to form a new parent company controlled by Community Hospital and Montrose Regional Health. Each hospital would have three board members on the parent company board, and Thomas and Mengenhausen would be co-CEOs.

Thomas said their hope is: “The parent company would then allow us to look at different opportunities like: Can we do group purchasing together? Can we lower our supply costs? Can we improve our revenue cycles to improve our ability to bill and collect and deal with the insurance companies? One of the top priorities is: Can we share IT services?

“So, Community Hospital has MEDITECH Expanse. Montrose is on an older version of MEDITECH and needs to move to a new version. So, can we do that together to save money on systems, hardwares? Can we have a similar IT system to save money and help us be more efficient and more viable going into the future?”

Thomas thinks the answer is yes, but there are hurdles to clear. If he’s right, he said the word from consultants is: “We anticipate a savings between 19 and 31 million dollars a year, every year with some of the different partnerships we’re talking about, so we’re talking significant savings.”

To the declaration of that being real money, Thomas said the same.

“It’s real money,” he said. “You know, we had a negative margin last year, so going into this year, there’s some challenges. So, yeah, we’re excited about the opportunity.”

Similarly, Mengenhausen said, “The last two years have been a little rough financially, just with the pressures of inflation and labor costs going up, and then some of the games that these payers are playing, which makes it hard to get paid for the services that you render.

“And so we’re facing the same pressures on, you know, supply costs going up with just simple things, needles and joints or equipment. And if we can come together and be bigger and have better purchasing power, we can actually drive down the cost. And that’s how these big systems are doing it, and we can accomplish that through a partnership versus a full-on merger/acquisition.”

Thomas addressed that merger/acquisition sentiment in no uncertain terms, as Community Hospital and Montrose Regional Health remain steadfast in their independence.

“This is not a merger. This is not an acquisition. It’s not a takeover,” he said. “Both boards, both hospitals would remain independent. Our board of directors would remain the same with the same bylaws, the same governance, but we would be just looking at those, what I would say, back-office support services that we can do together to make us both more efficient, so that we can deal with, really, the changing environment in healthcare.

“You know, it’s getting more difficult. You’ve got the state of Colorado budgets that are going to be a challenge this year, the effects of the One Big Beautiful Bill, so we’re doing this to strengthen our independent hospitals.”

Mengenhausen added, “It’s actually going to help both hospital systems flourish and actually add jobs and add service lines. And it moves us from kind of surviving into flourishing. … It’s going to be economic drivers for both communities and add more jobs for both organizations.”

Again, there are hurdles to clear for the partnership to become official, and Thomas said, “Yeah, it’s going to be an interesting summer, working through this, but I think it’s going to be an exciting venture for us, and I’m very, very optimistic that we will get this done. And we will both be better organizations because of it.”