Principals of the H Group and Centerstone announced today that their boards had completed a letter of intent that would affiliate the H Group, a behavioral health organization with facilities in Illinois and Kentucky, with the Centerstone organization in early 2014. The organizations will now pursue due diligence and negotiations aimed at completing an agreement to affiliate, likely in February 2014.
Under the arrangement, H Group B.B.T., Inc. (Marion, Ill.) and H Group of Kentucky (Paducah, Ky.), together with their current leadership and employees, will become new affiliates called Centerstone of Indiana and Centerstone of Kentucky.
Centerstone CEO David Guth, said that the affiliation – he called it a marriage - “has no buying party, no selling party, and no assets or money changing hands. It’s about two not-for-profits joining forces to create a stronger and more effective behavioral health service organization.”
According to John Markley, CEO of H Group B.B.T. (Building Better Tomorrows), Inc., who will continue as CEO at both of the new Centerstone affiliates, the conversations that led to today’s announcement began when he attended David Guth’s “strategic directions” session at April’s National Council Conference. Informal conversation led to a formal invitation for Markley to visit Centerstone. This, in turn, launched more detailed deliberations by the boards of both organizations.
When completed, the affiliation will add $27 million in service revenues, more than 600 employees, and a service footprint in two additional states to Centerstone. Guth added that the new affiliates will use the same management and governance structure as other Centerstone affiliates. This structure places financial oversight for all of Centerstone in the hands of a single board (Centerstone of America), leaving local management, service, and governance matters in the hands of each Centerstone affiliate and its local board and management team. “That structure, we believe, makes those first-tier boards much more effective in meeting the challenges of service, access, staff supports, and other matters,” said Guth.
For H Group CEO Markey, the decision to affiliate represents an intelligent trade-off. “When you decide to join a larger organization, your organization is going to lose some autonomy, so what you gain has to make sense," he said. "We expect to gain in infrastructure, in research, and in Centerstone’s knowledge of managed care, contracting, and integrated care. Plus, our team will have the chance to join and work with a nationally-recognized staff.” He believes the planned affiliation will also offer a stronger voice in state and local policymaking, improve organization-wide economies of scale, and “produce a bit more margin” through improved efficiencies in service delivery.
Guth noted that Centerstone is eager to welcome and learn from the H Group’s expertise in serving intellectually and developmentally disabled (IDD) individuals. At present, the H Group operates programs that create temporary and long-term employment opportunities for more than 200 people with IDDs who work with major regional employers, the H Group’s own contract-services company, and or as H Group employees.