nonprofit industry health care founded 1996 headquarters great falls montana united states area served north central montana key people john goodnow ceo steve ballock cfo revenue 5.9 million 2009 1 net income 1.1 million 2009 1 number of employees 210 2 website http www.benefis.org benefis health system is a nonprofit independent health care system based in the city of great falls in the state of montana in the united states . the system owns 516 bed benefis hospital sletten cancer institute benefis mercy flight a fixed wing and helicopter emergency medical evacuation service 146 bed benefis extended care center for both rehabilitation and long term nursing care 12 bed peace hospice of montana benefis quick care an ambulatory care facility and benefis physician associates . 3 as of march 2011 it was montana s largest hospital . 4 contents 1 formation 2 corporate history 3 ownership changes 3.1 deregulation battle 4 market size and economic impact 5 cardiac services 6 charity care 7 accreditation 8 awards 9 footnotes 10 bibliography 11 external links formation edit the forerunner of benefis health system was benefis healthcare . benefis healthcare was formed when 145 bed columbus hospital a catholic church owned hospital founded in 1892 and 339 bed montana deaconess medical center a hospital founded in 1898 by the methodist episcopal church merged in july 1996 . 5 the two hospitals first considered merging in 1994 but a traditional merger was held up by prolonged disagreements which lasted 20 months 6 with state and federal antitrust officials over the legality of the merger . 7 the hospitals finally merged in july 1996 under a so called certificate of public advantage copa a provision in montana state antitrust law which permitted hospitals to merge prior to examination of the merger under state antitrust laws provided that the state issued a certification that the merger met public need the copa and further provided that the merging hospitals agreed to certain conditions imposed by the state . 8 the u.s. federal trade commission dropped its objections to the merger after the copa was signed . 9 columbus and deaconess hospitals were the first hospitals in the united states to merge under a state copa statute . 7 10 the name benefis was chosen because although it was not a word found in any dictionary it sounded similar to words such as beneficence beneficial and benefit . 10 a number of conditions on the merger were required by both state and federal governments . these included a limit on excess revenues profits that 86 million in cost savings be passed on to consumers and a prohibition on certain anti competitive behaviors . 7 11 another restriction prohibited benefis from entering into any joint ventures which would permit existing services to be transferred to the joint venture thus enabling benefis to skirt the copa agreement . 7 the merged entity was originally named benefis healthcare . 11 corporate history edit just a year after its formation benefis challenged the construction of specialty surgical centers in great falls . both the central montana surgery center an ambulatory care facility founded in 1996 by local great falls businessman harold poulsen and the great falls clinic a physician owned group practice founded in 1917 announced they intended to build outpatient surgery centers in the city . 7 the clinic had explored building its center as a joint venture with benefis but the copa agreement prohibited it . 7 both companies sought a certificate of need con for their surgery centers but benefis challenged these filings . 7 both companies then altered their plans saying they would build specialty surgical centers instead as permission was not needed under the state s con law . 7 the state subsequently approved both plans . 7 benefis filed suit in state district court as well as filed a protest with the state over the decision not to seek a certificate of need for either proposed facility . 7 in late december 1997 benefis central montana surgery center and the great falls clinic agreed to settle their differences out of court and to drop their administrative dispute with the state of montana . central montana surgery center and the great falls clinic agreed to abandon plans to build surgical hospitals and to build outpatient surgery centers instead . 9 benefis agreed to close its own outpatient surgery center and become a 49 percent owner in the clinic s center . 9 the montana state attorney general s office which approved the settlement said benefis would be permitted to charge the costs of closing its center to the 86 million in cost savings owed to the community . 9 benefis reported excess revenues of 7 million on income of 140 million in 1997 . 6 in early 1999 benefis announced it was suffering serious financial losses that were imperiling its ability to provide health care . in january 1999 the company reported a loss of 3 million on revenues of 128 million in 1998 and projected a doubling of that loss in 1999 with no appreciable growth in revenues . 6 benefis claimed its copa agreement did not account for the costs of consummating the merger of columbus and deaconess hospitals and did not provide for adjustments to the agreement in the event competition forced changes to its business plan . 6 the company cut costs by 17 million saw construction costs increase by 17 million and had not yet implemented any staff reductions . 6 benefis predicted losses totaling 25.7 million by 2003 unless changes to the copa were made . 12 after two months of negotiations the state amended the copa to allow benefis to raise prices faster than originally permitted generating 12 million in revenues and reduce cost savings returned to the community by 39.5 million . 13 the term of the copa its initial terms were to end in 2006 was not changed . 13 in january 2000 benefis reported that it had generated 9.1 million in excess revenues in 1999 because of the changes . 12 the company also doubled its charity care expenditures from 2 million to 4.8 million inpatient prices were 6 percent lower than pre merger prices and outpatient prices were 15 percent lower than pre merger prices . 12 that same year benefis received a 7 million gift from a group of anonymous donors permitting it to build a 25 000 square feet 2 300 m2 hospice now known as peace hospice near its east campus . 14 in august 2000 benefis signed an agreement with treasure state healthcare network an independent practice association ipa representing about 30 percent of the physicians practicing in great falls . 15 the agreement created a 50 50 for profit partnership which marketed benefis and the ipa to large employers and health care trusts . 15 despite these changes benefis faced continuing financial pressures . the company had excess revenues of 3.3 million in 2000 but said it would only break even in 2001 . 16 it sought a second revision to the copa agreement 16 but the state refused to reopen the terms . in 2001 benefis again sought state permission to revise the terms of the copa . that year harold poulsen owner of central montana surgery center announced he would build a 20 bed 24 000 square foot 2 200 m2 5.3 million inpatient specialty surgical hospital to be called central montana surgical hospital . 17 instead poulsen ended up transforming his existing outpatient center into a hospital . 18 benefis sought to reopen the copa before poulsen s announcement but its pleas became more urgent after the competitor s plans were announced . 17 but once more the state turned down the request . in october 2005 benefis sought to disaffiliate from providence services . a dispute between the local health system and its parent organization first arose in 2003 when providence services asked benefis to change its corporate constitution and bylaws to permit the parent organization to veto any joint venture that the local system might enter into review and veto capital spending plans and power to reject any chief executive officer the system might attempt to hire . 19 20 benefis refused and in 2004 providence services declined to issue a corporate bond that would have financed construction of a new cancer center in great falls . 19 according to standard & poor s a bond rating agency benefis contributed 16 percent of providence services total assets 17 percent of its operating revenues and 30 percent of its net operating income . 19 in the last week of december 2005 benefis opened its 20 million sletten cancer institute . 18 in early 2006 benefis sought to stop the great falls clinic from purchasing 20 bed central montana surgical hospital . the clinic had partnered with essentia health a non profit healthcare system based in minnesota and north dakota to purchase harold poulsen s outstanding stock in central montana surgical hospital and gain a controlling interest in the surgical hospital . 18 21 benefis sued to prevent the transaction arguing that the new owners intended to run the facility as a specialty hospital in contravention of a 2005 state law banning further construction of these types of facilities and that the clinic and essentia did not apply for the required health care facility license . 18 21 the health system won a temporary restraining order . 22 benefis also said it stood to lose 4 million a year in revenues if central montana surgical hospital was licensed as a general hospital . 22 the company said it would likely close its renal dialysis unit suspend mercy flights shutter its nursing home and end outpatient psychiatric and chemical dependency services . 22 benefis also said it would lose several million dollars a year in federal payments as well . 22 on march 24 the injunction was lifted . 23 24 benefis filed an emergency motion with the montana supreme court three days later appealing the district court s ruling . 23 the state of montana then issued a six month provisional license to central montana to operate as a general hospital . 23 but on october 4 2006 the montana supreme court ruled 4 to 3 to uphold the district court s dismissal of the temporary injunction . 25 however the state supreme court declined to rule on other issues raised by benefis lawsuit and left open the door for the company to continue litigation in the district courts . 26 on november 6 2006 benefis declined to appeal the high court s ruling and said it would not bring the other issues back to the district court . 26 in february 2007 the clinic sued benefis to recover its legal fees . 27 a state judge ruled in september 2007 that benefis must pay these fees . 28 also in 2006 the clinic bought out benefis 49 percent ownership in the great falls clinic surgery center . 5 benefis also began a number of construction projects in 2006 . it began work on an 80 000 square foot 7 400 m2 three story 14 million medical office building and 22 private rooms in the old deaconess building at a cost of 4 million . 18 benefis also consolidated its rehabilitation and physical therapy units into one space at its east campus and moved its skilled nursing unit to its west campus . 18 it moved the montana orthopedic neurologic and rehabilitative care center monarc sports injury center and its behavioral health unit into the old nursing home space expanded its emergency room waiting area and remodeled its pediatric unit . 18 in january 2006 benefis partnered with diversified clinical services to open the benefis wound care and hyperbaric medicine center the only like it in the state of montana at the time . 29 in august 2006 benefis sletten cancer institute added a cyberknife nuclear radiosurgery system