Montana’s largest independent health system Billings Clinic is cutting salaries and implementing a hiring freeze in an attempt to cut expenses. Amid this announcement, the company’s planned integration with Flathead Valley-based Logan Health is still in the works.

Logan Health Senior Marketing Coordinator Chris Leopold said in an email to the Inter Lake on Tuesday that “many health care systems across the country are facing financial challenges in today’s environment, including Montana hospitals. We are continuing our discussions with Billings Clinic to explore how we can be stronger together.”

The two health care organizations announced in February they had signed a non-binding letter of intent “to explore uniting the two organizations into one integrated, independent, Montana-based health system.”

The Billings Clinic cuts include up to 5% pay cuts for doctors, and pausing contributions to employees’ 403b retirement plans. The hospital is also seeking to temporarily cut 10% of hospital executives’ salaries, and implementing a business travel freeze and a hiring freeze. They are also pausing all capital projects and reducing contract labor, when possible.

A release from Billings Clinic said they are focused on addressing “the serious financial challenges facing our organization this fiscal year.” They say many other health care organizations are struggling with financial woes across the country— citing a 12% rise in drug prices and an increase in their labor costs, which has risen from under 60% of their net patient service revenue to more than 70%.

In a February interview, Logan Health President and CEO Craig Lambrecht said the potential deal with Billings Clinic is not a merger, but rather an integration, with the final outcome being an entirely new organization. A new board of directors would be created with members representing both Logan Health and Billings Clinic. That board would ultimately select a new CEO and pave the path forward.

A definitive agreement for the new organization was expected this spring, with a goal to have all details and approvals finalized by summer. Boards at both hospital systems would approve terms before a deal is finalized.

The deal would include all Logan Health properties across the state, which includes the main campus in Kalispell and Logan Health Whitefish, as well as four other hospitals and more than 68 provider clinics. The organization, formerly known as Kalispell Regional Healthcare, currently employs more than 4,500 clinical and nonclinical workers across its properties.

Reporter Taylor Inman can be reached at 406-758-4433 or by emailing tinman@dailyinterlake.com