More guar­an­tees sought in HealthOne deal with HCA, and other news

More guar­an­tees sought in joint ven­ture sale to HCA

Modern Healthcare - - MODERN HEALTHCARE - Vince Gal­loro

The two pub­lic hear­ings on the pro­posed sale of the Colorado Health Foun­da­tion’s 40% in­ter­est in the HealthOne joint ven­ture to ma­jor­ity part­ner HCA in­cluded new de­mands for Colorado At­tor­ney Gen­eral John Suthers to re­quire more guar­an­tees re­gard­ing low­in­come pa­tients and keep­ing HealthOne’s hos­pi­tals open.

In a let­ter to Suthers’ of­fice and in com­ments made last week at the hear­ings, the Colorado Cen­ter on Law and Pol­icy said it sup­ported the foun­da­tion’s de­sire to cash out its stake in HealthOne in or­der to con­cen­trate on mak­ing health­care-re­lated grants. The cen­ter does not have an opinion on whether the $1.45 bil­lion the foun­da­tion would re­ceive un­der the deal is a fair price.

The cen­ter also urged Suthers to im­pose five con­di­tions on the deal—four on HCA and one on the foun­da­tion. On HCA, the cen­ter urged elim­i­nat­ing a non­com­pete clause that would re­strict the foun­da­tion; ad­just­ing the dol­lar value of HCA’s com­mit­ments on char­ity care, com­mu­nity ben­e­fits and other mat­ters by med­i­cal in­fla­tion; guar­an­tee­ing that none of HealthOne’s seven hos­pi­tals would be closed for at least 10 years; and giv­ing the foun­da­tion six seats on an eight-mem­ber over­sight board, rather than the pro­posed 4-4 split. The cen­ter also urged Suthers to re­quire the foun­da­tion to re­port for at least three years on its in­vest­ment ad­vis­ers to en­sure that there are no con­flicts of in­ter­est. The cen­ter dis­closed that it has re­ceived grants from the foun­da­tion.

Other crit­ics of the sale sug­gested in a 14page po­si­tion pa­per, un­veiled at the first of the two hear­ings, that it’s not in the pub­lic in­ter­est for the foun­da­tion to lose the con­trol it shares with Nashville-based HCA over the hos­pi­tals and the price is not fair mar­ket value. Ten former mem­bers of the boards of the foun­da­tion, its pre­de­ces­sor or­ga­ni­za­tion or the joint ven­ture it­self signed the let­ter, in­clud­ing six physi­cians.

The foun­da­tion has ar­gued that the sale would diversify its port­fo­lio, al­low­ing it to fo­cus on mak­ing health­care-re­lated grants in­stead of help­ing to run a health­care sys­tem with seven hos­pi­tals and 13 am­bu­la­tory surgery cen­ters. The let­ter sug­gests that the joint ven­ture could bor­row money and make pay­ments to its own­ers that would al­low the foun­da­tion to cash out part of its in­vest­ment and thereby diversify, yet still re­tain its over­sight role.

More­over, the former board mem­bers ar­gue that the re­turns from its HealthOne stake are bet­ter than what the foun­da­tion could ex­pect to earn on a di­ver­si­fied in­vest­ment port­fo­lio. The foun­da­tion, in a white pa­per is­sued in June, con­tends that the re­turns from the joint ven­ture are highly vari­able, and the prospects from a health­care ser­vices busi­ness are es­pe­cially un­cer­tain for the fore­see­able fu­ture.

Dede de Percin, ex­ec­u­tive di­rec­tor of the Colorado Consumer Health Ini­tia­tive, said in an e-mail that her or­ga­ni­za­tion does not op­pose the sale. The CCHI sup­ports the law cen­ter’s sug­gested con­di­tions, not­ing that the lawyer who drew them up served un­til re­cently on the or­ga­ni­za­tion’s board, de Percin wrote. The CCHI also would like to see the com­mit­ments to Med­i­caid and unin­sured pa­tients more clearly spelled out, de Percin added. The CCHI has re­ceived nearly $1.4 mil­lion in op­er­at­ing and other grants from the foun­da­tion since 2006, ac­cord­ing to de Percin.

An­other not-for-profit agency that has re­ceived grants from the foun­da­tion, Men­tal Health Amer­ica of Colorado, also spoke in sup­port of the sale at both hear­ings, ac­cord­ing to Jacy Con­radt, MHAC’s com­mu­nity re­la­tions man­ager. The foun­da­tion and the MHAC work to re­duce bar­ri­ers to re­ceiv­ing men­tal health­care ser­vices, Con­radt wrote in an e-mail. The MHAC has re­ceived $310,000 from the foun­da­tion since 2006, ac­cord­ing to Con­radt.

The Colorado Com­mu­nity Health Net­work also sup­ports the sale, said Ross Brooks, the net­work’s chief op­er­at­ing of­fi­cer. The foun­da­tion has in­creased its sup­port of com­mu­nity health cen­ters by fund­ing the CCHN’s pro­grams for the cen­ters on cap­i­tal de­vel­op­ment, op­er­a­tions, qual­ity im­prove­ment, tech­nol­ogy and work­force de­vel­op­ment, Brooks said in an in­ter­view. In 2011, the foun­da­tion is mak­ing grants of about $500,000 to the net­work, up from about $50,000 in 2006, when the foun­da­tion funded a CCHN pro­gram that helps unin­sured res­i­dents qual­ify for Med­i­caid and chil­dren’s health pro­grams, Brooks said. In ad­di­tion, the foun­da­tion pro­vides mil­lions of grants di­rectly to com­mu­nity health cen­ters that are CCHN mem­bers, he said.

The sale will help the foun­da­tion meet its com­mit­ment to dou­ble the num­ber of Coloradans who have a com­mu­nity health cen­ter as their med­i­cal home from 500,000 to 1 mil­lion over the next decade, Brooks said. “I re­ally do re­spect and trust the judg­ment of the Colorado Health Foun­da­tion in this di­vesti­ture” of its HealthOne stake, Brooks said.

A hear­ing on the pro­posed sale of the Colorado Health Foun­da­tion was held at Rose Med­i­cal Cen­ter, above, in Den­ver.

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