Officials Request More Information in Hospital Deal: Tennesee Company Asked to Provide Details
By John Stucke, The Spokesman-Review, Spokane, Wash.
Mar. 7–State health officials are seeking dozens of documents and want more details uncovered in a Tennessee company’s application to buy two Spokane hospitals before they begin reviewing the proposed sale.
It’s a request that could add days or weeks to a final decision by regulators on whether the sale of Deaconess Medical Center and Valley Hospital and Medical Center to Tennessee-based hospital chain Community Health Systems Inc. is in the best interest of the Spokane community.
Three letters sent to Community Health by the state Department of Health outline numerous questions about financial terms, maintaining medical services, the structure of a new charity that would be funded with sales proceeds, and governance issues of hospital operator Empire Health Services.
The application filed by Community Health totaled more than 4,500 pages. The regulators must deem the application complete before starting a formal review.
The letters were delivered to Community Health the same day a group of Spokane officials and business leaders traveled to Olympia to meet with several local lawmakers and state officials, including Secretary of Health Mary Selecky.
They urged the state to ensure the deal is not derailed by delay.
Washington laws regarding the conversion of nonprofit hospitals to for-profit institutions are considered rigorous.
The information requested by health officials includes a demand that Community Health provide documents that haven’t been edited, or redacted.
“Provide un-redacted copies of this information,” the regulators wrote, adding that any explanation justifying the secrecy of the information will be reviewed by the Washington Attorney General’s Office.
Health officials also want more explanation and documentation about a proposal by former Empire Health Chief Executive Officer Jeff Nelson to buy the organization.
A turnaround specialist who has since left Empire, Nelson put together a private equity group and expressed interest in buying Empire, but reportedly dropped that interest before the board decided on a sale to Community Health.
Other information being sought relates to potential buyers that were excluded from consideration.
In one series of questions, officials are seeking to better understand a pledge that Community would continue to offer “essential services” for 10 years after the sale.
They want a definition of “essential services” and what criteria Community would use before discontinuing a medical service.
Officials also want to know more about the discussions between Empire and Providence Health Care, which operates Sacred Heart Medical Center, regarding their joint operation of Inland Northwest Health Services.
Providence has demanded that Empire answer specific questions regarding governance, and even offered to buy Empire’s share of the joint venture for about $25 million in a letter written last month.
Health officials want answers and documentation within 45 days.
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