Inside the Wilson Medical Center deal
By Jon Jimison, The Wilson Daily Times, N.C. | |
McClatchy-Tribune Information Services |
Supporters are looking to close a deal they believe will improve the hospital and make it more competitive in the turbulent world of health care reform. Opponents, who have started a petition in the community, say the deal has problems and they hope to turn the tide.
Dr.
"The merger is not in the best interest of our hospital nor our community, both financially and in the delivery of medical care," Russell said.
Russell is a retired physician and was a member of the
"Dr. Russell presented us with a great deal of information, all of which we will consider as we conduct our review," said
Meanwhile, the previously unseen valuation document was obtained by The
The valuation date is
The valuation report did include different approaches and valuations. A market approach with a mergers and acquisitions method in the selection of comparable transactions had a valuation of
The valuation was of the hospital's business enterprise and appeared to be in line with the
Opponents pointed out the date of the valuation. It came after the first public hearing. Duke
QUESTIONS
Russell has other concerns related to the valuation and the contribution agreement.
The agreement obligates the joint venture to spend
If Duke LifePoint sells its interest in the joint venture during that 10-year period, only "commercially reasonable efforts" will be made to compel the third party to assume the additional capital commitment.
There is no requirement for Duke LifePoint to remain in the joint venture for 10 years, Russell said.
"The capital improvement commitment of Duke LifePoint is vaporous," he contends.
One of the concerns he presented was a correlation between
"
Stroudwater was
The same is true for
Russell told the attorney general's office this information hasn't been divulged to the hospital, the trustees or the county commissioners and it raises certain questions.
The specific deal on the table calls for an 80/20 joint venture with
Both sides have spoken with the state attorney general's office as officials there must approve the deal. The latest closing target date is the end of February.
"When the
Under the proposal on the table, the hospital will continue to operate as a nonprofit.
"Under that existing corporation, the trustees serve as the hospital authority in
Russell questions whether commissioners exercised due diligence in considering these factors when they made their proposal to amend the motion to release the reverter stipulating a permanent seat on the governing board for a commissioner.
Questions have been raised as to why
Russell, along with
Vidant signed the confidentiality agreement and asked if its officials could make a visit to
He contends Vidant chose not to pursue it further as it appeared a choice of affiliation had been made.
Herman later agreed to come to
Herman and a development officer attended and also talked about what Vidant could offer in regards to a management affiliation, Russell's letter said. Several community leaders and elected officials were also in attendance, including City Councilman
At the "request of community members in
DUKE
Duke
Dr.
"Our primary goal is to strengthen
Duke
Fulkerson talked a little about where the Duke LifePoint partnership is headed.
The Duke LifePoint partnership won't be limited to
"We believe there is an opportunity outside of
When asked about potential operating efficiencies down the road, Carpenter said Duke LifePoint would look for opportunities in order to be able to deal with the kinds of pressure on reimbursement.
"But we will be very careful about how we do that," Carpenter said. "Any change like that will only be done following a long consideration taking into account the views of our joint venture governing board."
Dr.
"We need to understand the needs clearly. Both Duke and
"This is a quality operation today, and we think we will have ability to enhance quality outcomes that are achieved at
REGULATORY ENVIRONMENT
The
The Hart-Scott-Rodino Antitrust Improvements Act establishes transaction thresholds that can trigger automatic filing with the FTC.
The act requires companies to notify authorities if the size of the parties at issue and the value of a transaction exceeds the filing thresholds absent an applicable exemption.
The threshold is going up this year from
But federal officials can challenge any transaction they want. They often focus on anti-trust issues, and
Any automatic review under the threshold comes with a minimum
A recent published report noted there were about 333 hospital mergers from 2007 to 2011, according to the
About 111 of those were reported to the
Only four were challenged in court -- less than 2 percent of all hospital mergers over the last five years.
WEIGHING IN
A definitive agreement has since been reached.
The implementation of the Affordable Care Act approved by
Members of the joint venture board for
"Becoming part of a larger health system was a choice our board weighed carefully," Fleming and Carver said. "We saw the health care environment changing, with rising costs, declining reimbursements and diminishing access to capital. Yet we were being required to make significant investments in our technology and infrastructure."
They said there were ways for "us to survive on our own, but most of those involved cutting services or staff -- compromises we were unwilling to make," Fleming and Carver said. "Our board wanted MPMC not simply to survive, but to thrive and grow. A partnership was the only way we could accomplish that."
They contend Duke LifePoint has lived up to its pledges of support and investments in quality, operational excellence and technology. The joint venture has invested
"We've also seen improvements in our ER operations, patient satisfaction and physician satisfaction," Fleming and Carver said.
"MPMC's relationship has not been about losing an 80 percent stake in our hospital, as some community citizens have suggested about
The MPMC board of directors could not be more pleased to be part of Duke LifePoint, they said.
"We wish the
NEGOTIATIONS
"It was negotiated that they would run the entire operation like a tax-exempt operation, the joint venture as if it were tax-exempt,"
Stukes previously said. "That's a pretty nice concession. We're a 20 percent partner and saying you have to operate the entire operation as we've operated."
Stukes points out that the county is getting an equal voice in voting with only a 20 percent ownership interest.
Hospital officials and trustees say they did their due diligence.
The operation of the hospital and its subsidiaries would fall under compliance rules of the county's "subsequent reverter" as well as certain community and tax-exempt entity standards, including standards under
In addition, the contribution agreement states the joint venture will operate under public interest covenants for the benefit of the local community. It includes a provision for indigent care, maintaining certain services in accordance with the public hospital transfer statute, maintaining an emergency department, participation in
Phillips, of Duke, believes Duke LifePoint eventually will win over those opposed to the joint venture when they get a chance to see the results.
Phillips, a cardiologist serving as associate director of the Duke Heart Center and chief medical officer of Duke Heart Network, attended the last public hearing.
"There was a medical staff advisory board that put countless hours into this," Phillips has said. "I thought the comments made by a very unified medical staff, several articulate physicians, spoke in favor of Duke LifePoint and 25, 30 all standing up with the speakers, arm in arm, was not only a powerful statement but a powerful image. It speaks to their enthusiasm for strengthening their hospital and what they've said to a man is they want to practice the very best heath care possible in this region. We want to be sure we put the patient first and deliver the highest quality that is possible."
ASSESSING VALUES
Russell believes the valuation doesn't come close to the value of the hospital and doesn't even reach tax value or include the tens of millions in assets.
Denise Stingale, interim county manager, said the county has a value for all buildings in
Values in place now include
Hospital officials said several factors affect the purchase price for a hospital, including the quality of earnings, returns on reserves and investments that are excluded from a sale, the market position of the hospital, the degree to which the tax-exempt seller of the hospital being acquired will retain a voice in governance, and the need for the acquiring entity to make future investments in the facility.
Officials noted the hospital is in a competitive marketplace and located in an aging facility in need of significant upgrades. WilMed faces millions in so-called charity care and bad debt each year and is located in a region with significant poverty.
The
Part of the attorney general's office review of
The office, which must make a regulatory ruling before the deal can close, has requested a wide range of documents, Talley said.
Glover notes the valuation released was fully three months after the first public hearing by county commissioners.
"The valuation by
Russell points out the hospital's attorney did not receive the valuation until on or after
"The hospital administration, the trustees, the
"Certainly, I never found anyone admitting to me they had actually seen an appraisal, but all attested to its existence."
But as a large business services company, it's likely it has worked with most large health providers over the years -- for-profit and not-for-profit. The company claims 1,500 health-care related assignments over a number of years.
The company said it has no business interest in
"When you analyze the methodologies employed by
EBITA is a business acronym that stands for earnings before interest, taxes and amortization.
Russell believes the document was hastily thrown together. There's even a mistaken reference to the state of "Alabama" rather than "North Carolina" on page 33.
Russell and Glover are involved in collecting names for a petition seeking an independent appraisal.
They declined to release any names on the petition to The
They plan to take the petition to the attorney general's office, Russell said.
A specific date for state regulatory ruling remains unknown.
[email protected] -- 265-7813
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