Monday, April 1, 2013

Kansas Attorney General: Charity care commitment clears way for sale of Providence and St. John hospital

The new owner of hospitals in Wyandotte and Leavenworth counties has agreed to enter into a binding agreement with the State of Kansas to maintain charitable health care and hear community input about its operations for at least the next 5 years, Kansas Attorney General Derek Schmidt announced today.

Prime Healthcare Services, Inc., and its local affiliates have committed to enter into a binding agreement with the Attorney General to continue providing charitable care in the Kansas City and Leavenworth communities at a level at least equal to that provided by the hospitals’ prior owner, the Sisters of Charity of Leavenworth Health System, Inc.

Schmidt said the legally binding commitment to ongoing charity care and to maintaining a formal community advisory board, once it is formally executed, would provide sufficient assurance to allow him to take no action to block the sale.

Under Kansas law, the Attorney General is responsible for ensuring that the sale of charitable assets to a for-profit organization sufficiently complies with the public interest.

In this case, Schmidt said the difficult financial condition of the two hospitals and the likelihood they would close without the infusion of new capital by the new owners was compelling.

“The communities in Leavenworth and Wyandotte Counties rely on the services provided by these two hospitals,” Schmidt said. “Keeping them open so they continue to provide health care services was clearly the top priority for the affected communities, and the new owner’s additional binding commitment to continue listening to community input and to maintain charitable care confirm that this sale is a satisfactory option.”

Last week, Schmidt conducted a public hearing in Kansas City to hear public input about the proposed sale.

The majority of people and organizations who testified favored the sale, and Schmidt said concerns raised by others are addressed by the binding commitments to ongoing charitable care and community input. Schmidt said he found to be compelling the testimony by the hospitals’ prior owner that it was not financially capable of continuing to operate the hospitals.

Schmidt also commissioned an independent review of the transaction, which confirmed that the sale price was reasonable, that the purchaser was the highest qualified bidder and that all of the sale proceeds would be applied to the former owner’s outstanding debt leaving none for other charitable purposes.

Schmidt noted that one person who traveled from California to testify at last week’s hearing raised concerns about some of the new owner’s billing practices and other conduct at hospitals it owns in other states.

Schmidt said that information would be relayed to officials who oversee medical billing by providers in Kansas, including the Medicaid Fraud Control Unit in his office.

“Kansas will, of course, expect these new owners not only to live up to their commitments in this transaction but also to diligently comply with all aspects of Kansas law in their operations here,” Schmidt said.