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Kansas City-Area Hospital Sale Finalized

Providence Medical Center, in Kansas City, and St. John Hospital, in Leavenworth, are now among the two dozen hospitals owned by Prime Healthcare—a for-profit company based in California.  The Catholic organization selling the hospitals, the Sisters of Charity of Leavenworth Health System, announced the deal two months ago.  As part of the arrangement, Prime Healthcare agreed to maintain the level of charitable care the hospitals currently provide.  At a public hearing, Kansas Attorney General Derek Schmidt said that was one of his main concerns in reviewing the sale.

"Section 7.10 of the asset purchase agreement requires Prime Healthcare to adopt and maintain the same charity commitments to the medically indigent," said Schmidt. "However, I notice that there is no enforcement provision in this section of the agreement by anyone."

Schmidt okayed the sale, after Prime made a legally binding commitment to ongoing charity care, and to create a formal community advisory board.  The company has also pledged to continue emergency room and acute care at both hospitals for at least five years.  Those promises are vital, according to Brenda Sharpe, who heads the REACH Healthcare Foundation.

"Wyandotte County ranks among the lowest in the county health rankings in this state," said Sharpe. "And it is critical that we have these services, and that the folks who need those services don’t get shut out of a hospital, and then are filtered out to an already struggling and over-tapped and overburdened safety net infrastructure that we are trying to support."

Sharpe urged Schmidt to take a lot of extra time studying the agreement to make sure the community and its vulnerable populations are protected.  She noted that the REACH foundation itself was created in the wake of a hospital sale, and 10 years later, that agreement is still being litigated.  Schmidt approved the Prime Healthcare deal a little more than four days after the hearing. 

Terms of the sale remain confidential. That was a concern for at least a few of the people who attended the hearing.  Some were also critical of Prime’s business practices. Kim Davis is an admissions worker at one of Prime’s hospitals in California, and a leader of a union involved in a labor dispute with the company.

"I know that I risk being fired for telling you that you should scrutinize this sale very closely," said Davis. "Prime is making hundreds of millions of dollars, but at a cost to caregivers and communities.  We have so many great employees at Garden Grove Hospital, but Prime is focused on the bottom line, and nothing but.  The company treats its employees no better than it treats the federal government."

That’s a reference to allegations—currently under federal investigation—that Prime inflates Medicare billing by over diagnosing elderly patients with conditions that trigger high payments from the federal government.  After the hearing, Attorney General Schmidt said those concerns will be monitored.

"We will, of course, expect whoever operates these facilities going forward, assuming they remain open, to comply fully with the requirements of both Kansas and federal law while they’re doing business in Kansas," said Schmidt.

In the press release announcing his approval of the transaction, Schmidt said those concerns would be relayed to officials who oversee medical billing by providers in Kansas, including the Medicaid Fraud Control Unit in his office.  For its part, the company accuses the union Kim Davis represents of engaging in a vicious anti-corporate campaign against Prime Healthcare.  Absent clear evidence of illegality, Schmidt said he would not substitute the state’s judgment for that of the seller, who knows the community and what’s at stake in the sale.  And the seller, the Sisters of Charity, felt they simply couldn’t sustain the two hospitals, which lost more than 78-million dollars over the last ten years.

"No one ever said this, but the writing was on the wall," said Dr. Sabato Sisillo, a pulmonogist and member of the volunteer board that oversees Providence and St. John. "If we did not find a buyer, the hospital was going to close."

Sisillo and other officials at the hospitals see the purchase by Prime as a lifeline. Hospital officials contacted 45 health care companies nationwide in search of a suitor. Only three actually submitted bids, according to the President and CEO of the organization selling the hospitals, Michael Slubowski.

"Only Prime was committed to maintain the existing charity care policies. They were the only provider that was willing to provide the binding commitment to maintain the emergency centers, and acute care services at both hospitals," said Slubowski. "And in the current times, with health care reform underway, and all of the uncertainty with coverage for the poor and underserved, a five-year commitment is a huge commitment on a going forward basis."

But for low-income residents of Wyandotte and Leavenworth counties who rely on Providence and St. John hospitals, five years may not sound like a very long time at all. 

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