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KU Health System And For-Profit Chain To Acquire Troubled Topeka Hospital

Jim McLean
Kansas News Service
Bob Page, left, of the University of Kansas Health System and David Vandewater of Ardent Health Services on Thursday announced a joint venture to take over operations of St. Francis Health, a 378-bed hospital in Topeka.

The University of Kansas Health System and a Tennessee-based for-profit hospital chain have agreed to rescue a troubled Topeka hospital despite possible changes in federal health policy that could hurt Kansas providers.

Officials from the KU Health System and Ardent Health Services, the nation’s second-largest privately owned for-profit hospital chain, announced Thursday that they had signed a letter of intent to acquire St. Francis Health.

Kansas Republican Gov. Sam Brownback, who along with Topeka officials helped convene discussions that led to the agreement, also participated in the announcement.

A news release issued by the acquiring partners announced they had formed a joint venture to “purchase” St. Francis and provide $50 million in operating capital in the first year. Other terms of the agreement, to be finalized over the next 60 days, were not disclosed.

Download the news release on the joint venture purchase of St. Francis Health.

Bob Page, president and CEO of the KU Health System, said the partnership with Ardent, which operates 20 hospitals in six states, ensures that St. Francis, a 378-bed hospital that has operated in Topeka since 1909, will remain open.

“By marrying our resources as an academic medical center and Ardent’s operational expertise, we secure the long-term sustainability of St. Francis Health,” Page said.

Both Page and David Vandewater, president and CEO of Ardent Health Services, thanked Brownback and Topeka Mayor Larry Wolgast for helping to broker the deal, which was negotiated in a matter of weeks.

“This transaction has happened at light speed, so there are a lot of things that we and our new partner have to sit down and figure out,” Vandewater said.

Though many operational details are yet to be finalized, the partners have agreed to “preserve jobs for virtually all of St. Francis Health’s 1,600 employees,” according to the release. In addition, while the partners will control the joint venture’s board of directors, they will establish a local board of trustees for the for-profit hospital, which the release said “will continue to be led by local management.”

Federal Health Bill A Concern

In recent weeks, St. Francis’ financial troubles became a focal point in the ongoing debate in the Kansas Legislature about Medicaid expansion. Supporters said the billions of additional federal Medicaid dollars that expansion would provide in Kansas could help prevent the closure of several struggling hospitals across the state.

Asked whether the state’s rejection of expansion and Brownback’s recent veto of an expansion bill were a concern for Ardent, Vandewater said they weren’t a factor in the discussions. But he made it clear that the company would like to see KanCare, the state’s privatized Medicaid program, expanded to cover an additional 180,000 Kansans, many of whom are uninsured.

“I’ll talk to the governor about that. Probably not make a lot of progress,” Vandewater said, glancing at Brownback and drawing laughter from many who attended the announcement.

Thursday’s vote in the U.S. House to pass a replacement for the Affordable Care Act is a concern, Vandewater said, noting the Republican replacement bill could significantly reduce the number of Americans with health insurance.

Read more about the House-approved health reform bill..

“There are individuals that need care that do not have the ability to access it,” he said. “The United States has got to figure this out. This is not a Kansas issue, this is a national issue.”

‘Unfair’ To Kansas

Tom Bell, president and CEO of the Kansas Hospital Association, applauded the effort to rescue St. Francis but said the GOP health bill could jeopardize other hospitals in the state because it treats non-expansion states unfairly.

The difference in federal funding that expansion states would continue to receive compared to non-expansion states “is tremendous,” Bell said, noting that an amendment aimed at Kansas prohibits states that haven’t yet expanded their Medicaid programs from doing so.

“So, from our perspective it’s sort of a double whammy,” Bell said. “Number one, tens of millions of people will lose coverage. Number two, it’s unfair to non-expansion states.”

Kansas 1st District Republican Congressman Roger Marshall voted for the bill, which he said includes funding to help providers cover the cost of caring for the uninsured. 

“This new legislation is going to provide more access to quality health care,” Marshall said. “It’s going to start driving prices down and it’s going to literally save Kansas hospitals.”

The bill allocates about $200 million to Kansas providers over two budget years to help offset the cost of uncompensated care, Bell said. But he said that pales in comparison to the nearly $1 billion expansion would provide. 

Though Bell expects the U.S. Senate will make substantial changes to the bill, he said its passage by the House further reduces the chances that Kansas lawmakers will make another run at passing an expansion bill in the final weeks of their legislative session.

“That’s another thing that we find really problematic with the bill,” he said. “It tells states that might be thinking about it (expansion), ‘Sorry, you didn’t do it by March 1 so you’re out of luck.’”

Jim McLean is managing director of the Kansas News Service, a collaboration of KCUR, Kansas Public Radio and KMUW covering health, education and politics. You can reach him on Twitter @jmcleanks. Kansas News Service stories and photos may be republished at no cost with proper attribution and a link back to kcur.org.

Jim McLean is a political correspondent for the Kansas News Service, a collaboration based at KCUR with other public media stations across Kansas. You can email him at jim@kcur.org.
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