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Friday, 24 April 2015 08:01

Metro Health forum to discuss merger draws supporters from West Mich. health care sector

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Metro Health Corp.’s proposed joint venture with Community Health Systems Inc. gained plenty of public support Thursday, including the endorsement of a health care planning agency and the former head of the Michigan Department of Community Health.

In a period of major change in the health care industry, the Metro Health deal reflects the simple reality of the times and how many community hospitals in response are consolidating into larger health systems, said James Haveman, who retired last September from his second stint as director of the Department of Community Health.

“If we really want to practice population health that we talk about, if we really want to have the integration we’ve talked about, if really want to have the systems of care, we really need to have more affiliations and more mergers like we’re seeing here today,” Haveman said during a public forum held by the Michigan Attorney General’s office. “I urge you to move ahead expeditiously because I think this is the future and we need to move toward it quickly.”

Haveman was one of more than two dozen people who spoke at the public forum, organized as part of the state Attorney General’s routine review of proposed transactions that involve the sale of the assets of a nonprofit organization to a for-profit company. State law requires the review to assure that the charitable assets of a nonprofit organization continue for a charitable use.

The forum did not generate any opposition from speakers, several of whom had a direct connection to Metro Health as physicians or through the Metro Foundation.

In offering his support to the deal, Alliance for Health CEO Paul Brand said the emerging change in health care where health systems are reimbursed based on how well they manage the overall health of the market they serve is best accomplished through a larger organization.

“The transition to the population health model is more likely to become a reality through large health systems like CHS acquiring community hospitals such as Metro Health,” Brand said. “The economies of scale and the promised capital investments that the CHS acquisition will provide Metro will ensure that a viable local hospital is sustained and empowered to work diligently to improve the health of our community.”

Under the proposal the Attorney General’s office is reviewing, Metro Health and the Franklin, Tenn.-based Community Health Systems would form a joint venture that would assume all of Metro’s assets. Community Health Systems would own 80 percent of the joint venture and Metro Health would own the remaining 20 percent.

Community Health Systems, the largest operator of hospitals in the U.S. with 206 facilities in 29 states, has committed to making $120 million to $125 million in capital investments at Metro Health over five years, including putting $20 million to physician recruitment and practice acquisitions.

“Grand Rapids needs choice in health care,” said Michael Garrett, a local business owner and a member of the board of directors for the Metro Health Hospital Foundation. “We need CHS to bring their strengths.”

Tom Miller, president of the division at Community Health Systems that would oversee Metro Health, said the corporation “has a history of reinvesting in affiliated hospitals to enhance services, improve quality of care and improve market share.”

Backers of the deal who spoke at Thursday’s forum cited the ability of the deal to enable Metro Health to upgrade and expand medical services to better compete in the Grand Rapids-area market that includes the much-larger Spectrum Health.

“We affiliate with hospitals where we believe we can improve operations and where we can work with the local board, medical staff and associates to further enhance care for the community,” Miller said. “Metro Health meets these tenets and provides an opportunity for us to expand into Michigan and add one of the state’s fastest-growing markets to our organization.”

Among the issues that the Attorney General is reviewing is the disposition of the net proceeds from the transaction for a charitable use. In other instances in Michigan where a for-profit acquired a nonprofit hospital, the net proceeds went to a foundation for health care use.

Some speakers suggested that the net proceeds from the Metro-CHS deal go the Grand Rapids Community Foundation.

“It will be able to put these to the greatest use,” said Lody Zwarensteyn, the former head of the Alliance for Health who retired last year.

A valuation report submitted to the Attorney General by Metro Health indicates that $45.1 million in net proceeds from the joint venture – $34.4 million from the sale after net debt and liabilities, plus $10.7 million in existing foundation assets – would go to Metro’s foundation. The Attorney General’s findings could alter that amount.

Directors at Metro Health chose Community Health Systems as a partner after seeking proposals that attracted for-profit and nonprofit suitors, including the University of Michigan Health System and Trinity Health, which owns Mercy Health Saint Mary’s in Grand Rapids and Mercy Health Muskegon.

“CHS would bring strengths and resources from one of the largest and most successful health care organizations in the nation,” said Doyle Hayes, chairman of Metro Health’s board of directors.

One former executive at Metro Health, however, said he would have preferred to see Metro Health make a deal with the U of M Health System.

“It really is a shame that U of M is not here tonight,” said Ken Nysson, Metro Health’s former vice president for strategic planning. “We really don’t know what would have been the results of having U of M here in this community.”

The forum also drew three nurses who work at the Community Health Systems-owned Affinity Medical Center in Massillon, Ohio. They contended that the health system maintains nursing levels that are too low and unsafe for patients.

They asked the Attorney General’s review team to impose standards of care and oversight into its review and any final approval of the deal.

Read 2270 times Last modified on Monday, 08 June 2015 10:32

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