Government and Health Care

Public airs support, concerns over Metro/CHS deal

May 1, 2015
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The proposed Metro Health affiliation with CHS prompted widespread support, as well as some concern, at a recent hearing included in the Attorney General’s review process.

During the public community forum hosted by the State of Michigan Department of Attorney General April 23, more than 30 individuals provided comments and concerns on the proposed joint venture between Metro Health and Community Health Systems.

While the majority of speakers expressed their support of the 80 percent ownership sale of a newly formed limited liability company known as Metro Health Holdings to a subsidiary of CHS, others expressed their concern regarding net proceeds from the sale, the protection of charitable assets and local control.

Dr. David Albrecht, an internal medicine physician at Metro Health Southwest and member of the Metro Health Hospital Board, said the physicians who were involved in the decision believe the proposed venture is the best option to move the organization forward, and their No. 1 priority is ensuring the current culture will continue.

“I want to be able to serve my community, but I have to have a health system and we want to take this to a place that is a lot better,” said Albrecht. “There are challenges in health care and it is going to be hard work, but I can tell you the physicians at Metro, the nurses at Metro, are on board for this, and we will work hard and the delivery and the care will be good.”

Dr. William Cunningham, assistant dean for academic affairs at Michigan State University’s College of Osteopathic Medicine and a Metro Health consultant, read a written statement provided by Dean William D. Strampel in support of the venture.

“Metro Health is a longstanding statewide campus system partner providing graduate education to over 60 to 70 medical students and residents in the Grand Rapids area each year. We look forward to continuing this critical partnership with the proposed joint venture between Metro Health and the Community Health System.”

A number of other individuals who provided supportive comments included Jack Poll, mayor of Wyoming; Patrick Reid, CEO of Orthopaedic Associates of Michigan; Peter MacGregor, state senator of the 28th District; Tom Hooker, state representative of Byron Center and Wyoming; Mark Tanis, president and founder of The Image Group; Reed VanderSlik, COO and CFO of Porter Hills; Paul Brand, president of Alliance for Health; and Doug Dietzman, executive director of Great Lakes Health Connect.

Nurses representing Affinity Medical Center, based in Ohio and owned by CHS, were also present during the public forum. Both Debbie McKinney, an R.N. on a medical telemetry floor, and Pam Garden, R.N. in the ICU, expressed concerns regarding CHS’s unsafe practices from a nursing perspective, such as short staffing, lack of supplies and insufficient technology.

Nischit Hegde, senior research analyst for National Nurses United, said while this transaction may be Michigan’s first experience with CHS, nurses and their communities throughout the country have spent years contending with their practices.

“Many of these objections have focused on poor staffing within CHS facilities. Since 2014 alone, CHS has had to settle lawsuits costing the company at least $160 million relating to allegations of knowingly and improperly billing government health care programs and violating physician self-referral laws, and violations of the false claims act,” said Hegde.

The U.S. Department of Justice announced Aug. 4, 2014, that CHS agreed to pay $98.15 million to resolve multiple lawsuits alleging the company knowingly billed government health care programs for inpatient services instead of as outpatient or observation services.

Jim Haveman, former director of the Michigan Department of Community Health who spoke as a private citizen, said he is supportive of the affiliation and has watched similar mergers take place across the state, including in the Upper Peninsula and on the east side of the state.

“We need to have more affiliation and mergers like we are seeing here. I support it, but I also want to say Metro has been a great partner with the state of Michigan. I think it is important … they continue these commitments as a partner with the state and continue these fine programs they have,” said Haveman. “I also wanted to say I have really seen the benefit of community foundations around this state. We have a great organization and we have a strong community foundation here in Grand Rapids. I like the support for the community foundation as you look at the proceeds.”

Others expressing concern over the net proceeds and charitable assets lent their support of the Grand Rapids Community Foundation as a viable option for the Attorney General to consider during the review process, including Diana Sieger, president of GRCF, Ken Nyssan, former vice president of planning at Metro Health speaking as a Grand Rapids resident, and Lody Zwarensteyn, former president of Alliance for Health speaking as a private citizen.

Bob Schellenberg, certified public accountant and attorney at Schellenberg & Evers PC, said the GRCF is an existing resource that could be used as a receptacle for the proceeds of the proposed transaction.

“They would provide what I call those checks and balances through an institution as opposed to personalities and people who change over time,” said Schellenberg. “It is a long-standing institution that has developed the policies and procedures to carry out donative intent and do all those administrative things that need to be done when handling those kinds of funds.”

The Attorney General oversees and protects charitable assets under Michigan law and as part of the review process considers a number of factors, such as overall fairness of the transaction to the public, a fair bidding process, that the seller receives at least fair market value for its charitable assets and those assets remain charitable, and adequate enforcement to hold the buyer to its promises.

Katie Huckle, senior residential loan officer with Independent Bank in Cadillac and co-owner of Cadillac News, served as president of the Cadillac Mercy Hospital Foundation board of directors when Trinity Health sold the hospital to Munson Healthcare Feb. 1, 2015. Despite assurances the $14 million in charitable donations would transfer with the sale of the hospital to maintain local control, Huckle said roughly one month and 14 days prior to the sale, Trinity Health decided to maintain ownership of the funds.

“It is critical that the buyer and the seller of Metro legally lock down a plan for the proceeds and the foundation assets and that they are transparent, that the plan benefits community health care,” said Huckle. “It takes courage to ask questions and resolution requires resolve, and I wish you the very best with your transition.”

The public forum was facilitated by members of the Attorney General’s review team and allowed leadership representatives of Metro Health and CHS to testify on behalf of the joint venture proposal. The review team consisted of Joe Potchen, assistant attorney general and division chief of corporate oversight; William Bloomfield, assistant attorney general and attorney of corporate oversight and charitable trust; Joseph Kylman, charitable trust auditor; and Carol Isaacs, chief deputy attorney general.

Doyle Hayes, board chair of Metro Health Corp., spoke on behalf of Metro Health and said the organization is “excited about the opportunity and believe it will preserve a choice in local health care for patients, physicians and employers.”

Tom Miller, president of Division V Operations with CHS, said CHS has a history of “reinvesting in affiliated hospitals to enhance services, improve quality of care and increase market share” and recognizes health care is local and the needs of each community are unique.

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