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Providence hearingKansas Attorney General Derek Schmidt listened to testimony Wednesday night about the sale of Providence Medical Center. The public hearing was held at the George Meyn Center, Wyandotte County Park, Bonner Springs. (Staff photo by Mary Rupert)
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Providence hearingThe SCL Health System officials said there will be no net proceeds from the sale. Proceeds were estimated at $60 million, bond debt was estimated at $103 million, and operations losses were estimated at $78 million, leaving a $121 million deficit to be absorbed by SCL Health Systems, according to the owners who presented this slide.
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Providence hearingKansas Attorney General Derek Schmidt, center, listened to testimony Wednesday night about the sale of Providence Medical Center. The public hearing was held at the George Meyn Center, Wyandotte County Park, Bonner Springs. (Staff photo by Mary Rupert)
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Providence hearingRoy Robinson, chairman of the board of Providence Medical Center, said, “The sale is a win-win-win.” It was the best solution for SCL Health System, Prime Healthcare and the citizens of the community, he said.
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Providence hearingMayor Joe Reardon sent a letter to the attorney general asking him to protect the public interest in the sale of Providence Medical Center.
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Providence hearingThere was a large turnout and the parking lot at the Meyn Center was filled to capacity for the public hearing Wednesday night on the sale of Providence Medical Center. (Staff photo)
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Providence hearingA slide in the Providence presentation outlined the investments Providence has made in the community during the past 10 years.
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Providence hearingDespite the investments, the operating losses exceeded $78 million in the past 10 years, according to this Providence slide.
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Providence hearingThis Providence slide stated that only Prime Healthcare committed to important concepts such as maintaining existing charity care policies, providing a five-year agreement to maintain emergency and acute care services, and being willing to continue elements of Catholic heritage at both hospitals.
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Providence hearingThis slide from Prime Healthcare stated that the health care organization was ranked in the top 15 in the nation.
Patty Ingraham, an intensive care unit nurse, went through the closing of Bethany Medical Center in 2001. Now, almost 11 years later, she works at Providence Medical Center, which is slated to be sold to a for-profit company.
Ingraham, a Kansas City, Kan., resident, testified at a public hearing Wednesday night on the sale of Providence. She was one of the 300 Bethany employees who came to Providence in 2001 when Bethany closed.
“My family went through all this change,” Ingraham told Derek Schmidt, the Kansas attorney general, at the hearing. Change is now the norm in the field of health care, she added. “The changing and renewing and revising is what you have to do every day.”
Nationally, there is currently a trend toward more mergers or sales of hospitals while the industry adjusts to changes from the Affordable Care Act and tries to decrease costs.
Ingraham said her passion is to take care of patients, and that will not change. She said she sees the future not as a challenge but as an opportunity to make Providence Medical Center the best.
While the current owners, some community leaders and some employees asked the attorney general to approve the sale, he also was asked Wednesday night to protect the public interest in the sale of the nonprofit Providence Medical Center to Prime Healthcare, a for-profit corporation. The public hearing was held at the George Meyn Center, Wyandotte County Park, Bonner Springs.
The attorney general was asked by the mayor to intervene to ensure that Wyandotte County residents are protected. A letter from Mayor Joe Reardon was read by the mayor’s senior policy adviser, John Jurcyk. The attorney general was asked to make sure that citizens were protected and to make sure the sale was in the best interest of residents, especially because all of the details of the transaction were not made public.
Also at the hearing, an employee who is with a labor union at one of the health care system’s California locations told the attorney general to be cautious in approving this sale.
Providence has no net proceeds, officials say
Officials with SCL Health System said Wednesday night that there will be no net proceeds from the sale. Proceeds were estimated at $60 million, bond debt was estimated at $103 million, and operations losses were estimated at $78 million, leaving a $121 million deficit to be absorbed by SCL Health Systems, according to the owners. There will be no funds available for a community charitable fund, but SCL Health Systems will continue operating the Duchesne Clinic here for the needy.
When the purchase agreement was announced Jan. 29 by SCL Health System and Prime Healthcare, some of the terms of the sale, including the purchase price, were not disclosed. Providence, along with St. John Hospital and the Providence Place nursing home, are to be sold to Prime Healthcare under the agreement. Prime agreed to keep emergency room and acute care services for five years, and also agreed to maintain at least the same level of charity care, according to a spokesman. SCL Health System is keeping the Duchesne Clinic that serves the needy, as well as the St. Vincent Clinic in Leavenworth, and the Providence St. John Foundation.
Providence Medical Center, 8929 Parallel Parkway, is the only acute care hospital on the west side of Wyandotte County.
Mayor asks AG to look into five concerns
The mayor’s letter, dated March 19, listed five concerns the attorney general was asked to determine:
- “The terms of the sale to determine the reasonableness of the sale price.
- That the sale is in the best interest of the public and the residents.
- Considering that local citizens over the years made charitable gifts to the hospital or its foundation for improved health care in our community, to ensure that a portion of those sale proceeds attributable to the facilities in Wyandotte County be used to further health care in our county.
- Ensure that the new owner has the financial capacity to continue operating an acute care hospital with emergency room services and that the sale contract obligates the new operator to this commitment.
- Verify that there are enforceable provisions requiring the buyer to provide for charitable care for the uninsured at the same level as has been provided at Providence.”
Some urge caution in approving sale
During testimony Wednesday night, Brenda Sharpe, president and CEO of the Reach Healthcare Foundation, asked all participants to be as transparent as possible in disclosing the terms of agreement. She said terms need to be well defined so there are not questions in the future about them.
Ten years ago, Health Midwest was sold to Hospital Corporation of America, and the Reach Healthcare Foundation was formed, Sharpe said. Today, there is still litigation over the lack of clarity in the terms used in the sale, Sharpe said.
Sharpe asked the attorney general to take a lot of extra time to protect the community’s interests, in making sure the terms of the agreement are “crystal clear.”
Jeremy Henderson of Kansas City, Kan., referred to research about Prime Healthcare and its operations in California. He asked the attorney general to put a hold on the sale and to require SCL Health Services to sell the hospital in a transparent method.
An employee of a California hospital who is a member of a labor union stated that there was a labor dispute involving Prime Healthcare and employees. Sobbing at times, she said the company focused on the bottom line, and that the employees were very vulnerable. She requested that the attorney general scrutinize the sale very closely and ask if there is a better way.
Selling or closing
At the public hearing Wednesday night, current owners of Providence described a choice between either selling the hospital or closing it. The hospital has lost $78 million in the last 10 years, according to Michael Slubowski, president and CEO of SCL Health System. This is the best opportunity for keeping Providence Medical Center open, according to Slubowski.
“There are no golden parachute agreements,” Slubowski said. None of the directors who approved the sale had a conflict of interest, he added.
Hospital officials said that 45 contacts with potential buyers were made, and three were interested enough to submit bids. Of those, only one agreed to maintain acute care and emergency room operations at both hospitals.
Randy Nyp, president and CEO of Providence-St. John hospitals, said he had observed that some Wyandotte County residents were going elsewhere for their hospital care. The hospital lost more than 20 percent of its patients to other facilities. Doctors and medical personnel were being recruited to work at other hospitals, and often, their patients followed them.
One Wyandotte County resident later verified a similar experience with his specialist, who formerly was at Providence, but then changed to a Johnson County hospital, sending patients there.
However, Nyp said there was still a base of loyal employees, volunteers and patients that could be built on.
About 25 percent of the patients who come to the emergency room do not have insurance, Nyp said. The emergency rooms are averaging about 130 patients a day.
Not only did the hospital’s patients decline, but also, the population of the community declined between 1970 and 2010. According to census records, Kansas City, Kan., lost about 22,000 residents since 1970, with most of the loss occurring between 1980 and 1990. The population trend has stabilized recently around 146,000, and officials point to new housing under construction now.
Also speaking at the hearing was one of the doctors who stayed with Providence, Dr. Sabato Sisillo, a pulmonologist who is the president of the Providence medical staff. Dr. Sisillo said he was a pulmonologist at Bethany Medical Center in Kansas City, Kan., when it closed in 2001, then he was asked to attend at Providence.
“I’m asking the attorney general to put your approval on this transaction,” he said. “We are very, very happy to have a for-profit organization to invest some money.”
Another speaker was Roy L. Robinson, Providence Medical Center chairman of the board.
“The hospitals haven’t done well for quite a while,” Robinson told the attorney general. The choice was either to shut down the hospitals or find a buyer, he said.
“The sale provides us with a new beginning,” Robinson said. “The loss of the hospital would have been devastating.”
The sale provides a five-year window of opportunity for the acute care and emergency levels of service, it provides for the continuing care of patients, and it provides needed jobs, he said. Most of the physicians and full-time associates will be part of the new organization, he said.
“The sale is a win-win-win,” Robinson said. It was the best solution for SCL Health System, Prime Healthcare and the citizens of the community, he said.
Officials of the SCL Health Systems also described meeting with hospital personnel in a city in Nevada where Prime Healthcare became the owner, and said those involved were very pleased with the change.
Jim Somerset, regional CEO for Prime Healthcare, said that some changes are planned, but for the most part, the new owners would keep the management and employees, maintaining the services here. Prime Healthcare also has agreed to a $10 million investment in capital projects for the next five years, he said. He said the company values quality, profitability and quality of work life.
“On day one, it will look like business as usual,” he said, adding there would be different support in place.
“We need this hospital,” said Cindy Cash, president-CEO of the Kansas City, Kan., Area Chamber of Commerce. “It employs close to 1,000 people. … We don’t want to lose those jobs.”
The community also doesn’t want to lose the businesses here that do business with the hospital, she said. She asked the AG to approve the sale, saying that it would bring new investment and new stabilization.
Greg Kindle, president of the Wyandotte Economic Development Council, also supported the sale. He said it has a direct economic benefit on the community, and hospitals are an important asset to the community.
Maureen Mahoney, an attorney who is on the SCL Health Services board, said it matters to everyone in Wyandotte County where they can go for medical treatment. She said with more than a thousand new apartments being built in western Wyandotte County, there will be an increased need here for health care. As a member of the committee that made the decision to sell the hospital, she said nothing was taken lightly, and the committee deliberated very carefully.
“This was the best option for us,” Mahoney said, asking for approval of the sale.
Prime Healthcare Services, a for-profit entity, is based in California, and has 21 hospitals in several states.
State Rep. Tom Burroughs, who attended the meeting, said after the hearing that he thought Providence’s presence in this community is very important. He supports making sure that Providence continues to keep its doors open and providing health care to the residents of Wyandotte County.
The attorney general will accept written comments on the sale of the hospital through Friday, March 29, at his office in Topeka, then is expected to review the information and make a decision on whether to approve the sale.