Archive for Wednesday, November 15, 1995

REPORT OUTLINES OPTIONS FOR LMH

November 15, 1995

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The Lawrence Memorial Hospital board wants public input on two partnership proposals. A public hearing is set for 7 p.m. Dec. 20 in the LMH auditorium, 325 Maine. The board will also meet with LMH employees on Dec. 18 and 19.

Copies of the assessment are available at the hospital's executive offices, at the reference desks of public libraries in Lawrence, Baldwin and Eudora, at the Lawrence Senior Center, 745 Vt., and at the front desk of the Lawrence Chamber of Commerce, 734 Vt.

Anyone who

wants a copy of the 73-page document can send or fax a written request to LMH, 325 Maine, Lawrence 66044. Fax

A health care consultant rates Lawrence Memorial Hospital's independence preferable to partnerships with two hospital groups.

Accountants also say LMH is fine on its own, but that it should command a premium price if any for-profit corporation buys it.

And lawyers say any partnership deal with LMH, the city-owned hospital at 325 Maine, would raise complicated legal issues.

These are some of the assessments contained in a 73-page report released Tuesday by the LMH board of trustees.

The report includes evaluations by financial, health care and legal consultants of two partnership proposals presented to the board in February and March.

But the report doesn't hint at what the board or individual board members think of the proposals.

The board plans to vote on the proposals Jan. 17.

Meanwhile, a third proposal, from a group that included St. Luke's Hospital of Kansas City, Mo., is completely out of the picture -- for now.

The group, called HealthFirst, has long had internal management problems.

"We simply had nothing to analyze in terms of an organization," said Howard Mossberg, chairman of the LMH board.

That doesn't mean LMH has heard the last of HealthFirst hospitals. A number of them remain interested in partnerships with LMH and could return with new proposals, along with new proposals from other potential partners, Mossberg said.

"I don't think that would be unusual with as much turmoil as we have and as much change as we have, and we'll take them one at a time as they come."

For now, that means dealing with the two remaining proposals.

One is from a not-for-profit group of hospitals that includes the Kansas University Medical Center.

The other is from Columbia/HCA Healthcare Corp., the nation's biggest for-profit hospital chain.

The LMH board's strategic assessment includes an evaluation of the proposals by Denver health care consultant Dean Coddington, who rated both proposals less desirable than rejecting them and remaining independent.

Although he rated Columbia's offer least desirable overall, Columbia scored the highest ranking in one crucial category -- economic viability -- and other consultants who contributed to the report said that Columbia had undeniably solid financial resources.

That financial strength could translate into a better sale price for LMH, according to an analysis by a Kansas City, Mo., accounting firm, Baird, Kurtz & Dobson.

The accountants concluded that LMH "would be an extremely attractive acquisition target," worth $65 million or more.

But such a sale would come at a price for the community, the accountants said.

"An acquirer of LMH could more than double earnings in the first year through increased pricing, reduced staffing, reduced length of stay and an influx of more physicians," the accountants said.

Like Coddington, the accountants didn't recommended either partnership offers.

"We believe anyone who might acquire or control LMH has much more to gain from this transaction than does the Lawrence community," they wrote. "If you decide to sell, you have a jewel and it should be priced accordingly."

Meanwhile, legal issues could complicate any partnership deal, according to attorneys who contributed to the report.

Lawyers said:

  • The LMH trustees have a fiduciary duty to conduct and maintain LMH for the benefit of all the inhabits of the city.
  • Any partnership would require permission from a district court judge.
  • A deal with Columbia might raise antitrust issues with regulators.

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