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Archive for Thursday, March 13, 2003

Tentative accord on sale of hospitals reached with A.G.

Agreement between Kline, Health Midwest said to assure charitable foundation

March 13, 2003

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— Health Midwest has reached a tentative agreement with Kansas Atty. Gen. Phill Kline in their battle over the nonprofit company's sale to HCA Inc., a newspaper reported Wednesday.

The $1.13 billion deal was scheduled to close March 31. A court battle had threatened to delay the sale to HCA, a Nashville-based for-profit company.

Leaders in the Kansas Legislature told The Kansas City Star that Kline briefed them Tuesday on the potential settlement that would allow the sale of 14 hospitals in Kansas and Missouri, most of them in the Kansas City metropolitan area. Drafts were also sent to Health Midwest and Missouri Atty. Gen. Jay Nixon.

Kline confirmed that he met with lawmakers and the Governor's Office but declined to provide details, other than to say, "Health Midwest has negotiated in good faith."

Health Midwest officials would not say if they planned to accept the settlement offer but said no deal had been signed.

Health Midwest spokesman Chris Whitley said, "We remain in contact with the (Kansas) attorney general's office, and we remain optimistic that something can be worked out, but we're not there yet."

Lawmakers said the proposed settlement would ensure a Kansas foundation would be created with at least 20 percent of the net proceeds from the sale, the Star reported. The net proceeds -- money left after Health Midwest's debts are paid -- are expected to total as much as $700 million.

They said the proposal would give Kline, Gov. Kathleen Sebelius, top legislators and Health Midwest a say in selecting directors for the charitable foundation.

The Star reported that under the tentative agreement, the Kansas foundation would make grants with a focus on health care for the indigent.

Members of the foundation board would "reflect the geographic, ethnic, gender, age, socio-economic and professional diversity of the counties comprising the Health Midwest service area."

Board members also would be expected to have demonstrated expertise in health care, asset management, investment strategies, philanthropic administration and related areas.

Kansas House Speaker Doug Mays, R-Topeka, said, "I am pleased with the progress and concur with what the attorney general has proposed for the settlement."

Kansas Senate Minority Leader Anthony Hensley, D-Topeka, said of the settlement, "I've looked at it, and it looks fairly favorable."

Although a Kansas settlement does not require the signature of the Missouri attorney general, officials said Nixon's approval would help ensure that the deal is completed.

Assistant Missouri Atty. Gen. Chuck Hatfield said drafts of the agreement "have been exchanged and some of those drafts have been shared with Missouri."

A settlement would end a complex court battle between Kansas and Health Midwest.

Nixon early on exercised his authority to ensure a charitable foundation would result from the sale of Health Midwest. Former Kansas Atty. Gen. Carla Stovall pressed Health Midwest to guarantee 20 percent of the sale proceeds would remain in Kansas.

Health Midwest filed lawsuits in Kansas and Missouri challenging the authority of both attorneys general. Subsequently, Health Midwest settled with Nixon.

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