KU hospital forming partnership to purchase St. Francis hospital in Topeka; hospital will convert to for-profit status
Topeka ? The University of Kansas Health System announced Thursday that it has reached an agreement to partner with Nashville-based Ardent Health Services to take over the financially troubled St. Francis hospital in Topeka.
During a news conference at St. Francis Thursday, KU and Ardent officials said many details of the takeover are yet to be worked out, including what will happen to the hospital’s affiliated clinics, what relationships it will have with various insurance companies, or even what the hospital’s name will be once the deal is complete in about the next 60 days.
“This is two days old, really,” said KU Health System president and CEO Bob Page. “So now, in the next 58 to 60 days, we’ve got to figure out how we structure the relationship, and how we work with various managed care organizations will be right at the top of the list.”
One thing that is known, however, is that Ardent will be the primary manager of the hospital, and it will convert to for-profit status.
Kansas Attorney General Derek Schmidt said previously that he has launched an investigation to determine the amount of charitable assets that St. Francis currently has in Kansas and that he will take steps to ensure those assets remain in Kansas.
In previous deals in which nonprofit charitable hospitals have been acquired by for-profit companies, the charitable assets of the hospital were converted to form a health-related foundation.
Ardent currently owns 20 other hospitals around the country. But for KU, the deal to acquire St. Francis represents the first time it has ever branched out to take ownership of another pre-existing facility.
Page, however, said it may not be the last.
“If you go back to our statutory mission, back in 1998 when (the KU Hospital Authority) got created, it really is about improving the health of Kansans,” Page said. “We had to spend 10 years figuring out how to right our ship. Once we did that, you can see we started gradually forming a variety of partnerships. This is yet another model.”
St. Francis is licensed as a 378-bed hospital that employs about 1,600 people in the Topeka area.
In a news a joint news release from KU Health System and Ardent, the companies said the deal will allow St. Francis to remain open and preserve the jobs of “substantially all” of St. Francis’ employees.
It will also provide St. Francis with a $50 million infusion of capital.
St. Francis is currently owned by Denver-based SCL Health, a Catholic-affiliated nonprofit company formerly known as the Sisters of Charity of Leavenworth.
SCL Health has been trying to sell St. Francis since last summer. It announced two weeks ago that if it did not find a buyer soon, it would discontinue operating the hospital this summer.
Gov. Sam Brownback, who attended the news conference, said he reached out to KU Health System once that announcement was made, and the deal to acquire St. Francis through a partnership with Ardent was all put together in that two-week period.
“Thank you for all of those people pulling together to see that today, we’re going to have growth in health care in northeast Kansas, growth in it in Topeka, stability here at St. Francis, a new day moving forward,” Brownback said. “It’s not going to be the end of St. Francis. It’s going to be the moving forward, and another chapter, in great health care.”
The changes at St. Francis are happening at a time when the business landscape of health care in the United States is changing rapidly.
Just hours after KU and Ardent announced the deal, the U.S. House voted to pass a bill repealing significant parts of the federal Affordable Care Act, commonly known as Obamacare, a law that was aimed at extending health coverage to virtually all Americans.
That measure still has to pass through a more closely divided U.S. Senate, which is expected to take up the measure this summer. But if it becomes law, it would dramatically change the health care marketplace in the U.S.
Page, however, said it was impossible to tell how that would affect the financial viability of St. Francis in the future.
“If I could answer that question, I probably could stop working and go buy an island because I’ll tell you, my colleagues around the country are just looking at each other, trying to figure out what’s next,” he said. “I don’t know that we know enough yet about what’s going to happen, but I’m really confident with the leadership we have here that we will make sure that anything that’s going to happen, we’ll address.”
SCL Health had cited Kansas’ refusal to use the ACA to expand its Medicaid program as one of several factors contributing to St. Francis’ financial difficulties.
But Ardent president and CEO David Vandewater said that did not factor into his decision to expand into Kansas.
“We’re in other non-expansion states. We’re in Oklahoma, we’re in Texas, we’re in Florida,” Vandewater said. “I’ll talk to the governor about that. Probably will not make a lot of progress on that. We’ll see if we’re fast friends or faster friends.”
In March, Brownback vetoed a bill that would have expanded Medicaid. An attempt to override that veto narrowly failed in the Kansas House.
Some lawmakers have said they want to make another attempt at passing an expansion bill before the 2017 session ends.
“”It is great news for Topeka that St. Francis has found a buyer with the University of Kansas Health System and Ardent Health Services,” Senate Democratic Leader Anthony Hensley of Topeka said. “However, to ensure no other hospitals in Kansas face potential closure and to demonstrate our commitment to the 150,000 Kansans who don’t have access to healthcare, we must override Sam Brownback’s veto of Medicaid expansion.”
A study conducted last year by the private consulting firm iVantage Health Analytics said there were as many as 31 hospitals in Kansas, most of them in rural areas, that were in danger of closing in the near future.
Page said KU Health System has been in contact with some of those hospitals, but he insisted that KU cannot be the savior for all endangered hospitals in the state.
“One of the things we’ve learned in 18 years is that situations like this take dedication and commitment to make sure we do it right,” Page said. “So, are we having conversations across the state? Sure. If you look at the Kansas heart and stroke collaborative that we have, we have over 50 percent of the counties in Kansas attached to that collaborative. Now, we’re not taking over the hospital or anything like that, but we’re partnering with local providers and local hospitals to make sure heart attack patients and stroke patients are getting the care they need as close to home as they can. So we’re not going to be the savior for every hospital, but we’re sure going to focus on the health of Kansans.”