December 4, 2018
ASHEVILLE – State Attorney General Josh Stein said Tuesday he wants to see changes in the proposed sale of Mission Health to HCA Healthcare to ensure the interests of Western North Carolina residents are protected.
In a telephone interview, Stein outlined three basic concerns with the proposed transaction as it is currently structured:
Josh Stein's 3 main concerns
- Are the provisions to ensure continuation of specific health care services at Mission Hospital and the five rural hospitals in the system strong enough?
- Is the roughly $1.5 billion HCA proposes to pay enough?
- Will the board of the foundation to get money from a sale be diverse and truly representative of WNC?
"Health care access is the definition of life and death," Stein said. "So many people's futures are at stake. We want to do everything in our power to make sure that the people of Western North Carolina get the quality of health care that they deserve."
After months of negotiations, Mission and HCA signed a sale agreement in August and sent it and other documents to the state Justice Department that Stein heads in early September.
State law says the attorney general can sue to block transactions in which a nonprofit entity is being sold to a for-profit company, as is the case in the Mission-HCA deal.
Nashville-based HCA owns 178 hospitals and 119 surgery centers in the United States and United Kingdom and employs than 240,000 people.
Stein's office gets up to 60 days to file a lawsuit once it has gathered all the information it needs to review a proposed transaction. Stein said Tuesday his department is still asking questions and he declined to predict when that process might end.
The sale agreement lists specific health care services HCA would have to continue at Mission Hospital and CarePartners, its home health and rehabilitative care arm, for at least 10 years.
The lists for Mission hospitals in Brevard, Franklin, Highlands, Marion and Spruce Pine are shorter and services there other than emergency rooms would be protected for only five years.
Rural hospitals are seeing economic pressures nationwide and several have closed in recent years.
"I want to clarify and strengthen HCA's commitment in terms of its delivery of medical services and ... keeping the rural hospitals open," Stein said.
Is the purchase price fair?
The board of Dogwood Health Trust, a foundation that will get the proceeds of the sale, would have legal authority to enforce its terms.
Stein said Tuesday that responsibility should primarily rest with Dogwood but his office should also have a role in ensuring the agreement is carried out to the benefit of WNC.
"I think it would be helpful to have some independent, knowledgeable third party who plays a role," he said.
All but one of Dogwood's current nine board members have served on Mission governing boards. That has raised concerns among critics that Dogwood might not stand up to HCA if the company wants to shut down services or make other changes.
Mission submitted an outside consultant's report that appeared to support the proposed $1.5 billion sale price. Stein said his office has also hired an expert to consider whether that figure is appropriate.
"The people of Western North Carolina have been investing in these hospitals for decades and they should benefit from all the value that has been accrued over time," he said. "I want to make sure that the sale price is full and fair."
Who distributes the money?
Dogwood proposes to make annual grants that could total $50 million or more to improve societal conditions that have an impact on health in the region. So far, six of Dogwood's nine board members live in Buncombe County, which makes up less than 30 percent of the population of the counties Dogwood is to serve. One board member is from a minority community and two are women.
All counties served by Mission should have a say in Dogwood Health priorities, Stein said.
Stein said he is optimistic he can persuade Mission and HCA to make changes and that the deal will thus ultimately go through, but added he "cannot prejudge the outcome."
He declined to say whether he expects to give the deal his approval before the end of the year.
The timing could have financial implications for local governments. Mission's assets are generally not taxed because they are owned by a nonprofit, but as a for-profit company, HCA will have to pay property and other taxes.
If the deal happens by the end of the year, that would bring in millions in additional tax revenue to local governments in 2019. If not, they might have to wait until 2020.
Stein said the deal is "truly momentous" and too important for his office not to look at it carefully. The review is "an extremely high priority issue for me and my office," he said.
The sale is probably the largest sale of a nonprofit in the state's history, he said. "It is exceptionally complicated" and documents involved run into the thousands of pages.
HCA spokesman Ed Fishbough said company officials have had "productive discussions with Attorney General Stein’s office and our conversations are ongoing."
Rowena Buffett Timms, senior vice president for government and community relations said Mission officials "continue to work with the attorney general to respond to all of his questions and concerns. We are confident that the purchase price is appropriate, and we are equally committed to protecting services and ensuring diversity on the Dogwood Health Trust board."