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HCA price for nonprofit group OK'd

Unanswered by the Kansas court decision is how many entities will oversee the disbursement of proceeds from the sale.

By Mike Norbut, amednews staff. Feb. 24, 2003.

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A Kansas district court judge ruled earlier this month that the potential sale of 13-hospital nonprofit Health Midwest to for-profit HCA Inc. was appropriate in terms of its $1.1 billion price, but he stopped short of weighing in on the hot-button issue of how many foundations should handle proceeds from the sale.

Johnson County District Judge Thomas E. Foster said 20% of the proceeds from the sale of the nonprofit hospital chain should remain in Kansas, but he didn't say if separate foundations should be established in Kansas and Missouri to manage the money. Kansas City, Mo.-based Health Midwest has hospitals in both states.

Missouri Attorney General Jay Nixon gave his blessing to the proposed deal in January, but the agreement called for the formation of only one foundation and for 10% of the proceeds from the sale to be earmarked for Kansas projects.

After debts are paid off, there should be about $700 million to $800 million left, with the foundation shares coming out of that total.

The ruling "is one step closer to enabling the closing of this deal, but we need to reconcile some of the findings of Judge Foster with our agreement with the attorney general of Missouri," Health Midwest spokesman Chris Whitley said.

Kansas Attorney General Phill Kline, who has pushed for a higher percentage of the proceeds and two separate foundations to oversee them, got half of what he wanted in the judge's ruling.

"We went from a week ago, where we had basically nothing, to 20% now, so we're pretty pleased with that," said Whitney Watson, a Kline spokesman. "I don't know if [the foundation question] is the last issue, but it's certainly a significant one."

Kline has not ruled out an appeal as a way to address some of the concerns he has with the ruling, Watson said.

"His primary goal is to make sure the citizens of Kansas benefit from this transaction," he added.

More than 300 physicians from the Health Midwest system signed a petition a few months ago endorsing the sale.

The agreement between HCA and Health Midwest expires March 31, but both sides are still confident they can close on the sale before then.

"We haven't even thought about what would happen if we reached that date," HCA spokesman Jeff Prescott said. "We've only been thinking about the transition."

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