July 10, 2011; Source: Denver Post | The Colorado Health Foundation’s plans to sell its interest in a hospital group to its for-profit partner is running into objections that the community will be hurt if the deal goes through. Some also want assurance that the $1.45 billion price is fair.
The Denver Post reports that former members of the board that oversees the joint venture between the foundation and HCA, Denver’s largest hospital chain, have asked the “attorney general to declare the deal a ‘conversion’ from nonprofit to for-profit status, a ruling that would give the state and community interests more power to alter terms.” Critics fear that if the deal isn’t changed, “HCA will not continue programs treating the uninsured, or will avoid taking unprofitable Medicaid patients.”
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According to the foundation, which would become Colorado’s largest after the sale, the conversion rule does not apply in this case because it says it only has a 40 percent interest in the hospital venture. It argues that critics are mistaken in believing that because the foundation has equal voting rights on the board it also owns 50 percent of the assets. Foundation attorney Troy Eid says controlling interest in the partnership’s corporate structure and operations belong to HCA. Even if the attorney general cannot treat the sale as a conversion, an independent review can be commissioned to make sure the deal is fairly priced.
The Denver Post notes that the attorney general is responsible for “making sure the community sees a fair price paid for the hospital assets, since the foundation has enjoyed the benefits of tax-exempt status for serving a public interest.” In response to objections that the sale would hurt the community, a hospital spokesperson said, “We’ve always taken care of the community because it’s the right thing to do. That’s not going to change.”
—Bruce S. Trachtenberg