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KU Health System And For-Profit Chain Acquire Troubled Topeka Hospital

Jim McLean
Kansas News Service
Bob Page, left, of the University of Kansas Health System and David Vandewater of Ardent Health Services announce on Thursday a joint venture to take over operations of St. Francis Health in Topeka.

The University of Kansas Health System and a Tennessee-based for-profit hospital chain have agreed to rescue a troubled Topeka hospital despite possible changes in federal health policy that could hurt Kansas providers.

Officials from the KU Health System and Ardent Health Services, the nation’s second-largest privately owned for-profit hospital chain, announced Thursday that they had signed a letter of intent to acquire St. Francis Health.

Kansas Republican Gov. Sam Brownback, who along with Topeka officials helped convene discussions that led to the agreement, also participated in the announcement.

A news release issued by the acquiring partners announced they had formed a joint venture to “purchase” St. Francis and provide $50 million in operating capital in the first year. Other terms of the agreement, to be finalized over the next 60 days, were not disclosed.

Bob Page, president and CEO of the KU Health System, said the partnership with Ardent, which operates 20 hospitals in six states, ensures that St. Francis, a 378-bed hospital that has operated in Topeka since 1909, will remain open.

“By marrying our resources as an academic medical center and Ardent’s operational expertise, we secure the long-term sustainability of St. Francis Health,” Page said.

Both Page and David Vandewater, president and CEO of Ardent Health Services, thanked Brownback and Topeka Mayor Larry Wolgast for helping to broker the deal, which was negotiated in a matter of weeks.

“This transaction has happened at light speed, so there are a lot of things that we and our new partner have to sit down and figure out,” Vandewater said.

Though many operational details are yet to be finalized, the partners have agreed to “preserve jobs for virtually all of St. Francis Health’s 1,600 employees,” according to the release. In addition, while the partners will control the joint venture’s board of directors, they will establish a local board of trustees for the hospital, which the release said “will continue to be led by local management.”

Federal Health Bill A Concern

In recent weeks, St. Francis’ financial troubles became a focal point in the ongoing debate in the Kansas Legislature about Medicaid expansion. Supporters said the billions of additional federal Medicaid dollars that expansion would provide in Kansas could help prevent the closure of several struggling hospitals across the state.

Asked whether the state’s rejection of expansion and Brownback’s recent veto of an expansion bill were a concern for Ardent, Vandewater said they weren’t a factor in the discussions. But he made it clear that the company would like to see KanCare, the state’s privatized Medicaid program, expanded to cover an additional 180,000 Kansans, many of whom are uninsured.

“I’ll talk to the governor about that. Probably not make a lot of progress,” Vandewater said, glancing at Brownback and drawing laughter from many who attended the announcement.

Thursday’s vote in the U.S. House to pass a replacement for the Affordable Care Act is a concern, Vandewater said, noting the Republican replacement bill could significantly reduce the number of Americans with health insurance.

“There are individuals that need care that do not have the ability to access it,” he said. “The United States has got to figure this out. This is not a Kansas issue, this is a national issue.”

‘Unfair’ To Kansas

Tom Bell, president and CEO of the Kansas Hospital Association, said the GOP health bill treats Kansas and other non-expansion states unfairly.

The difference in federal funding that expansion states would continue to receive compared to non-expansion states “is tremendous,” Bell said, noting that an amendment aimed at Kansas prohibits states that haven’t yet expanded their Medicaid programs from doing so.

“So, from our perspective it’s sort of a double whammy,” Bell said. “Number one, tens of millions of people will lose coverage. Number two, it’s unfair to non-expansion states.”

Under the bill, Bell said, Kansas would receive about $200 million in federal funding over the next two budget years to help providers care for uninsured patients while expansion would have provided nearly $1 billion over the same period.

Though he expects the U.S. Senate will make substantial changes to the bill, Bell said its passage by the House further reduces the likelihood that Kansas lawmakers will make another run at passing an expansion bill in the final weeks of their legislative session.

“That’s another thing that we find really problematic with the bill,” he said. “It tells states that might be thinking about [expansion], ‘Sorry, you didn’t do it by March 1 so you’re out of luck.’”

Jim McLean is managing director of KMUW's Kansas News Service, a collaboration of KMUW, Kansas Public Radio and KCUR covering health, education and politics in Kansas. Follow him on Twitter @jmcleanks.