The Tribune Democrat, Johnstown, PA

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July 6, 2014

Conemaugh deal takes communities into account | Leaders worked hard to find right partner

JOHNSTOWN — We won’t be the ones approving or denying Conemaugh Health System’s bid to sell its assets to Duke LifePoint Healthcare.

But we believe officials who testified under oath Wednesday made strong arguments for the state attorney general’s office and the Cambria County courts to give the $550 million deal their blessing.

The proposed sale was announced March 14, and followed months of “due diligence” and negotiations, various individuals involved said.

In the end, they were convincing in their assertions that the merger will allow the health system to bolster its place as the area’s top employer while enhancing medical care provided across the Cambria-Somerset region.

Conemaugh board chairman Ron Vickroy said Duke LifePoint stood out for its sound corporate financial position and its track record of investment in facilities it operates.

Vickroy and Conemaugh CEO Scott Becker both said Duke’s academic reputation was also a key factor.

In the end, Duke LifePoint’s strengths and priorities matched up well with Conemaugh’s, the local officials testified.

“These programs are not only important to Conemaugh Health System. They are important to Duke,” that system’s Chief Medical Officer, Dr. Harry Phillips, said.

We applaud Conemaugh for a thorough and well-planned process of selecting a partner.

Becker said 30 prospective suitors identified last fall included regional and national organizations, and both academic and non-academic and for-profit and nonprofit entities.

Then 16 organizations agreed to participate and signed confidentiality agreements. From there, the list was narrowed to six contenders and then three finalists.

Becker compared the process to Internet dating, and each of the finalists came back with revised proposals with increased values of at least 15 percent.

They said, “I want to marry this girl,” Becker said.

The Conemaugh CEO said his system had its business in order and could “deal from a position of strength.”

He called the search process “board-driven,” “management-led” and supported by physicians.

Becker said Duke LifePoint dollars would allow for a $150 million investment during the first two years to provide a new computer system for CHS and new outpatient facilities in Ebensburg and Richland.

And officials with both systems pledged to support nearly 5,000 individuals who count on the Conemaugh for their livelihoods.

“We take very seriously our role as the top employer in the marketplace,” Becker said.

Becker and others said the new private ownership will not mean a reduction in the availability or quality of care.

Conemaugh’s attorney, Samuel Braver of Buchanan Ingersoll and Rooney in Pittsburgh, added during his opening statement: “Proceeds from this will be used to continue health care for the communities they serve.”

“The clinical component brought by Duke was head and shoulders above all the others,” Vickroy said.

Vickroy, essentially the community's representative in Wednesday’s hearing, said the Conemaugh board took seriously its obligation to find a partner for the Johnstown-based health system that would continue to serve the region in the years to come.

A retired Pitt-Johnstown business professor, Vickroy said he often told his students that “all organizations have a social obligation to the communities they serve.”

“I have no questions about Duke LifePoint’s commitment going forward,” Vickroy said.

There are details yet to be finalized, including the setting of a final sale price, and not all information about the proposed transaction has yet been revealed to the public.

But we like what we’ve heard so far, and believe Conemaugh took the right steps and employed a sound philosophy in choosing Duke LifePoint as a partner now.

The deal is in the hands of Cambria County Judge Tim Creany and Senior Deputy Attorney General Gene Herne.

Unless Creany or Herne is privy to vital knowledge not shared with the people of the region, this sale should get their approval.

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