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July 3, 2014

Duke ups offer by $6.3M

EBENSBURG — The price for Conemaugh Health System has gone up $6.3 million during negotiations since its proposed acquisition by Duke LifePoint Healthcare was announced March 14.

The joint venture of Duke University Health System and the for-profit LifePoint

Hospitals will pay about $550 million for the three Conemaugh hospitals and related affiliates, Conemaugh CEO Scott Becker testified during a hearing Wednesday at Cambria County Courthouse.

Specifically, the new owners will invest about $425 million in new construction and technology upgrades, including patient records systems. Another $110 million will endow the Conemaugh Health Foundation for charitable work related to health care.

The original terms listed

the foundation’s payment at $105 million.

Becker outlined the acquisition process during testimony before Judge Timothy Creany.

Court approval is required under nonprofit corporate law to protect the community’s interest in the sale of charitable entities such as hospitals.

Becker admitted the final asset purchase agreement is still being tweaked, so Creany granted Senior Deputy Attorney General Gene Herne’s request to delay approval until the agreement is finalized. The attorney general’s office can object to the sale if the price is too low, if anyone is getting improper payments or for other reasons.

“Since we do not have access to the ultimate sales agreement, we will withhold objection,” Herne said.

“When you receive the agreement, if you feel you need to have another hearing, I’d gladly agree,” Creany said.

Conemaugh’s attorney, Samuel Braver of Buchanan Ingersoll and Rooney in Pittsburgh, asked Becker if preliminary terms of acquisition had changed during negotiations.

Becker said the changes have either strengthened Conemaugh’s position or added more description.

“I believe we added $6.3 million to the acquisition price,” Becker said.

Becker and Conemaugh board Chairman Ronald Vickroy were asked, “Why Duke LifePoint?”

Both said after reviewing 16 proposals from potential partners and scrutinizing three finalists, the Duke LifePoint plan met the Conemaugh board’s vision for continued quality care, patient safety and employment, with additional expansion of services as well. They cited Duke’s clinical programs and LifePoint’s financial strength.

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

Duke system Chief Medical Officer Dr. Harry Phillips said the renowned university health system entered into the joint venture with LifePoint in 2011 with a vision of creating a hospital network strengthened by two industry powerhouses.

Both organizations are dedicated to excellence of care, high quality services, patient safety, support for local governance, ability to expand, support for local economies and a strong commitment to charity care, Phillips said.

For Duke’s part, it is an opportunity to build on its clinical and patient safety programs, he said. Duke helps “partner” hospitals with accreditation, for instance.

“It allows almost unparalleled access to not only clinical, but operational resources,” Phillips said.

The new owners are required to hire all current employees and maintain all programs, including the hospital’s educational programs. Its postgraduate residencies, nursing school and allied health programs will be strengthened by the new owners, Phillips pledged.

“These programs are not only important to Conemaugh Health System,” he said. “They are important to Duke.”

Randy Griffith covers health care for The Tribune-Democrat. Follow him on Twitter at @photogriffer57.

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