The Tribune Democrat, Johnstown, PA

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July 1, 2014

Hospital sale gets hearing

JOHNSTOWN — Conemaugh Health System representatives will be in court Wednesday to present their case for how the public’s interest will be protected in an acquisition by Duke LifePoint Healthcare.

At a hearing scheduled for 9 a.m. in Cambria County Courthouse, Courtroom No. 1, Conemaugh and Duke LifePoint officials will review terms of the buyout made public last month.

The hearing before Judge Timothy Creany is open to the public, but it is not clear if additional testimony will be accepted from those in attendance.

“Both any role for public speakers and the way the hearing is conducted are up to the court,” said J.J. Abbott, spokesman for state Attorney General Kathleen Kane.

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

The attorney general’s office reviews financial, corporate and transactional information before blessing such deals.

If both Conemaugh and Duke LifePoint are satisfied with the terms and conditions of the sale, Creany’s approval is the final regulatory approval that is required, Abbott said.

Terms of the sale require Duke LifePoint to pay about $105 million to Conemaugh Health Foundation, the only affiliated organization not being sold to Duke LifePoint. The foundation will use the money to continue its mission of supporting health care in the community, with room for expanded programs, Conemaugh leaders have said.

The actual amount paid to the foundation will be adjusted for the change in “net working capital” between June 30, 2013, and the closing date. In other words, if there is more “net working capital” when the sale closes, Duke LifePoint will pay more than $105 million. If there is less capital, it pays less.

In addition, the foundation gets $10 million in LifePoint stock.

Duke LifePoint will also be required to spend at least

$425 million over 10 years, including $150 million in the first two years, on capital improvements. Areas listed include new and expanded medical services, investments in new information systems, new equipment and facility renovations.

Construction of outpatient centers and a medical education conference center are listed for the first two years, along with a new electronic health record system.

Duke LifePoint agrees to hire all qualified employees and physicians and adopt the existing workforce management policy.

The new owners will appoint advisory boards for Memorial, Miners and Meyersdale medical centers and continue the existing policies for treatment of indigent patients.

The advisory boards’ approval would be required for any change in charity care.

All current programs must be maintained, including heart services, vascular care, level one trauma center, neuroscience, cancer care center, radiology, women’s health and maternity care, family medicine and neurosurgery.

Graduate medical education residencies including general surgery, family medicine and emergency medicine. Conemaugh Valley Memorial Hospital School of Nursing, Conemaugh Surgical Technology Program, and the Conemaugh Emergency Medical Services School are required to continue.

It will be Conemaugh Health Foundation’s responsibility to see the terms are carried out, the court petition says.

Conemaugh officials declined to expand on the issues to be considered at Wednesday’s hearing.

The health system does not expect to present the full case for acquisition that was provided to the attorney general’s office at a public hearing on June 6, Conemaugh spokeswoman Amy Bradley said.

“(The session) will be a courtroom setting, answering questions under oath,” Bradley said Tuesday in an email.

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

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