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Takeover of hospitals raises control issue

By Myung Oak Kim, Rocky Mountain News (Contact)

Published February 18, 2008 at 12:30 a.m.

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The dispute over the proposed Catholic takeover of two metro-area hospitals isn't just about whether patients can undergo procedures like tubal ligations that religious rules prohibit.

It's also about control - who gets to call the shots at Lutheran Medical Center in Wheat Ridge and Good Samaritan Medical Center in Lafayette.

Exempla Inc., which owns and manages both hospitals, is locked in a bitter power struggle with its parent organizations, Kansas- based Sisters of Charity of Leavenworth Health System and Community First Foundation of Arvada. Four court cases on the transaction are pending.

Under the proposed deal, Community First would sell its interest in Exempla to Sisters of Charity for $311 million. Sisters of Charity also would invest $300 million for hospital expansions and growth needs at Exempla's three facilities, including St. Joseph Hospital in Denver.

In return for its financial commitment, Sisters of Charity would gain control over Exempla's CEO and board and thereby direct operations at Lutheran and Good Samaritan hospitals.

As it is with the other nine hospitals owned by Sisters of Charity, Lutheran and Good Samaritan medical staff would have to follow Catholic ethical and religious directives, which prohibit abortions, tubal ligations, vasectomies and other forms of birth control unless deemed medically necessary. The rules also restrict removing feeding tubes from people in a persistent vegetative state.

Beyond religious dictates

Bill Murray, CEO of Sisters of Charity, said Exempla asked for and needs his organization's financial resources to fulfill long-term plans to keep pace with other hospital groups. But Sisters of Charity needs more control over Exempla's hospitals to protect its financial commitment, he said, and Exempla has been resisting that demand - now through legal action.

"If you thought of (Sisters of Charity and Community First) as parents, (Exempla) is trying to trade them in," Murray said. "The (religious rules) are hoisted out there as the major thing, but it goes beyond that."

Murray said Sisters of Charity is continuing its longtime commitment to the Denver area with this transaction.

"There's a tremendous amount of good that can be done."

Jeff Selberg, Exempla CEO, does not see good in Sisters of Charity's takeover bid. He said Sisters of Charity should have provided financing to replace St. Joseph years ago without trying to take over more hospitals.

"We believe this is all about leverage, and that what is appropriate is that the Sisters of Charity provide the capital necessary to replace St. Joseph and not use it as a hammer to acquire Lutheran and Good Samaritan and convert them to Catholic hospitals," Selberg said.

Selberg said Exempla's opposition to the transaction is not about a wish to retain power.

He said Exempla's board opposes changing the original missions of Lutheran and Good Samaritan hospitals as nonsectarian, community facilities. They also oppose allowing Community First to spend money from the transaction, including charitable funds given for medical care, on nonmedical programs.

Court battles looming

Exempla has filed two lawsuits. One seeks to block the transaction. In response, Sisters of Charity asked a judge to order the parties to binding arbitration to resolve the dispute. A court date is scheduled for April 8 in Denver District Court.

Community First filed a response to the Exempla suit Thursday, accusing Exempla of purposely trying to delay the transaction so that legislation pending in the General Assembly that could hamper the deal will move forward. Community First also said Exempla is inappropriately lobbying for those bills. Exempla denies that and says it is staying neutral on the legislation.

In its second suit, Exempla has asked a judge to throw out a decision issued in December by Attorney General John Suthers to approve the sale. A court date is scheduled for March 3 in Denver District Court.

Community groups and patients also have asked a judge to stop the sale. Sisters of Charity filed a motion to dismiss that case. A hearing is scheduled for Feb. 29 in Boulder District Court.

Sisters of Charity and Community First also have asked a judge to issue a restraining order to stop Exempla's move to strip powers held by Sisters and Community First. A court date is scheduled for Feb. 20 in Denver District Court.

Delay urged

The lawsuits have indefinitely delayed the sale, which was supposed to have been finished in December.

Negotiations over a possible "carve-out" - an area of the hospital, owned by another organization, that would provide medical services prohibited by religious rules - have also stopped. Exempla pulled out of discussions when it filed suit against Sisters of Charity.

Lois Uttley, director of the MergerWatch Project, which monitors hospital mergers nationwide, said the three organizations involved in the sale are stuck in a "very significant power struggle."

She said Sisters of Charity appears to be "intransigent" in its position to not provide the prohibited medical services. She said Exempla appears to be "stunned that the system could be sold out from underneath them."

kimm@RockyMountainNews.com or 303-954-2361

Anatomy of the deal

* Sisters of Charity of Leavenworth Health System is buying out the stake of its partner, Community First Foundation, in Exempla Inc. and thereby gaining control of Exempla's Lutheran Medical Center in Wheat Ridge and Good Samaritan Medical Center in Lafayette.

* Exempla's board opposed the deal after Sisters of Charity and Community First said they would move forward with the transaction without providing services such as abortions and birth control, which are banned by the Catholic Church's ethical and religious directives.

* Kaiser, one of the state's largest insurers with about 480,000 subscribers, funnels most of its Denver members to Exempla hospitals. Kaiser said it is obligated by contract to provide patients with services prohibited by the Catholic directives. Kaiser said it would direct patients to other hospitals if the procedures are not available at Good Samaritan.

The buyers

* Sisters of Charity of Leavenworth Health System

Composed of nine hospitals and four stand-alone clinics in Colorado, Kansas, Montana and California, the Sisters of Charity owns Exempla St. Joseph in Denver and St. Mary's Hospital in Grand Junction.

The sellers

* Community First Foundation

Founded in 1975 as the fund- raising arm of Lutheran Medical Center, the foundation today has nearly $54 million in assets pledged to support health care and community services. The foundation is selling its 50 percent stake in Exempla Inc.

Comments

  • February 21, 2008

    11:39 a.m.

    Suggest removal

    STOPUSAGiveaway writes:

    All the Catholic anything wants to do is PROLIFERATE--as they have encourage in Latin America and Carribean where poverty is the greatest on PLANET EARTH.
    Then what does the Catholic Church/Charities etc do but ship them to the USA and put them on Public Assistance now for eight generations.
    Those who made choices in their lives and built this nation didn't expect anymore than they contributed and earned: not these THE RACE INVADERS they want it all just by heathen breeding via sperm donor exponentials.
    NUMBERs via exponentials who have NEVER PAID FOR THEIR BIRTHRIGHT are a P L A G U E upon the USA.
    UNIVISION had a family on in Dade County Florida where in the l972's overturned ENGLISH as the language: now have over l25 family members from the original 6 boys 6 girls and two breeders.
    Can the 25% pay for the 75 per cent illegitimacy in the USA?
    I cannot?
    Can we continue to pay double for everything due to ILLEGALS ILLITERACY?
    Tell the POPE and POPE VILLE to sell their GOLD and pay for their encouragement of breeding and overpopulation and leave the USA alone: we don't need their breeders, we do not need NUMBERS and we certainly do not want their interference...
    HEMORAGE is that what we are expected to do.
    THE RACE never learned the TEN COMMANDMENTs especially
    Thou Shalt Not Steal
    Do Unto Others...
    One Nation Under GOD