By Michael Howell
Community Medical Center, Inc. (CMC), has executed an Asset Purchase Agreement with RegionalCare Hospital Partners, Inc. Billings – Missoula, LLC, a Delaware limited liability company and others, which is scheduled to be consummated and to close on or about December 31, 2014, and which will result in cash being paid at closing to CMC in the amount currently estimated to be approximately $74.7 million
CMC is a Montana non-profit public benefit corporation, exempt from taxation under Section 501(c)(3) of the Internal Revenue Code. The Montana Attorney General’s Office (AGO) is charged with reviewing the proposed sale of CMC’s assets, including whether the proceeds of the sale and other charitable assets of CMC will be put to an appropriate use. The AGO has advised CMC and the public that it will review any proposal by CMC for the use of its sale proceeds to ensure fidelity to CMC’s charitable mission and service area.
CMC has proposed to use the proceeds from the sale in a couple of ways.
First a gift of $500,000 cash will be conveyed to the University of Montana Foundation (UMF) for the benefit of the University of Montana to help fund in part the healthcare programs and healthcare infrastructure at the new Missoula College to be constructed on the East Broadway campus.
Secondly, a gift from CMC in the amount of $10 million will be conveyed to UMF for the benefit of UM to help fund in part, the three healthcare related projects at UM described in the proposed budget as the CMC Legacy Health Professions Complex, Program Initiatives for Health Professionals, and the CMC Promise Scholarships Pilot Program.
The remainder of the CMC sale proceeds will at closing (or in the case of any adjustments resulting in additional payment after closing, once received) be retained and managed by CMC on an interim basis only, until a foundation, named the Community Hospital Legacy Foundation, has been formed, is operational, and has been determined to be exempt from taxation under Section 501(c)(3) of the Internal Revenue Code, at which time the remainder of the CMC sale proceeds of approximately $64.2 million, (less the “Reserve Fund” which will be retained to fund wind-down activities) will be transferred to the Foundation as a gift.
The Foundation will be operated on a permanent endowment model basis, using revenues to fund its activities and preserving its principal. The mission of the Foundation will be to support healthcare related projects and programs in the region that are consistent with the “Triple Aim Initiative” of the Institute for Healthcare Improvement, which focuses on improving the patient experience of care (including quality and satisfaction), improving the health of populations, and reducing the per capita cost of health care.
Not everyone is happy with the deal, according to Dale Woolhiser, a founding board member of the Missoula Community Foundation and a board member of the Montana Community Foundation. He claims that the process used in making the decision about how the funds would be distributed was flawed and fraught with conflicts of interest.
Woolhiser claims that the CMC Board’s review of existing organizations with which to partner was neither transparent nor sincere. He claims that the two existing organizations considered as potential recipients of the funds, the Montana Health Care Foundation and the Montana Community Foundation, were not given fair consideration by the CMC Board.
“A new organizational structure creates yet more unnecessary administrative structures and cost centers which could be much more efficiently managed by partnering with an existing organization,” said Woolhiser.
Woolhiser also believes that the decision to gift the University of Montana as part of the deal should not have been made by the CMC Board but should have been left up to the final repository of the assets.
“I have contributed to both the University of Montana and Community Medical Center and a multitude of other charitable efforts in Missoula,” said Woolhiser. “When I gave to the hospital it was for health care. When I gave to UM it was for education. If I wanted my donation to the hospital to go to the university I would have given to the university, and vice versa. That the Board would not honor my charitable intent, and that the Board would not honor the charitable intent of any/many other (much larger) donors to Community Hospital is simply dishonorable. As for the UM’s part in this deal, I feel they are absconding with funds that rightly belong to the poverty stricken, the aged, the infirm, even the unborn of, not just Missoula, but our entire region. UM’s solicitation and acceptance of such a gift is, in a word, unconscionable. To solicit and accept gifts from the willing rich is one thing, to take it from the unwitting and ignorant poor is quite another,” said Woolhiser.