State approves sale of Deaconess & Valley Hospital - Spokane, North Idaho News & Weather KHQ.com

State approves sale of Deaconess & Valley Hospital

OLYMPIA, Wash. - The state Health Department has approved the sale of Deaconess Medical Center, and Valley Hospital for $156 million.

"I'm pleased that this proposal has been approved and that the Department of Health has beat its timeline to make this important decision," said Governor Chris Gregoire. "I know it was a difficult choice for the local hospital board to sell the facilities. This decision protects the many interests of the community and helps ensure that both hospital systems in Spokane - Providence and Empire - will remain strong."

Community Health Systems of Tennessee applied to buy Deaconess Medical Center in downtown Spokane and Valley Hospital and Medical Center in Spokane Valley. Empire Health, a local non-profit, now owns both hospitals. The state health department reviewed the sale under both the Certificate of Need program and as a conversion to for-profit status.

The approval comes with some conditions. It requires Community Health to set aside $80 million in proceeds from the sale for an independent non-profit foundation for charitable purposes. It also requires the buyer to make at least $100 million in capital investments in the hospitals in the next five years. Community Health must expand the level of charity care provided by the two facilities and continue to provide essential services for at least 10 years.

"We know how important these hospitals are to the people of the Spokane area," said Secretary of Health Mary Selecky. "We heard from hundreds of people, and considered their input. It's obvious they care deeply about this issue. We worked hard to be thorough, yet make a timely decision. We're issuing this decision well-ahead of our original schedule of September 10."

The decision was based in part on a legal opinion from the state Attorney General's Office. The Attorney General's Office review helps safeguard all charitable assets and assure that proceeds are used for charitable purposes. The legal opinion reviewed how the community interests and assets are protected in the sale.

The health department reviewed about 8,500 pages of information in the application, as well as an independent valuation of the sale.

In November, Community Health Systems filed its letter of intent to buy the hospitals. It sent applications to the state in January. After additional material was provided, the applications were considered complete in May. The attorney general's opinion was completed August 8, paving the way for today's decision.

Deaconess and Valley have 511 acute-care beds and treat more than 225,000 patients each year in the Spokane area.

2008 Timeline Chart for Conversion Application

Date

Action

Done

11/9/07

Letters of intent received.

X
11/11

Develop Empire Health Sale-general information Website.

X
1/11/08

Applications received.

X
1/12

Application screening began by Department of Health (DOH) and Attorney Generals Office (AGO).

X
1/14

Set-up weekly meetings with review team and AGO team- Ongoing.

X
1/25

Independent valuation expert opinion contract- Statement of work developed.

X
3/3

Advertise and post Response For Proposal (RFP).

X
3/5

Application screening deadline. Letter identifying missing items in application.

X
3/10

Release RFP.

X
3/28

Receive contract proposals.

X
3/31

Evaluate contract proposals.

X
4/1

Select contractor and prepare final contract materials.

X
4/1

Empire Health Website refinement.

X
4/3

File contract with Office of Financial Management.

X
4/18

Screening response submitted by Community Health Systems (CHS). Revisions expected.

X
4/22

Revised screening response submitted by Community Health Systems (CHS).

X
4/23

2nd application screening begins.

X
5/8  Application sufficiently complete to begin review X
5/8  AGO requests additional information X
5/12  "Beginning of Review" notification published in the
  Spokesman Review.
X
5/29  Independent Evaluation / Expert Opinion contract
 signed
X
6/3  Public Hearing Notices Published in Spokesman
 Review
X
6/3  DOH Requests Additional Information X
6/6 Received Responses to AGO 5-8-08 Letter X
6/6 Received Responses to DOH 6-3-08 Letter X
6/16 Meeting with KPMG X
6/18 Meeting with KPMG X
6/20 KPMG Report Received (Summary) X
6/25-26  Public Hearings Scheduled: Click for Details X
7/14 Close of Public Comment X
8/8 Attorney General (AAG) Advisory Opinion Received X
8/20 Certificate of Need and Conversion decisions released X
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