A Roman Catholic hospital system backed out of a partnership to own Hilton Head Hospital in South Carolina this month after the other partners wouldn't agree to ban certain medical procedures, such as tubal ligations and sterilizations.
The deal for the 68-bed Hilton Head Island hospital was announced in late April and was to include Bon Secours Health System as well as Dallas-based American Medical International, the Medical University of South Carolina, its physicians and the hospital's foundation.
However, when the hospital and its new partners signed a letter of intent last week to buy the hospital for $28 million, the Catholic system was noticeably absent.
John Shea, vice president of business development for the Marriottsville, Md.-based system, said Hilton Head had been doing tubal ligations and sterilizations, both of which are prohibited by the Ethical and Religious Directives for Catholic Health Facilities. Hilton Head is not a Catholic facility.
Mr. Shea said he had reached an initial agreement with physicians and hospital managers to stop the delivery of such procedures. However, when it came time to sign a letter of intent, the deal was worded so that the partnership cannot "withhold any services based on moral and ethical grounds."
Bon Secours couldn't go along with that, "and so we walked," Mr. Shea said, adding that the system will "look for opportunities elsewhere."
Late last week, Mr. Shea was discussing other possibilities with one of
the partners, Medical University, Charleston, S.C. In addition, he said he's talking with executives of 396-bed Roper Hospital in Charleston, where Bon Secours owns 243-bed St. Francis Xavier Hospital.
"We know we are going to have to partner in networks formed with non-Catholic providers, and we're assessing how that can be done," Mr. Shea said. The system is among hundreds of Catholic hospitals grappling with that issue (June 6, p. 32).
Meanwhile, Dallas-based AMI will be the lead partner in the Hilton Head deal, owning 70% of the hospital. The hospital's foundation will own 20%, and the university and physicians will own 10%. The deal is expected to be completed by the end of August.
In another development, AMI said it has settled litigation that has dragged on for four years with Creighton University over AMI Saint Joseph Hospital in Omaha, Neb. Under the settlement, Creighton, which assigns medical students to train at Saint Joseph, will buy a 25% stake in the hospital.
Terms were not disclosed.
AMI bought Saint Joseph and Saint Joseph Center for Mental Health in 1984 for $100 million. However, the relationship with the medical school got nasty in 1990 when Creighton sued AMI, claiming the investor-owned chain reneged on a promise to make $12.8 million in capital improvements.
In 1992, Creighton sought to have the affiliation agreement dissolved. AMI countersued, asking for $91 million in lost income and damages from Creighton. AMI filed another lawsuit against Creighton last year, claiming the university was seeking affiliations with competing hospitals.