Healthtrust-The Hospital Co. and Holy Cross Health System Corp. closed their Utah hospital deal last week but not without a controversy similar to the ones that have plagued the transaction since its inception.
The other obstacles included an attempt by a Roman Catholic bishop to block the sale and an antitrust challenge from the Federal Trade Commission.
Prior to the Aug. 15 close, 13 of 20 members resigned from the board of trustees of Holy Cross' Utah division. Their resignations were made in protest of the distribution of proceeds resulting from the sale of the system's three Utah hospitals and 10 clinics to Healthtrust.
The reported sale price was $125 million. Healthtrust and Holy Cross say the figure was lower, but they've re-fused to disclose the amount.
The resigning board members, who were community appointees, accused Holy Cross of not keeping enough of the money from the sale in Utah. They apparently believed the 15% to 16% of the proceeds devoted to local charities wasn't enough.
The protest prompted Holy Cross to run a series of newspaper ads detailing the distribution of the proceeds and explaining its actions.
"We realize not everyone will agree with the congregation's decisions to sell HCHSU (Holy Cross Health Services of Utah) and to distribute proceeds in the manner we described," the Holy Cross ads said. "We can assure you these determinations were made prayerfully, carefully and thoughtfully by the president and general council of the congregation."
Under the deal that closed last week, Holy Cross sold its three hospitals and 10 outpatient clinics to Healthtrust, a Nashville, Tenn.-based for-profit hospital chain. The hospitals are Holy Cross Hospital in Salt Lake City, St. Benedict's Hospital in Ogden and Holy Cross Jordan Valley Hospital in West Jordan.
Holy Cross said the net proceeds of the sale will be $6.4 million after it pays its Utah division's approximately $80 million in outstanding debt and spends $30 million to $40 million on a variety of closing costs.
Based on those figures, the final sale price likely fell between $116.4 million and $126.4 million.
According to the ad, some $18.6 million of the estimated sale price will remain in Utah to fund various charitable activities:
Some $7.5 million will stay with the charitable foundation that was part of Holy Cross Hospital in Salt Lake City. A new not-for-profit corporation called Holy Cross Ministries will take over the foundation. The new organization and its 15-member governing board will be a subsidiary of Holy Cross Health System.
A sum of $4.5 million will stay with the charitable foundation that was part of St. Benedict's Hospital in Ogden. The hospital's sponsor, the Sisters of St. Benedict, also is reorganizing the foundation into a charitable ministry.
And $6.6 million in restricted and unrestricted donations will be dispersed accordingly by the newly reorganized five-member board of Holy Cross' Utah division.
As for Healthtrust, it must sell the Salt Lake City hospital and five of the 10 clinics under a proposed consent agreement signed with the FTC last month (July 18, p. 20).
The FTC said the original deal would have violated Section 7 of the Clayton Act, which bars acquisitions that may reduce competition. Healthtrust owns six other hospitals in Utah, four of which are considered to be in the same market as the Holy Cross hospitals.
Healthtrust, which signed a letter of intent to acquire the Holy Cross facilities last October, also overcame the opposition of a Roman Catholic bishop in Utah who didn't want the hospitals and clinics sold to a for-profit chain (Nov. 22, 1993, p. 8).-7