The high-pitched battle for Bishop Clarkson Hospital in Omaha, Neb., intensified last week as Columbia/HCA Healthcare Corp. sued the University of Nebraska over the university's decision to buy Clarkson.
Columbia, the nation's largest hospital chain, agreed last year to buy Clarkson for $84 million, but completion of that deal was delayed when the University of Nebraska Medical Center said it had first rights of refusal on Clarkson.
In recent weeks, the melee looked as if it could shape up as a hostile takeover, as Clarkson officials rebuffed the notion of the medical center purchasing it instead of Columbia.
In a series of six newspaper advertisements highlighting "the issue" and "the facts," Clarkson publicized the benefits of Columbia's purchase of the hospital and disputed comments by medical center officials about why they wanted Clarkson. The ads were paid for by Clarkson, although officials there declined to disclose the costs.
However, last week, medical center Chancellor Carol Aschenbrener, M.D., said she plans to begin "positive talks with Clarkson" soon. She said the negative comments from Clarkson represent only "a small number of people who are talking publicly."
She added that the hospital hopes to retain as many Clarkson physicians as possible. However, Clarkson's physicians voted in favor of the Columbia deal and some have said they would not continue practicing at the hospital if the medical center acquires it.
The proposed sale became a microcosm of the debate on tax-exempt vs. investor-owned hospitals as the pros and cons filled the news and advertising columns of the Omaha World-Herald for weeks. Even a regional official with VHA, the nation's largest alliance of not-for-profit hospitals, got involved, writing a newspaper commentary about the virtues of not-for-profit community hospitals.
Medical center officials have said buying Clarkson would help them avoid spending $57 million in remodeling and construction at its facility. The medical center would finance Clarkson's purchase with $60 million in reserves and by issuing bonds.
However, the issue now is in the hands of the Douglas County District Court. The university sold Clarkson the real estate for the hospital. As part of the deal, the medical center received first refusal rights to buy Clarkson if it ceased operating a hospital.
The agreement ensures that "if (Clarkson) was going to be turned into a Wal-Mart, the university could be protected," said Kevin Gross, president of Columbia's Midwest division. However, Columbia contends the agreement doesn't apply if Clarkson remains a hospital.
If Columbia loses its suit, "we're prepared to appeal this all through the courts," Gross said.
The state has conditionally approved Columbia's certificate of need to buy the hospital depending on the outcome of the medical center's claims. In addition, four not-for-profit hospitals or hospital systems in Omaha have appealed the CON.
In the wake of this controversy, two of those hospitals announced they were consolidating operations. Immanuel Healthcare Systems and Bergan Mercy Health System agreed to form a system with $300 million in annual operating revenues.
With six hospitals operating 1,020 acute-care beds, the merged organization would create the largest coordinated healthcare system in eastern Nebraska and western Iowa, officials said.
The merger would be an outgrowth of Community Health Vision, an organization formed by both systems in 1992. Community has developed neighborhood health centers and managed-care products including an alliance with Mutual of Omaha in June 1993.
The systems are trying to determine whether they will have to file merger documents with the U.S. Justice Department, said Joan Neuhaus, CHV's vice president. No target date has been set for completion of the merger.