Michigan Capital Medical Center is negotiating an outright sale to Columbia/HCA Healthcare Corp. because a proposed joint venture was ruled illegal, a hospital spokesman said last week.
The Lansing, Mich., hospital said it expects to receive more than double what Columbia would have paid under the proposed 50-50 joint venture, which was $43.8 million, because the for-profit company would pay a premium for full control.
If a sale occurs, it would create the first for-profit hospital in Michigan.
In September, Ingham County (Mich.) Circuit Court Judge James Giddings ruled that Michigan law bars for-profit joint ventures between not-for-profit and for-profit organizations (Sept. 9, p. 2)
But the judge left the door open for an outright sale of the 369-bed hospital.
Michigan Capital plans to appeal Giddings' decision, but that could take up to two years. Hospital spokesman Andy Corner said the hospital wants to settle the matter soon because it is paying $500,000 a month in interest on its $50 million debt.
Corner said if the appeal is successful, the hospital's not-for-profit parent company would buy back 50% of its operations from Columbia and operate the hospital as a joint venture.
Chris DeWitt, a spokesman for Michigan Attorney General Frank Kelley, who filed a lawsuit that led to the ruling, said his office would listen to any proposal the hospital put forward.
"If they can make an arrangement that meets or does not violate Michigan law, we would take a look at that," DeWitt said.
However, DeWitt said the attorney general's office would request a hearing to determine whether Columbia is paying a fair price. Kelley took issue with the valuation used for the joint venture.
Michigan law charges the attorney general with overseeing the disposition of charitable assets.
Kelley filed a lawsuit to block the joint venture soon after it was announced in June.
Excluded from the sale of the medical center would be Michigan Capital's radiation oncology alliance with Michigan Sate University and the University of Michigan, which is under development.