Candor can pay off when it comes to winning public support for a hospital sale. Perceived secrecy, on the other hand, can hinder a deal.
That's the lesson in northeastern Ohio, where community participation recently became a central factor in the sales of two not-for-profit hospitals.
Barberton (Ohio) Citizens Hospital and Massillon (Ohio) Community Hospital each needed some form of public approval to sell their assets to for-profit companies. The first met with acceptance, the latter with a roadblock.
Last month, voters backed 347-bed Barberton Citizens' deal with Brentwood, Tenn.-based Quorum Health Group. By a margin of 3-1, voters passed a referendum to waive the city's right to the hospital property.
Fifteen miles away, a sale of 179-bed Massillon Community to a for-profit joint venture involving Columbia/HCA Healthcare Corp. has been stalled by the city council, which refuses to waive a similar municipal claim.
Ohio Attorney General Betty Montgomery in a recent speech held out Barberton Citizens as an example of how a hospital's openness can benefit all parties.
Montgomery has introduced legislation that would mandate public scrutiny of not-for-profit hospital sales, which are being announced at a rate of about one every two months in the state. The legislation is expected to be taken up in January. She claims to be the only attorney general in the nation that can't release data on those transactions publicly (Oct. 28, p. 18).
For now, each hospital decides what to disclose.
Barberton Citizens, anticipating a special referendum, sought early support from community leaders and disclosed financial details, including its $75 million minimum sale price.
The hospital and Barberton City Council held numerous public forums, and a political action committee spent about $30,000 on a grass-roots campaign, said hospital spokeswoman Elizabeth Wilson.
In its confidentiality agreement with the buyers, the hospital excluded data it knew it would need to disclose publicly, Wilson said. Quorum will own 95% of the hospital, with Akron, Ohio-based Summa Health System and Cleveland Clinic Foundation sharing 5%.
"Folks in Barberton are real comfortable with what's going on, and that's not true in many of these transactions," said Craig Mayton, chief of the attorney general's charitable foundations section. "The lesson is, it's much much better to involve the community upfront."
In Massillon, city officials say key financial questions including the sale price have not been answered. The hospital said its lips are sealed by a confidentiality agreement with the buyer, a 50-50 joint venture operated by Columbia and Sisters of Charity of St. Augustine Health System.
Jerry Rizor, the hospital's vice president of marketing and planning, said the confidentiality agreement is justified by the buyer's need to keep business secrets. Given that, he said the hospital made "an honest effort to keep people informed. I think that we and Columbia have done everything we possibly can."
The hospital mailed 10,000 letters to members of the community last spring. This fall, when it was clear that the citizens still had questions, the hospital tried information booths, newspaper ads and a public forum.
But city leaders grumbled that the efforts were too little, too late. The hospital, founded in 1904 with a contribution of land and $50,000 by a prominent businessman, is considered a public asset in Massillon, population 31,000. Since its dedication in 1910, citizens have contributed money to keep it going.
"(Columbia) came in and got it done before anyone realized what happened. This community prides itself on knowing what is going on," said City Council President John H. Frieg, who added that he believes his own grandfather donated $20,000 to the hospital.
City leaders want assurances that the new owner will maintain services, employment and indigent care. Barberton secured several commitments from Quorum, including a 10-year written guarantee to continue serving the community with services in obstetrics, emergency care and medical/surgical care.
Massillon Community has called such assurances unrealistic, but the city formed a negotiating committee last week to submit specific requests in a last-ditch effort to reach accord.
"I think Columbia and the board have both got to realize that the city is a player here," said John Ferrero, the city's law director.
The hospital, meanwhile, has threatened to go to court to challenge the validity of a 1904 clause that calls for the hospital to revert to city ownership rather than be sold to a for-profit entity.
In another new wrinkle, not-for-profit Aultman Hospital in Canton, Ohio, has offered to reopen discussions with Massillon Community about a partnership.