While most state investigations of not-for-profit hospital conversions wind down before the deal closes, a probe of one transaction in Texas is alive more than a year after the hospitals shook hands.
The parties are for-profit Columbia/HCA Healthcare Corp., Nashville, and St. David's Healthcare System, Austin, Texas.
Columbia and St. David's completed a 50-50 joint venture agreement in May 1996 that converted St. David's three hospitals into for-profit facilities. Texas Attorney General Dan Morales' office began requesting documents related to the deal before it closed, and the review is ongoing.
"Our concern is whether St. David's still will be able to fulfill it's charitable obligations to healthcare," said Ward Tisdale, a spokesman for the attorney general's office.
Neither the attorney general's office nor hospital executives would comment further on the nature of the state's investigation. However, the attorney general hasn't ruled out requiring alterations to the deal's structure.
"The joint venture did go forward, but we do reserve the right to effect (changes in) the deal even if it has been consummated," Tisdale said. "We have the ability to make changes up to and including a lawsuit."
Under the deal, St. David's sold its three hospitals to a newly created joint venture owned by St. David's and Columbia. The hospitals, all in Austin, are 296-bed St. David's Medical Center; St. David's Pavilion, a 38-bed psychiatric facility; and 107-bed St. David's Rehabilitation Center. Terms of the sale weren't disclosed. The hospitals reported combined assets of $160 million in 1995, according to HCIA, a Baltimore-based healthcare information company.
The hospitals then were added to Columbia's previous three hospitals in the Austin market to create Columbia St. David's Healthcare System.
St. David's attorney Irwin Salmanson said the former hospitals of not-for-profit St. David's are providing as much, if not more, uncompensated care now as they did in the past. And, he said, St. David's Foundation, Columbia's partner in the joint venture, has awarded more than $1 million in grants to help fund various community healthcare projects.