Health Midwest, Kansas City, Mo., offered a compromise in its battle with the attorneys general of Kansas and Missouri for control of the $800 million in proceeds expected to result from the $1.1 billion sale of the not-for-profit system to HCA, Nashville.
The nine-hospital system proposed creating two new healthcare foundations, one in each state. Each foundation would start with a board of 30 members-15 members selected by a community advisory committee and 15 members selected by the current Health Midwest board. The Health Midwest appointees would be phased out over five years, leaving each foundation with a 15-member board made up entirely of appointees from the advisory committee.
Under the proposal, 80% of the sale proceeds would be allocated to the Missouri foundation, with the remainder directed to the Kansas foundation; the distribution is in line with the current division of Health Midwest's assets. The foundations' boards would ensure 15% to 25% of total expenditures during a three-year period would be allocated for use in Kansas, while the remainder would be spent in Missouri.
The board of each foundation would report to the advisory committee and to the attorneys general, Health Midwest said.
Kansas Attorney General Carla Stovall and Missouri Attorney General Jay Nixon have asked courts in their respective states to dissolve Health Midwest and its board (Dec. 16, p. 6). Stovall proposed a new 15-member board that would not include any current Health Midwest officers, directors or employees for at least five years (See related story, p. 9).
"It is not Health Midwest's decision on how these foundations will be implemented," said Mark Ohlemeier, Stovall's spokesman. "It is up to the attorney general."
Nixon, in a written statement, said he was studying Health Midwest's proposal and plans to conduct a public hearing that has not been scheduled.
Bernard Erdman, chairman of the Health Midwest board, said in a written statement that the new structure "seeks to reinforce that the board of Health Midwest is listening and carefully considered each and every suggestion from the community." The system's board has been criticized heavily for a lack of diversity of its members and for its management of the system (Nov. 25, p. 12).