A Kansas judge ruled that the state should receive 20% of the proceeds resulting from the $1.1 billion sale of Kansas City, Mo.-based Health Midwest to HCA of Nashville.
The ruling by Johnson County (Kan.) Circuit Court Judge Robert Foster sparks a potential dispute between the attorneys general of Kansas and Missouri. At issue is the approximate $700 million in proceeds that will result from the sale of Health Midwest, which owns seven hospitals, leases two and manages four in the two states.
Health Midwest officials are planning to review the judge's written order this week but were pleased with his remarks about the system's pricing, sales process and the proposed distribution of proceeds from the sale, spokesman Chris Whitley said.
"In general terms, we are very pleased with today's outcome," Whitley said. "It is a significant step forward toward the closing of the sale."
Kansas Attorney General Phill Kline contended that his state's share of the $700 million foundation should be 15% to 25%, or $105 to $175 million. He had obtained a temporary restraining order that prohibited the transfer of Health Midwest assets from the three Kansas holdings across state lines (Jan. 27. p. 10).
Kline said in a written statement that he was going to review the facts of the case before determining "the best course of action to take to protect the interests of Kansans."
Late last month, Missouri Attorney General Jay Nixon and Health Midwest officials reached a settlement, creating a healthcare foundation that will be controlled by a new board of directors, which will be governed by board members selected by Nixon, Health Midwest and the community. Nixon's settlement called for 90% of the foundation proceeds to be distributed to charities in Missouri, while the remainder was guaranteed to Kansas.
Kansas legislators approved a bill intended to protect what state officials said was the state's rightful share of the proceeds. The legislation would create a separate Kansas foundation to hold assets from the sale, with an 18-member board appointed by the governor, attorney general and lawmakers.