Vanguard Health Systems needs only one more regulatory approval to complete its purchase of tax-exempt Detroit Medical Center after Michigan Attorney General Mike Cox approved the deal.
Vanguard one step away from DMC purchase
Cox conditioned his approval on Nashville-based Vanguard and six-hospital DMC agreeing to four amendments to their asset purchase agreement. Mike Duggan, DMC's president and CEO, said those amendments have been approved by both parties. The changes extend Vanguard's reports to DMC's successor foundation to 10 years from six years after closing, require Vanguard to follow its own charity-care policies if they are more generous than DMC's current policy and state explicitly the attorney general's authority over the asset purchase agreement and the operations of both the hospitals and the DMC successor foundation post-closing, among other requirements, according to Cox's report.
The report also included an updated actuarial estimate of DMC's pension liability of $293 million as of Dec. 31, rather than the $184 million liability estimated in the spring. The decline in interest rates causes estimates of future liabilities to rise, Duggan said. Vanguard's closing costs have been estimated down from $417 million to $391 million, in part because some cash that DMC was holding was used to pay down debt, Vanguard executives said last week. The company also has committed to funding the pension liability over seven years and making $850 million in capital investments. Cox's report indicated that Vanguard also will assume $42 million in net malpractice liabilities.
The last remaining regulatory approval involves an agreement with the CMS over Medicare provider numbers. “We can't have one day without Medicare and Medicaid payments with DMC,” Charlie Martin, chairman and CEO of Vanguard, said last week during a conference call with analysts.
The target closing date remains Dec. 31, Duggan said.
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