Metro Health Board Approves Definitive Agreement for Sale of Equity Interest
The Metro Health board of directors has approved a definitive agreement with subsidiaries of Community Health Systems, Inc. (CHS) of Nashville, Tennessee, which sets the terms and conditions for the purchase of equity interest in the hospital, its neighborhood outpatient centers and affiliated assets. Metro Health will retain 20 percent ownership, and the CHS subsidiaries will own 80 percent. The agreement was reached after more than a year of due diligence and exclusive negotiations.
The agreement will now be filed for review by the Michigan Office of the Attorney General. The Michigan Department of Community Health must also conduct a certificate of need review for the transaction. The public will be invited to a public hearing during the approval process.
The proposed transaction is the first affiliation in West Michigan of a community hospital with an investor-owned, national health system and represents the first entry by CHS into Michigan.
If approved, this affiliation would give Metro Health access to the resources of a larger organization and a network of hospitals that share best practices. Among the many other benefits of this sale are:
- An infusion of $100 million to $125 million in capital for investments in facilities, services, medical technology and physician recruitment in the first five years;
- Continuation and growth of Metro Health’s essential services and partnerships with University of Michigan, Orthopaedic Associates of Michigan, Pennant Health and others;
- Hiring of all active employees in good standing at the time of the transaction, at the same rate of compensation with years of service recognized;
- Maintaining Metro Health’s current medical staff and strong efforts to recruit new physicians to the community;
- Adoption of charity care policies;
- A local board of directors comprised of members of Metro Health’s medical staff and local community leaders;
- Continuation of the residency and fellowship teaching programs.
“Our agreement helps ensure West Michigan community members will continue to have choice in their healthcare options,” said Doyle Hayes, chairman of the board of Metro Health Corporation. “CHS has an outstanding reputation for high quality and patient satisfaction, and we’re excited to move forward with an organization that will help position Metro Health for long-term success.”
Signing the definitive agreement followed a lengthy process aimed at determining if Metro Health and the West Michigan community would be best served by Metro Health remaining independent or forming a strategic alliance. During this process, the Metro Health board of directors also evaluated proposals from leading national and local healthcare organizations.
The evaluation focused on a strict set of criteria for assessing potential allies including community choice in a healthcare provider; local control of healthcare decisions; perpetuation of advanced care within the community; commitment to improve, not maintain, quality and service; and economic stability for the community. After thoughtful deliberation and a thorough and competitive evaluation of several options, the board chose CHS, one of the largest and most successful health care organizations in the nation.
“We had the luxury of time to work together with CHS to achieve the best long-term strategic outcome,” said Mike Faas, president and CEO of Metro Health. “We could be patient looking to the future, not in a panic mode for a short-term solution.”
“I am very excited to move forward with our affiliation with CHS,” Faas said. ”This recognition of Metro Health as a strong community asset and commitment to our region insures we’ll be well positioned to serve our patients moving into the future.”
The state regulatory review process could take several months. If the sale is approved Metro Health will become a tax-paying entity, contributing substantial new tax revenues to the state and local communities.
Subject to the review by the Michigan Attorney General, the Metro Health Hospital Foundation will be restructured following the transaction close. The original Foundation restricted assets will be protected and used only according to donor intent. Use of additional proceeds available from the sale will be subject to the determination of the Michigan Attorney General.
About Metro Health
An award-winning leader in community healthcare, Metro Health serves more than 250,000 patients annually from across West Michigan – and beyond. In addition to its 208-bed hospital, which provides a comprehensive suite of inpatient and outpatient healthcare services, Metro Health has a growing number of neighborhood outpatient centers and offices throughout West Michigan, as well as a community clinic for the underserved and student health clinics at Grand Valley State University and Aquinas College. With more than 500 physicians on staff, Metro Health provides a growing number of specialty health services, including cancer treatment, heart and vascular, neurology, pulmonology and others; many are members of the Metro Health Medical Group. The hospital is committed to promoting health and wellness through the work of the Metro Health Hospital Foundation, Live Healthy community outreach classes and educational programs and more. Follow us on Twitter @MetroHealthGr and like us on Facebook/MetroHealth.
About Community Health Systems, Inc.
Community Health Systems, Inc. is one of the largest publicly-traded hospital companies in the United States and a leading operator of general acute care hospitals in communities across the country. Through its subsidiaries, the Company currently owns, leases or operates 206 hospitals in 29 states with an aggregate of approximately 31,000 licensed beds. The Company’s headquarters are located in Franklin, Tennessee, a suburb south of Nashville. Shares in Community Health Systems, Inc. are traded on the New York Stock Exchange under the symbol “CYH.”