Spokane Journal of Business

State to hold hearings on Empire sale

Department of Health slates meetings this month, plans to issue decision this fall

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The Washington state Department of Health has scheduled two public hearings later this month regarding the proposed sale of Empire Health Services, of Spokane, to Franklin, Tenn.-based Community Health Systems Inc.

The meetings will focus primarily on the conversion of Empire Healths two nonprofit hospitals hereDeaconess Medical Center and Valley Hospital & Medical Centerto for-profit hospitals. Community Health Systems, which owns 125 hospitals in 28 states, has applied to the state to buy the assets of Empire Health for $156 million through two subsidiary companiesSpokane Washington Hospital Company LLC and Spokane Valley Washington Hospital Company LLC.

The first hearing, which will focus on the sale and conversion of Deaconess Medical Center, will be held June 25 at the Spokane Convention Center and will be split into two sessions, from 10 a.m. to 2 p.m. and from 4 to 7 p.m., says Steve Saxe, director of facilities and services licensing at the Department of Health. The space at the convention center will be able to hold roughly 100 people, and participants will be able to speak for about three minutes each, Saxe says.

The second hearing, which will center on the sale of Valley Hospital & Medical Center, will be held June 26 at the Mirabeau Park Hotel & Convention Center, in a space that can hold roughly 150 people, he says. That meeting also will be divided into two sessions spanning the same hours.

The hearings are part of a lengthy review process that the state is conducting before issuing a decision on the proposed sale. Community Health has submitted 8,500 pages of documents to buy Empire Health, and its application is being reviewed by teams at the Department of Health and the Washington state attorney generals office, Saxe says.

As part of that review, state officials are evaluating Community Health Systems certificate-of-need applications for the two hospitals, and is accepting public comments about those applications, says Bart Eggen, executive manager of the office of certification and technical support at the Department of Health. While the state isnt holding public hearings specifically regarding the certificate-of-need applications, it will accept comments about those applications during the public hearings later this month, he says.

The certificate-of-need process involves evaluating whether Community Health will continue to provide patient access to services that currently are available, whether the company will be able to meet short-term and long-term financial obligations, and whether it has reasonable financing for the purchase, Eggen says. The state also is reviewing the history of the company and the quality of its health care, he says.

The Department of Health has set Sept. 10 as the tentative date it will issue a decision on the sale, Saxe says. First, it must hold the public hearings and receive reports from the state attorney generals office and New York City-based KPMG LLP, which is conducting an independent audit of the proposed sale, he says.

Community Health submitted its letters of intent to the state for the sale last November. Since then, the purchase price has dropped to $156 million from $172 million, due partly to Empire Healths financial troubles. The nonprofit reported a net operating loss of $7.1 million last year.

Officials at Empire Health have stressed the need for a timely decision on the sale, which they have said could be jeopardized if the process takes too long to conclude.

We are hopeful for a thorough yet expeditious process, says Empire Health spokeswoman Christine Varela. Its no secret the hospital has had its share of financial challenges, and weve been engaged in this process for many months and need to move forward.

Varela adds, We respect that the Department of Health is working through the process and appreciate that theyre considerate of the time constraints were under.

Contact Emily Proffitt at (509) 344-1265 or via e-mail at emilyp@spokanejournal.com.

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