St. Luke’s Hospital may soon turn back the clock and return to operating as an independent hospital.
ProMedica submitted a formal application and divestiture agreement with the Federal Trade Commission Tuesday that provides some detail about the process for spinning off St. Luke’s and restoring its independent status.
After a 30-day public comment period that ends June 2, the FTC will decide if it accepts ProMedica’s proposal to unwind St.Luke’s.
If the plan is approved, ProMedica’s signature green lights will no longer adorn the Maumee building, said Tedra White, ProMedica spokesman.
ATTACHMENT: ProMedica’s Federal Trade Commission filing
The FTC documents filed by ProMedica end months of speculation over whether the 182-bed St. Luke’s would return to being an independent, stand-alone hospital, or be purchased by a new hospital system not currently operating in the Toledo area.
ProMedica, the area’s largest health system, has battled with the FTC since July, 2010, less than two months after the merger agreement with St. Luke’s was signed.
The federal agency immediately questioned whether this pairing of ProMedica with St. Luke’s, reducing the number of hospital systems in Lucas County from four to three, would result in higher prices for consumers.
Circuit Judge Raymond Kethledge — who wrote the 2014 ruling for the Court of Appeals against the merger — asserted that “ProMedica’s rates before the merger were among the highest in the state, while St. Luke’s rates did not even cover its cost of patient care. That was true even though St. Luke’s quality ratings on the whole were better than ProMedica’s.”
The judge went on to state that if St. Luke’s were allowed to remain part of the ProMedica system, all ProMedica hospitals would be in an even more dominant position in the Toledo-area market because “the merger would allow ProMedica to unilaterally increase its prices above competitive levels.”
It was well known that St. Luke’s was struggling to remain the only independent hospital in the Toledo area before it merged with ProMedica.
Numerous stories in The Blade reported the hospital’s financial struggles and that it was considering cutting money-losing services, including obstetrics, cardiac rehabilitation, and even general surgery to stay afloat.
In the papers filed with the FTC, ProMedica officials said they will leave St. Luke’s in a much stronger financial position than it was in 2010, which before joining ProMedica had “declining cash reserves and a downgraded bond rating.”
“ProMedica has eliminated St. Luke’s long term debt. Prior to the Joinder, St. Luke’s was in technical default on its long-term bond debt of approximately [redacted figure],” ProMedica states in the FTC filing. “ProMedica consolidated St. Luke’s into its Obligated Group, secured the bond debt, and completely paid it off since the Joinder closed.”
The exact amount of St. Luke’s debt was not available in Tuesday’s filing.
Under ProMedica’s proposed agreement, St. Luke’s will again become an independent hospital, with its own board of directors and staff. It will retain its contract with ProMedica-affiliated insurer Paramount.
Dan Wakeman, St. Luke’s current president, would continue working at the hospital but the FTC documents did not specify his future role. The deal would also allow for “reasonable financial incentives” for Mr. Wakeman to accept a position with St. Luke’s” after the divestiture is complete.
ProMedica will provide a year of transition services to St. Luke’s, such as helping it migrate to its own information technology system.
The document filed with the FTC also states that ProMedica has made several upgrades, including converting space to create more private inpatient rooms. This has helped the hospital lower the number of people it has to turn away from the emergency department, the document states.
“After a period of time for public comment, and the FTC approves the agreement, ProMedica and St. Luke’s then will finalize the deliverables to transition St. Luke’s to an independent hospital. This entire process may take a number of months,” ProMedica said in a written statement.
During the transition, nothing will change for St. Luke’s customers and patients. They can continue to see their doctors and the hospital will function as normal, Ms. White said.
The FTC will appoint a third-party monitor to oversee the divestiture process. Many financial details were unavailable in the filing.
Public comments can be filed electronically at https://ftcpublic.commentworks.com/ftc/promedicadivestuture/.
Contact Marlene Harris-Taylor at: mtaylor@theblade.com, 419-724-6091, or on Twitter @marlenetaylor48.
First Published May 4, 2016, 4:00 a.m.