Dignity has deeper pockets than other bidders

ASHLAND — The four hospital systems in the running for a possible merger with Ashland Community Hospital proposed to keep its current level of services, ACH officials said Thursday.

Dignity Health was chosen because the other systems either didn't have the financial capability to guarantee what ACH was looking for "down the road," they adhered to strict religious guidelines for all their physicians and hospitals, or they threatened to turn ACH into "a commodity," said Dr. Doug Diehl, former chairman of the ACH board.

"They (Dignity Health) had the balance that was going to work for the vast majority," he said. "We felt, in the big picture of things, that Dignity presented the best option for us to maintain a full-service hospital in the community."

The hospital sent out 25 requests for proposals last December and received five proposals back, said Diehl, who was board chairman at the time. Four of those organizations, excluding Regional Care Hospital Partners of Brentwood, Tenn., were invited to give presentations to the ACH board.

They included Asante, which owns Rogue Regional Medical Center in Medford; Providence Health & Services of Seattle, which operates Providence Medford Medical Center; Dignity Health of San Francisco, then known as Catholic Healthcare West; and Capella Healthcare of Franklin, Tenn.

Capella reported revenue of $172.8 million in 2011 and was the only for-profit system that met with ACH.

Providence Health & Services is a not-for-profit Catholic health care ministry in which all of its 27 hospitals adhere to the church's religious directives. It posted a revenue of about $7 billion in 2011.

Asante, a not-for-profit, secular system, owns RRMC and Three Rivers Medical Center in Grants Pass. In 2011, it produced revenues of $480 million.

Dignity Health produced more than $10 billion in revenue during 2011.

Diehl said he could not discuss the particular reasons why ACH eliminated any of the hospitals from consideration, citing confidentiality agreements that were part of the negotiations.

Diehl also would not comment on what type of contract ACH has on the table with Dignity Health.

Community members Tuesday warned the Ashland City Council that Dignity Health in June wrapped up a deal selling St. Mary's Regional Medical Center, a 380-bed hospital in Reno, Nev., to for-profit hospital-chain Prime Health Care Services.

Dignity Health acquired St. Mary's in 2007 and lost nearly $130 million over the past three years there, according to news reports.

"We would certainly have to ask for a substantial time period where current services will remain in place," Diehl said.

ACH is reporting a loss of $3.3 million from last year's operations, Chief Executive Officer Mark Marchetti said, reviewing an ongoing audit of the budget. The hospital experienced a $500,000 shortfall in 2010-11, he said, and posted a $1.5 million loss during the 2008-2009 fiscal year.

"We're not in as strong of a position as we were when we started this process," Diehl said.

Dignity Health officials said the organization has identified ways to bring ACH into the black and increase its services.

If the merger goes through, Dignity Health will maintain a local board of directors in Ashland. The local board would pick and approve its new members, but a central board in San Francisco has the ultimate say over all of the decisions regarding Dignity Health's 40 hospitals.

The vast majority of board work, such as budgeting, development and capital resource and services management, among other responsibilities, will be carried out by the local board, Diehl said. Dignity also has agreed to keep ACH's current bylaws in place, he said.

Representatives from Dignity Health and ACH are scheduled to make a presentation to the Ashland City Council at 7 p.m. Tuesday, Oct. 16, in the Ashland Civic Center Council Chambers, 1175 E. Main St.

A public hearing is set for the Nov. 6 City Council meeting at the same time and place.

The alliance requires the city's approval because when the city turned the hospital over to the not-for-profit Ashland Community Healthcare Services in 1996, it retained sole corporate membership, according to city documents. Before 1996, the hospital was a department of the city.

Dignity Health was formerly known as Catholic Health Care West until Jan. 23, when it changed its name and its affiliation with the Catholic Church. Since the change, the hospital system is no longer a sponsored ministry of the church, but a self-governing, nonprofit health care system.

However, because 25 of Dignity's 40 hospitals remain Catholic-affiliated, its non-Catholic hospitals are still barred from performing direct abortions, in vitro fertilization or prescribing aid-in-dying medication. They are not, however, required to force lifesaving treatment on a patient who refuses it.

Many Ashland residents have expressed concern over Dignity Health's stance against the Oregon Death with Dignity Act, its banning of direct abortions, and the loss of local control if a partnership is formed.

Reach Ashland Daily Tidings reporter Sam Wheeler at 541-499-1470 or email swheeler@dailytidings.com.

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