HCA Midwest Health agrees to pay $15 million to Health Care Foundation of Greater Kansas City

The Health Care Foundation of Greater Kansas City and HCA Midwest Health have settled a long-running dispute about whether HCA spent promised funds to provide charity health care in the metro area.

The foundation was created with some of the proceeds from HCA’s $1.3 billion purchase of the former Health Midwest hospitals in 2003. The deal, which transferred not-for-profit hospitals to for-profit HCA, created two charitable foundations to help continue Health Midwest’s charity service to the community.

The contractual obligations called for HCA to provide at least $653 million in charity and uncompensated care in the Kansas City area over the 10 years ending in March 2013. The health care foundation sued HCA when it believed the obligation was unmet.

In the settlement announced Wednesday, the foundation will receive $15 million, an agreed-upon shortfall in HCA’s charitable spending that occurred at some point during the contracted 10 years.

The settlement funds will be used “to continue our mission of improving health for the uninsured and underserved in the Kansas City community,” said Kenneth Southwick, the foundation’s board chairman.

M.L. Lagarde, president and chief executive of HCA Midwest, said the hospital company remains “steadfast in our belief that the company fully satisfied and exceeded” its charity obligations by providing “tens of millions of dollars in free or uncompensated care every year.”

HCA Midwest did not say what its exact charity care spending has been, but a court-ordered accounting audit helped arrive at the $15 million settlement.

The charity settlement doesn’t affect litigation in which the foundation has charged that HCA also failed to spend contractually promised amounts on capital improvements at the former Health Midwest properties, including Research Medical Center, Menorah Medical Center and Overland Park Regional Medical Center.

Previously, in the capital improvements litigation, the foundation received two judgments against HCA, one for $162 million in 2013 and an additional one for $77 million in 2014. The foundation argued that HCA had not met its contractual obligation to spend $450 million on improvements to the hospitals it bought.

HCA argued that since it had spent $343 million in new construction on the Centerpoint and Lee’s Summit medical centers, it had fulfilled its capital spending obligation. But a Jackson County circuit judge ruled that HCA could take credit only for upgrades to the existing hospitals.

The capital improvement awards are not yet final, and HCA is expected to appeal. None of the total of $239 million in capital spending judgments has been paid.

In addition to creating the Health Care Foundation of Greater Kansas City, the Health Midwest sale created the REACH Healthcare Foundation. The REACH foundation did not participate in the litigation and is not receiving any of the charity settlement.

Both foundations use the assets from the Health Midwest sale to make grants to health and social service nonprofits in the area that provide safety net services.

This story was originally published February 11, 2015 at 9:48 AM with the headline "HCA Midwest Health agrees to pay $15 million to Health Care Foundation of Greater Kansas City."