Missouri attorney general sets conditions for sale of St. Joseph and St. Mary’s medical centers

Missouri Attorney General Chris Koster said Wednesday that Ascension Health has agreed to set aside $20 million in expected proceeds from the coming sale of two Kansas City area hospitals to be used for charity care.

Steps are underway to complete the sale of St. Joseph Medical Center in Kansas City and St. Mary’s Medical Center in Blue Springs to Prime Healthcare Services.

The pending sale drew concern from hospital supporters who wanted to ensure that previous donations to the hospitals’ philanthropic foundations stayed in the Kansas City area, if not at the hospitals themselves.

Koster said that until the agreement about the $20 million was reached, he had “not received sufficient assurance that the money would remain available for acute indigent medical care benefiting the general public in Kansas City.”

Nothing in the new agreement indicates that the restricted funds would be allocated for use by the two hospitals that are being sold. Specific allocation of the restricted funds for use in Kansas City will continue to be discussed.

“Ascension cannot access the $20 million in restricted funds until this concern is resolved, either through further negotiation, mediation or litigation,” according to the attorney general’s office.

The two hospitals, consolidated under the Carondelet Health umbrella, became part of Ascension Health, a St. Louis-based not-for-profit organization, in 2002. Ascension owns three long-term-care facilities in the Kansas City area and will retain them after it sells the two hospitals to Prime, a California-based hospital chain.

By law, the attorney general must be notified when a Missouri nonprofit corporation such as Ascension plans to sell all or substantially all of its assets. The attorney general then is obligated to ensure that charitable assets in Missouri are used for their intended purpose.

Similar oversight by the attorney general’s office helped lead to creation of two large health care foundations in the Kansas City area after the former nonprofit Health Midwest hospitals were sold to HCA Health Midwest in 2003.

Koster’s review of the pending transaction led him to inform Ascension that his office would not conditionally approve the hospitals’ sale to Prime unless Ascension agreed to put the expected proceeds in a restricted account. That agreement was received Wednesday. The notice of agreement from the attorney general’s office didn’t specify how the “acute indigent medical care” requirement would be met.

“We are pleased to come to an arrangement with the Missouri attorney general regarding the sale of St. Joseph Medical Center and St. Mary’s Medical Center to Prime Healthcare Services and look forward to continuing to work with the attorney general to ensure that all his concerns are addressed,” Ascension said in a prepared response.

This story was originally published February 11, 2015 at 2:24 PM with the headline "Missouri attorney general sets conditions for sale of St. Joseph and St. Mary’s medical centers."