KU Health System working with Nashville for-profit to purchase Topeka hospital

The University of Kansas Hospital got its first 5-star ranking from the federal government.
The University of Kansas Hospital got its first 5-star ranking from the federal government. File photo

The head of the University of Kansas Health System has contacted the owner of struggling St. Francis Hospital in Topeka with an offer to buy and operate the hospital in partnership with Ardent Health Systems, a for-profit hospital chain based in Nashville.

KU Health System provided a letter Thursday from its CEO Bob Page to SCL Health CEO Mike Slubowski. It outlined the proposal to save the Topeka hospital that is losing millions of dollars a year and is in danger of closing.

“We are preparing a proposal to acquire St. Francis Health,” Page wrote in the letter dated April 27.

Page’s letter proposes a partnership with Ardent Health at St. Francis and cited KU’s relationship with Hays Medical Center as an example of a different health partnership. KU Health and Hays Medical remain separate entities, but they combined their financial statements starting this year and are sharing resources.

“We partnered with Hays Medical Center in Hays, Kansas, to help keep health care vibrant and successful in that community,” Page says in the letter.

“We understand how to work with doctors, nurses and caregivers to provide quality care, while also providing access to the extraordinary resources of a nationally renowned academic medical center. In addition, Ardent Health Services has one of the most experienced joint venture management teams in the nation.”

Ardent Health completed an acquisition of LHP Hospital Group last month that made it the second largest private for-profit hospital operator in the United States. The company has 19 hospitals in six states.

Colorado-based SCL Health put St. Francis up for sale about a year ago. The hospital has about 30 percent of the market share in the Topeka area, where it competes with Stormont Vail Health.

News that St. Francis Hospital might close breathed new life into a debate about Medicaid expansion that had died down after Gov. Sam Brownback vetoed an expansion bill and the Legislature failed to override the veto by a slim margin.

Medicaid expansion under the Affordable Care Act improves hospital finances by reducing uncompensated care to uninsured patients. Even expansion advocates acknowledge it wouldn’t have been enough to keep St. Francis in the black. But they say it would have helped, and hospital acquisition experts say it would also make St. Francis a more attractive target for potential buyers.

Brownback, a staunch opponent of expansion, has tried to halt St. Francis’ closure in other ways. He asked Kansas Attorney General Derek Schmidt to look into the finances of SCL Health, which was formerly run by the Sisters of Charity of Leavenworth, and he told reporters earlier this week that he’s been involved on the commercial side as well as the legal.

"My role in this has been to try to stir up buyers," Brownback said.

The Ardent Health-KU partnership is not the only possibility. The Topeka Capital-Journal reported that Stormont Vail is studying the feasibility of absorbing St. Francis and another for-profit with experience salvaging SCL Health assests is also in the mix.

Prime Healthcare Services announced Tuesday it was potentially interested. The California-based company was the fifth-largest for-profit hospital chain in the country as of last year. In 2013 Prime purchased two other distressed SCL Health properties, Providence Medical Center in Kansas City, Kan., and St. John Hospital in Leavenworth.

Kathleen Conwell, a spokeswoman for Providence Medical Center, said the company has since turned that facility’s fortunes around.

She said there are lots of considerations when it comes to St. Francis, including the presence of Stormont Vail. But they’re not insurmountable.

“Prime is interested,” Conwell said. “Their philosophy is you save hospitals and you save lives.”

Andy Marso: 816-234-4055, @andymarso

Hunter Woodall: 785-354-1388, @HunterMw