Carle Foundation Hospital offers to buy Carle Clinic
URBANA – Carle Foundation Hospital has offered to purchase Carle Clinic and its subsidiary, Health Alliance Medical Plans, for $250 million, according to documents filed with the state this week.
And if the deal is approved, a significant barrier to medical care now faced by needy and uninsured patients in East Central Illinois could be removed: The clinic, currently a for-profit business, would join the hospital under its not-for-profit umbrella and begin offering patients the same charity-care assistance now offered by the hospital.
The clinic-hospital merger plan is spelled out in a lengthy application Carle hospital has filed with the Illinois Health Facilities and Services Review Board.
The board plans to conduct a public hearing on Carle's application at 10 a.m. Nov. 4 in the Urbana City Council chambers, 400 S. Vine St., U.
State law requires Carle hospital to show the transaction is needed and financially feasible before the state planning board can approve it, and the board includes public testimony in its consideration.
According to Carle's Certificate of Need application, the foundation board of trustees met earlier this month to approve the offer to purchase the clinic and its wholly owned subsidiary, Health Alliance Medical Plans.
The clinic's physician-owners will consider the offer in November.
The application states the hospital hopes to complete the deal by April 30, 2010, and would cover about $245 million of the purchase with an $82.8 million bond issue and a $162.5 million promissory note.
The total $250 million purchase price also includes three parcels of land worth $4.4 million.
The hospital said it plans to offer jobs to all clinic employees in good standing, among them the 342 doctors, and offer them fair market pay and benefits. All Carle Clinic facilities in Urbana, Champaign, Danville, Monticello, Effingham, Mahomet, Rantoul and Tuscola would be included, according to the application.
Health Alliance Medical Plans, which provides health coverage for about 320,000 enrollees, would remain a for-profit business under its new owner. A significant amount of the total purchase price reflects the value of Health Alliance, hospital officials said.
Carle officials say they want to combine the operations of the hospital and the clinic to provide a seamless health care delivery system and widen access to physician services in both the local community and outlying towns.
And by bringing the hospital and clinic system under one common ownership, the hospital states, Carle could benefit from costs savings and efficiencies and provide better health care at a lower cost.
Carle Clinic CEO Dr. Bruce Wellman said the integration would allow for higher levels of cooperation and improve all aspects of patient care.
A separate hospital and clinic poses some problems, the hospital states:
– The current system doesn't allow for full collaboration on patient care.
– Separate information technology systems exist for electronic medical records.
– Multiple points of entry into the Carle system make it more difficult for patients to access the appropriate level of care and information they need at all hours of the day and night.
– The hospital's quality standards are difficult to mesh with individual physician practices.
– Disparate medical research goals remain.
A merged hospital and clinic would improve service, "because each patient will obtain physician-led care that will be supported by a vast network of coordinating providers, each who shares a consistent commitment to delivering quality care," the hospital's application states.
Carle officials said the charity care policy of the Carle Foundation – which offers free or reduced-cost care to patients who are financially eligible and fill out an application – will continue at the hospital and several of its business units and will be extended to all clinic physician practices. Carle hospital provided more than $7.8 million in charity care during its 2009 fiscal year.
Valerie McWilliams, managing attorney for Land of Lincoln Legal Assistance Foundation's Champaign office and a member of a Carle hospital advisory committee on medical debt and charity care, said the merger agreement holds exciting possibilities for expansion of patient care in the area.
"The potential is fabulous for this community," she said.
McWillliams said her main concern is how the details will work out, not only for expanding charity care to clinic patients but for clinic properties that could ultimately be removed from local tax rolls. Carle hospital's local property tax exemption was removed by the Illinois Department of Revenue, but the hospital is challenging that action in court.
Carle officials declined to answer questions about the potential tax impact. But McWilliams said she hopes Carle will spell out in a community benefit agreement how it would address, among other details, the impact on local taxing districts if the hospital wins a reinstatement of its tax exemption and clinic properties become tax-exempt.
But she sees a lot of potential for more needy patients to get medical care in the merger proposal, she said.
"There are thousands of people in this community who, as a result of financial issues, can no longer receive treatment from (Carle) clinic doctors," she said.
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