Mark Hall’s Preliminary Report on HCA’s Acquisition of Tax Exempt Mission Health
Asheville’s Mission Hospital
Mark Hall has completed another chapter of his case study regarding PE acquisition of nonprofit hospitals. The latest update concerns the decision making process. When all is said and done, this encyclopedic project will likely weigh in as the most detailed and comprehensive study of its kind, useful to state and federal policy makers, as well as for-profit and nonprofit healthcare stakeholders. Here is the Background and Summary from Mission Hospital’s Decision to Sell to HCA: A Preliminary Report:
This preliminary report is one part of a larger study examining what lessons can be learned from the events leading up to, and following, HCA Healthcare’s 2019 purchase of the Mission Health system based in Asheville, North Carolina (NC). Other portions will address what has transpired following the sale, as well as recommendations for how other institutions and communities might address similar issues that may arise elsewhere. This portion of the report provides a brief introduction and then focuses on events leading up to the decision to sell.
As a summary of this report’s key points:
• HCA’s management of the Mission Hospital system has proven to be much more controversial and contentious than anyone imagined. Concerns related to Mission’s quality of care, scope of services, patient access to services, corporate profits, inadequate staffing, excessive physician turnover, and questionable charitable care policies have produced an avalanche of negative publicity, both locally and nationally, as well as several high-profile lawsuits and a major federal enforcement action.
• A key event that paved the way for the HCA sale was the state’s decision in 2015 (effective in 2016) to terminate the antitrust oversight that had been in place for two decades as a condition for allowing Mission Hospital to merger in 1995 with its former Asheville competitor, St. Joseph’s. No convincing reason can be found for why the state, having conferred monopoly power, then permitted Mission to become an unregulated monopoly. It does appear, however, that state officials and involved community members at the time failed to foresee that lifting regulatory oversight might lead to the hospital’s sale to a large, out-of-state profit-driven owner.
• Key elements of Mission’s decision to sell to HCA have been covered extensively by others. This report pulls together that body of work and adds additional insights from interviews with former board members and informed sources. In sum, despite the hospital’s strong financial condition at the time, Mission’s leaders believed that, over time, Mission would struggle to maintain its quality and scope of services as a stand-alone system. A substantial driver of this belief was Mission’s failed negotiation with Blue Cross in 2017 to increase payment rates. Because Mission’s leaders had already been exploring a potential sale, its board was able to approve a sale to HCA within just a few months after the failed Blue Cross negotiations.
Mission’s selection of HCA rather than an in-state nonprofit system that offered similar terms has been extensively critiqued, based on concerns that its board was not fully informed or that its CEO had a conflict of interest. Key leaders involved at the time, however, explain that HCA was selected because it appeared better able to achieve operating cost efficiencies without compromising quality or service. Also, a major draw was that HCA’s purchase price would be used to create a large foundation that would broadly address regional health problems. It does not appear, however, that the board anticipated HCA would pursue cost savings by making aggressive cuts in patient care staffing.