Bellin proposal to acquire DCHS totals $61.3 million
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IRON MOUNTAIN -- Bellin Health's total purchase price for Dickinson County Healthcare System will be about $61.3 million, all of which will be used to pay the hospital's long-term debt and unfunded pension liabilities.
A public hearing on the proposed purchase agreement is scheduled for 7 p.m. Monday, March 26, during a regular meeting of the Dickinson County Board of Commissioners.
Bellin, a Wisconsin non-profit corporation based in Green Bay, announced plans in December to acquire financially troubled DCHS by summer. Approval of the asset purchase agreement was announced last week and a 12-point summary was provided by DCHS on Monday as follows:
-- Bellin will purchase substantially all of the assets of DCHS, including the real estate previously owned by the county and the real estate owned by DCHS.
-- Bellin will assume all long-term liabilities of approximately $18.5 million, plus will provide cash that will allow DCHS to pay its unfunded pension liability of approximately $42.8 million for a total purchase price of approximately $61.3 million, subject to certain technical adjustments. For example, DCHS will apply any cash and investments to pay off existing liabilities.
-- Closing is projected to be July 1, 2018. Bellin will obtain licenses as a hospital and will obtain provider numbers for hospital payers and will obtain Certificates of Need from the CON Department to allow for transfers of services and facilities.
-- Bellin will provide to DCHS a short-term loan of $4 million up to a maximum of $8 million to assist DCHS in its negative cash flow between now and closing.
-- Amy Dettman, a Bellin Health executive, will be leased to DCHS to supplement DCHS's management through the date of closing.
-- Bellin will hire all of the existing DCHS employees, including physician employees and management, at the exiting terms and conditions of employment.
-- Bellin will grant recognition to each collective bargaining agent and take over the existing collective bargaining agreements.
-- An initial 11-member board of directors will be appointed by Bellin for the hospital. Five will be residents of Dickinson County and two will be members of the hospital medical staff. The initial local directors will be nominated by the current DCHS Board of Trustees.
-- For a period of at least five years after the date of closing, Bellin will continue to operate the hospital as a licensed hospital, either as a general acute care hospital or as a critical access hospital. Bellin will do an assessment of the community's health needs as required by tax-exempt hospitals and will provide a plan on how to meet those community needs.
-- The hospital will be operated as a non-profit, tax-exempt hospital and will provide charity care as required by a tax-exempt hospital and shall accept Medicare and Medicaid patients and all other patients regardless of their ability to pay.
-- DCHS will agree not to compete with Bellin's hospital operations for five years from the date of closing within a radius of 60 miles of Iron Mountain without Bellin's written consent.
-- The money to fund the unfunded pension liability will be provided on or about the date of closing.
During Monday's county board meeting, commissioners mentioned the March 26 hearing but otherwise offered little comment.
In previous weeks, the board met in closed sessions several times to resolve the real estate issue. Dickinson County Memorial Hospital and associated DCHS clinics are on a 27-acre parcel on U.S. 2 that is deeded to the county and leased to DCHS for a token sum.
The county has agreed to hold the property in escrow to allow a smooth transfer to Bellin once a final agreement is reached on Bellin's planned acquisition of DCHS. The purchase agreement between Bellin and DCHS is subject to final approval by the county board, which then would turn over the property.
DCHS initially bought the U.S. 2 property for $700,000. The property was then deeded to the county, which entered into the lease after DCHS paid off an outstanding $500,000 balance of general obligation bonds for the former hospital on Woodward Avenue.
DCHS now operates as a Michigan municipal health facility corporation under Public Act 230. As such, it receives no direct county appropriations or taxpayer support and has been self-sustaining since moving to its U.S. 2 facility in 1996. DCHS has more than doubled its staff and patient utilization over the past 20 years, according to hospital officials.
Construction of the new hospital was financed by the sale of $30 million in revenue bonds. DCHS, at various times, has since taken on further debt and refinancing arrangements.
The only hospital action taken by the county board Monday concerned potential citizen requests for copies of a longer document detailing the asset purchase agreement. That document, estimated at 48 pages, was not yet available from DCHS, but in a 3-2 vote the board decided a charge of 10 cents per page should be levied for anyone who might request it. An electronic copy will be provided at no charge, should the document be made public by DCHS.
Commissioners Joe Stevens and Ann Martin both said there should be no charge for printed copies.
"I say they pay," said Chairman Henry Wender, arguing it's the county's policy to charge such a fee for other copying requests.
Bellin Health Systems Inc. has more than 4,000 employees in northeast Wisconsin and the Upper Peninsula. It is comprised of Bellin Hospital, Bellin Psychiatric Center, 31 primary care physician clinics and several retail health clinics. It operates Bellin Health Oconto Hospital in Oconto, Wis., Bellin Fitness and Bellin College as well.
DCHS has more than 90 active physicians and each year treats more than 200,000 patients. As of December, it employed a staff of more than 850, making it the major largest employer in the Dickinson County area.