Hearing Monday on pending DCHS sale to Bellin

IRON MOUNTAIN — A public hearing Monday marks another step in the proposed sale of Dickinson County Healthcare System to Bellin Health, targeted for completion July 1.

Bellin, a Wisconsin non-profit corporation based in Green Bay, announced plans in December to acquire financially troubled DCHS by summer. Both parties accepted an asset purchase agreement earlier this month, subject to approval by the Dickinson County Board of Commissioners.

Monday’s hearing will be conducted by the county board beginning at 7 p.m. in Fornetti Hall at Bay West College, 2801 U.S. 2 in Iron Mountain. The hearing initially had been slated for the circuit courtroom of the courthouse.

County commissioner Joe Stevens, a longtime liaison to the hospital board, said representatives from DCHS and Bellin will attend.

“The public can come out and voice their concerns and opinions,” he said, adding, “I think we’re doing what’s best for the community.”

Board approval is needed by April 1 and a vote is planned Monday. Consent from the Michigan Department of the Attorney General is required before the July 1 closing date.

Key terms of the agreement include:

— Bellin will hire all of the existing DCHS employees, including physician employees and management, at the existing terms and conditions of employment. Bellin also will recognize each collective bargaining agent and take over existing collective bargaining agreements.

— Bellin will appoint an initial 11-member board of directors, of which five will be Dickinson County residents and two will be hospital medical staff. The initial local directors will be nominated by the current DCHS Board of Trustees.

— Bellin will operate the facility as a licensed hospital, either as a general acute care hospital or as a critical access hospital, for at least five years. It will remain a non-profit, tax-exempt hospital and will provide charity care as required by a tax-exempt hospital, accepting Medicare and Medicaid patients and all other patients regardless of their ability to pay. 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.

— Essentially, all of the purchase price will be used to pay the hospital’s long-term debt and unfunded pension liabilities. That total figure has been reported by the hospital’s legal counsel at an estimated $61.3 million, though hospital officials say the agreement is a fluid process with a number of “moving targets.” The dollar amounts are subject to adjustments.

Bellin signed an agreement March 9 to provide DCHS an emergency line of credit of up to $8 million to meet short-term cash needs. Bellin, then, is subsidizing DCHS leading up to the closing date. Bellin representative Amy Dettman has been named chief restructuring officer to oversee the transition of DCHS to Bellin.

DCHS has more than 90 active physicians and 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 John Schon, CEO-administrator.

Hospital officials reported a $10 million decline in revenues in 2017, largely linked to standards for Medicare, Medicaid and other government reimbursements, as well as poor levels of reimbursement from Blue Cross Blue Shield.

The proposed new entity, Bellin-DCHS, would fall under the umbrella of Bellin Health System, which includes Bellin Hospital, an acute care, 167-bed, multi-specialty hospital in Green Bay. Bellin-DCHS would be a sub-entity of the Bellin system, with its board of directors answering to the Bellin board. This is similar to the structure for other Bellin sub-entities, such as Bellin Psychiatric Center in Allouez, Wis., and Bellin College of Nursing in Bellevue, Wis.

Bellin has worked collaboratively with DCHS for about 35 years, starting with cardiology services. “We know each other and that’s a huge benefit,” Bellin president-CEO George Kerwin said when the planned acquisition was announced.

Locally, Bellin operates a health clinic on Woodward Avenue on property that once hosted the original Dickinson County Memorial Hospital, which opened in 1951.

DCHS purchased the U.S. 2 property that now has the hospital and related clinics in 1994 for $700,000. In exchange for approving DCHS’s request to seek revenue bonds for construction of the new hospital, the county required it be deeded the property. DCHS also paid off the outstanding $500,000 balance of general obligation bonds on the former hospital.

Under the 1994 deed, the county agreed to lease the 27-acre U.S. 2 parcel to DCHS for a century, at the nominal rent of $1 per year. The county now has the U.S. 2 property in escrow to allow a transfer to Bellin once a final agreement is reached.

Construction of the U.S. 2 hospital was financed by selling $30 million in revenue bonds. DCHS, at various times, has since taken on further debt and refinancing.

To accommodate the hearing, Monday’s regular county board meeting has been moved to 5 p.m. in the circuit courtroom, an hour earlier than the normal start time.

Jim Anderson can be reached at 906-774-3500, ext. 26, or janderson@ironmountaindailynews.com.

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