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No sale of DCHS to UP Health

Meeting to be set on future course for financially troubled IM hospital

IRON MOUNTAIN — The sale of Dickinson County Healthcare System to Marquette-based UP Health System will no longer be pursued and a meeting is pending to discuss the financially troubled county hospital’s next course of action.

DCHS and UP Health System announced Tuesday the organizations have terminated a non-binding letter of intent signed in July. In a press release, the parties cited “an inability to reach agreement on the terms of an acquisition.”

With this action, DCHS no longer is in exclusive discussions with UP Health System and will explore all options for the hospital’s future, including potential alternative arrangements with UP Health System, officials said.

“We have been transparent with the community and our stakeholders about the financial distress our hospital has faced, similar to many other rural hospitals across the country,” said Bill Edberg, DCHS board chairman. “The management team and board will continue to work diligently to identify the right path forward for the health system. I am hopeful that there will continue to be even stronger support from all stakeholders in helping our community continue to have access to quality health care close to home.”

UP Health System remains committed to serving the Upper Peninsula and believes Iron Mountain and Dickinson County deserve access to quality local care, said Brian Sinotte, market president of UP Health System. “While we are no longer discussing this acquisition arrangement, we will continue to explore collaborative efforts with Dickinson County Healthcare System to provide health care in Iron Mountain and Dickinson County,” he said.

An executive committee meeting of the DCHS board was canceled Tuesday and has yet to be rescheduled. It was expected the Dickinson County Board also would be represented at that meeting.

County Controller Brian Bousley said this morning officials are awaiting a report from hospital attorney Michael Celello. The talks with UP Health never reached the level of direct negotiations with the county board, he said.

DCHS has been seeking greater financial stability after Bellin Health of Green Bay, Wis., withdrew in May from an acquisition agreement that was estimated at $61 million, all of which would have gone to pay the hospital’s long-term debt and unfunded pension liabilities.

After signing a non-binding letter of intent July 19 to explore a possible sale to UP Health, officials said it would take 60 to 90 days or more to determine if negotiations should begin on a definitive agreement. UP Health is affiliated with Duke LifePoint, a joint venture of Duke University Health System Inc. and LifePoint Health, a private health care company.

DCHS’s financial losses have slowed — after a negative $13 million bottom line in 2017 — but a downward trend in business continues to keep it in the red. The 2018 year-to-date bottom line is a negative $4.1 million.

Dickinson County Commissioner Joe Stevens, a liaison to the DCHS board, said it’s “frustrating and sad” to see the proposed sale fall through. Nearly a year has been spent on the exploration of a sale, beginning with a letter of intent signed with Bellin in December, he said.

“Whatever action is taken, it has to be in the best interests of the community,” Stevens said.

At a DCHS board meeting Sept. 11, Edberg had said the relationship with UP Health seemed to be “to be forging ahead in a positive way.” Officials at that session continued to emphasize the importance of community support in keeping DCHS viable.

The possibility of a hospital bankruptcy has been mentioned, but there has been no open discussion by county officials of what that might entail. A Chapter 11 filing allows an organization protection from creditors as it reorganizes, but there has been no public signal of whether that option is legal, reasonable or will be pursued.

Serving northern Wisconsin and the central Upper Peninsula for more than 66 years, DCHS is a 49-bed community hospital with more than 80 active physicians. It operates as a Michigan municipal health facility corporation under Public Act 230. It is owned by the county but receives no direct county appropriations or taxpayer support and has been self-sustaining since moving to its U.S. 2 facility in 1996.

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