MSHA CEO Vonderfecht: Health system still interested in acquiring Unicoi Memorial

Brad Hicks • Oct 5, 2012 at 4:11 PM

Mountain States Health Alliance President/CEO Dennis Vonderfecht said he is disappointed the Unicoi County Memorial Hospital Board of Control delayed action on MSHA's letter of intent to acquire UCMH, but he said the organization is still interested in acquiring the community hospital and is urging the UCMH board to act on its original plans.

"What we're calling for is the board of directors of Unicoi County Memorial Hospital to get back on track with the process that was originally put in place," Vonderfecht said. "It was a fair process to both parties involved, which was us and Wellmont, as well."

Vonderfecht met with members of the media Friday morning to discuss the process that led to the UCMH board's consideration of MSHA's letter of intent and what he wants to see happen next regarding MSHA's possible acquisition of UCMH.

In late July, the UCMH Board of Control sent requests for proposal to both MSHA and Wellmont Health System seeking proposals to acquire the financially-struggling community hospital. Vonderfecht said MSHA's letter of intent was submitted on Sept. 7. This was followed by a strategic planning meeting by the UCMH board's executive committee to decide between MSHA's proposal and Wellmont's proposal.

"They selected our proposal to go forward to the full board," Vonderfecht said. "The full board informally accepted it, knowing they had to go for the formal acceptance last night. So that's how the proposal worked. All along the process, they said we had the best proposal that best met the request that was put out to us, and now to allow Wellmont a second chance, a second bite of the apple, is patently unfair to Mountain States Health Alliance."

The UCMH Board of Control was set to discuss and vote on the MSHA letter of intent at a meeting held Thursday evening. Among the more than 50 people gathered inside the UCMH boardroom for the meeting were Wellmont President/CEO Denny DeNarvaez and Medical Care CEO and Qualuable representative Steve Hopland. Not among those present, however, was Vonderfecht.

"We purposely weren't at the meeting because we were asked not be at the meeting by the board," Vonderfecht said. "What we were instructed and told, and I think what they fully had intended, was that they were going to discuss our proposal before the group that showed up and then formally vote on it, really not opening it up at all."

After the meeting was opened for the board to receive comment from those in attendance, both DeNarvaez and Hopland spoke about the interest their respective organizations have in acquiring UCMH. DeNarvaez said the RFP sent by the board asked for little information and that the proposal submitted by Wellmont reflected the information it had received from the UCMH board.

Hopland told the board that Qualuable had expressed prior and recent interest in acquiring UCMH, but was not provided with the RFP information sent out by the board in late July.

The board eventually voted to table the signing and execution of the MSHA letter of intent and hold another meeting on Oct. 18 at a larger, not-yet-specified venue. The board also voted to allow UCMH interim CEO Jete Edmisson to receive proposals from other health care entities interested in acquiring UCMH until Oct. 11.

Vonderfecht said Qualuable is made up of a group of physicians and, under federal law, physicians cannot own hospitals. Because of this, he feels Qualuable should be removed from consideration. He also said because Wellmont has seen commitments MSHA made in its letter of intent, which became available for public review on Sept. 28, Wellmont has been given an "unfair advantage" if allowed to submit a second proposal.

MSHA was not allowed to view Wellmont's proposal, Vonderfecht said, adding that if Wellmont can submit a second proposal, MSHA should have the opportunity to do so as well.

"That's the only fair thing to do to start with," he said. "But, like I said, they had a good process in place to start with and there's no reason that they should've been sidetracked last night by the Wellmont people and Dr. Hopland with this Qualuable group."

Both Wellmont and MSHA received the same one-page request for proposal from the UCMH Board of Control on the same date, Vonderfecht said. At Thursday's meeting, several UCMH board members commented that the 20-page proposal submitted by MSHA was a stronger and more detailed than the five-page proposal initially submitted by Wellmont.

"Wellmont had the same opportunity we did to put a very good proposal together," Vonderfecht said. "If they dropped the ball and didn't do that, that's their problem. We shouldn't have to pay a price for that."

Vonderfecht said he feels MSHA is the best partner for UCMH. He said between MSHA facilities and UCMH, the two entities serve 96 percent of the health care needs of Unicoi County residents.

"We have a very long track record of working with the Unicoi County Memorial Hospital in a partnering relationship for many years," he said. "I think by the fact that they're one of the last three remaining independent hospitals in this region shows that partnering relationship worked. They were able to remain independent for much longer than the majority of hospitals in this 29-county, four-state service area that we serve."

He also said MSHA has a track record of "building up" community hospitals it takes into its system.

"Our volumes increased at those facilities because we take physicians out to those facilities, the specialists, to try to keep patients at home as opposed to coming in to, for instance, the Johnson City Medical Center," Vonderfecht said. "We've built plenty of new hospitals. We've invested lots and lots of capital into those new facilities, and we'll stand toe-to-toe with Wellmont or any other health system in this country with what we've invested in hospitals that have come into our organization. Unicoi County hospital will be no different than any other hospital that's come into Mountain States Health Alliance."

Vonderfecht said he expects the board to take action at its Oct. 18 meeting. He said this action should be the UCMH Board of Control's formal acceptance of MSHA's letter of intent.

"The board really does have to act," he said. "The hospital is literally living payroll to payroll period. They don't have a whole lot of cash available."

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