Wellmont’s legal counsel to look into other options concerning Unicoi County hospital

Brad Hicks • Aug 27, 2013 at 7:08 AM

ERWIN — Wellmont Health System President/CEO Denny DeNarvaez said her organization was prepared for the Unicoi County Memorial Hospital Board of Control’s Wednesday decision to move forward with Mountain States Health Alliance’s proposal to acquire UCMH.

DeNarvaez also said Wellmont already is working to explore avenues to have the board’s decision reviewed further. She said Thursday that Wellmont’s internal and external legal counsel have been given the green light to look into any avenues available to accomplish this.

“They’ve been given authority to go ahead and do their homework as to whether or not we have a case, whether or not it’s a defendable case or not, but they’ve been given authority to go ahead and pursue that avenue,” DeNarvaez said. “And, again, we’re not saying would be successful or not. They simply have authority to pursue that avenue and find out whether or not there is, in fact, a case.”

DeNarvaez said Wellmont will not only await the results of the state attorney general’s required review when transactions involving public hospitals occur, but it may look to involve the Federal Trade Commission, which aims to protect consumers and prevent anticompetitive practices. DeNarvaez said she feels the required process relating to the sale of community hospitals was not followed, that the board’s decision does not reflect the wishes of the community and, with the board’s decision, that MSHA now has too great a hold on health care in the area.

“I think what we also want to test is does the Federal Trade Commission see any issue in the fact that, at this point, with Unicoi County, if it were to fall in the hands of Mountain States, do they see any issue with the idea that there would be four counties, population size of about the size of Knoxville, that now have no choice in their health care system but to go to a Mountain States facility and do they have any problem with it,” she said.

Wednesday, the UCMH board voted 5-2 to accept a proposal from MSHA to acquire the financially struggling community hospital over a proposal submitted by Wellmont.

DeNarvaez said Wellmont has received “overwhelming” feedback since the decision from those in the community displeased with the board’s decision. She said some have stated they will take part in a letter-writing campaign to make their opinions known to the attorney general.

“People are absolutely outraged,” she said. “They have witnessed what they think is total arrogance from the board members of Unicoi County, and they are mad. They are just absolutely fighting mad.”

MSHA Vice President Tony Benton said MSHA officials are confident the process leading up to the decision will pass the attorney general’s review, as the organization has been through the transaction process with other hospitals in other communities. He said officials do not feel a FTC review would be required.

“The Federal Trade Commission really looks at the market level of activity, and we would be confident that there will be no issues there,” Benton said.

While the total cost of MSHA’s acquisition of UCMH may not be known for some time, some costs are spelled out in the organization’s proposal. MSHA has committed to voluntary contributions of $750,000 each to the town of Erwin and Unicoi County, a $1 million contribution to go toward a foundation to enhance health care services within the county, the providing of $2 million line of credit to sustain operations at UCMH through the transaction’s closing and assumption of all of UCMH’s debt and financial obligations, which were estimated to be more than $6 million in late July.

FTC spokesman Mitch Katz said transactions less than $68.2 million do not require up-front approval from the commission, but he said it can be called in after the transaction to investigate complaints of anticompetitiveness and price increases resulting from the transaction.

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