Vanguard/DMC deal approved with strings attached

Despite Michigan Attorney General Mike Cox giving Vanguard Health Systems the go-ahead to buy nonprofit Detroit Medical Center, approval for the $1.5 billion deal comes with strings attached, according to an 85-page report the attorney general's office released Saturday.

The sale may proceed as long as DMC and Vanguard promise to protect the public interest and continue its historic role of serving the poor and indigent. The conditions include ensuring the $140 million in restricted charitable gifts that DMC is sitting on will be used for intended charitable purposes; assuring that resources suffice to police Vanguard's performance and accepting that the attorney general has the authority to legally enforce Vanguard's promises.

A 20-person board, comprised of current and new DMC members--plus appointees by the attorney general, the mayor and the county executive--will track Vanguard's performance and finances. At the least, the board must offer a telephone hotline and an email address for people to express concerns.

Cox also extended to 10 years from six the length of time Vanguard must submit written reports to the board about its performance and adherence to commitments.

Key details have yet to be worked out, including CMS's approval to transfer billing procedures from a nonprofit company to a for-profit. That change is critical because most of DMC's patient revenue comes from Medicare and Medicaid reimbursements.

After Vanguard buys DMC, it will be the country's fifth largest investor-owned hospital and healthcare company.

"With these additional commitments, I conclude DMC will receive fair market value for its assets; Vanguard will have the means to
carry out its promises; adequate means exist to hold Vanguard to its word; and restricted charitable gifts held by DMC will be preserved for intended charitable purposes," the attorney general's report said.

"A whole lot of people are going to be watching" to see that Vanguard lives up to its commitments, Gary Benjamin, a legal services attorney and member of the Coalition to Protect Detroit Health Care--a network of healthcare, religious and community groups that raised questions about the sale--told the Detroit Free Press.

Vanguard's purchase of DMC and its $850 million capital investment in the hospital will be the single largest private investment in Detroit's history, according to DMC. The deal is expected to close by Dec. 31.

To learn more:
- here's the Attorney General's report
- read the Detroit Free Press article
- read the Detroit News article
- here's the Nashville Business Journal article

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