This page answers frequently asked questions regarding the Attorney General’s review of Metro Health’s proposed joint venture with a subsidiary of Community Health Systems (CHS). Metro Health and CHS signed a definitive agreement in January 2015. The Attorney General is reviewing the transaction, which is expected to take 4 to 6 months from the signing of the definitive agreement.
To promote transparency and inform the public, documents are available on the Attorney General website.
Metro Health has represented to the Attorney General that, with this joint venture, it is proactively adapting to the changes of federal health care reform from a position of strength. This will allow it to improve facilities, to access capital, and to preserve services. The Attorney General will review these representations.
The Attorney General will be reviewing Metro Health’s process in choosing CHS.
Community Health Systems (CHS) is one of the nation’s largest hospital operators. It is a publicly-traded company from Tennessee. CHS owns or operates 135 hospitals in 29 states. This would be CHS’s first hospital in Michigan.
Under the proposed joint venture, Metro Health will contribute its assets to the joint venture; CHS will contribute cash; and Metro Health and CHS will jointly govern the hospital. More details will be available once the parties have reached a definitive agreement.
Michigan law requires that charitable assets be used for charitable purposes. Consistent with this, Metro Health represents that proceeds from the transaction will remain with Metro Health Corporation and be used for charitable purposes. The Attorney General will be closely reviewing the preservation of charitable assets so that both donor intent and charitable assets are preserved. Typically, the Attorney General also requires the parties to agree to a Charitable Asset Transfer Agreement to offer further protection to transaction proceeds. As more information is available, the Attorney General will update the website.
Metro Health’s hospital and other facilities will continue to serve the medical needs of the local community, albeit with a new owner—the joint venture of Metro Health and CHS. Metro Health has represented that, under the joint venture, core services will continue and that current employees in good standing will be offered similar employment contracts by the new owner. As part of his review, the Attorney General will consider these representations.
A Letter of Intent, or LOI, is a tentative agreement between the parties to cooperate toward certain ends. In general, the parties agree to work in good faith towards completing a transaction. In January 2015, the parties signed a definitive agreement. With this agreement, the parties have reached definitive terms of agreement regarding the transaction and are working towards closing—anticipated by the end of June or July 2015. As the proposed joint venture progresses, the Attorney General will update the website with additional information regarding the transaction.
In general, the Attorney General protects charitable assets in Michigan under broad common law and statutory authority. This authority extends over the merger or sale of charitable nonprofit corporations, which includes most of Michigan’s hospitals. Primarily, the Attorney General reviews these transactions to protect the charitable assets and to ensure that they are not diverted for private benefit. The Attorney General also protects restricted charitable assets, i.e., those assets that were donated for a specific purpose, to prevent these assets from being misused. For a guideline of the Attorney General’s review process, see here.
More specifically, the Attorney General is reviewing this transaction because the parties have conditioned the sale on receiving the Attorney General’s consent or lack of objection. In other words, the parties recognize the Attorney General’s authority in this area, are cooperating with the Attorney General’s review process, and recognize that his objection would stop the sale.
The Attorney General’s Review Process provides guidelines for the issues the Attorney General considers, but here are some of the main areas:
Yes. When the Attorney General’s review is complete, he will publish a report on this website.
Yes. The Attorney General is hosting a public forum on Thursday, April 23, so that the public can comment and submit questions regarding the sale.
Date & Time: April 23, 2015, 5:00 - 7:00 p.m.
Location:Metro Health Conference Center
The public can also comment on the proposed sale by email or by mail to:Michigan Department of Attorney General
Last updated: April 8, 2015