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Hospital sues over shared assets

Fri., Sept. 12, 2008, midnight

Providence wants partnership clarified before Empire sells

The company that owns Sacred Heart Medical Center sued the current owner of Deaconess Medical Center on Thursday, asking the court to rule on assets the two hospital systems share.

Dr. Andy Agwunobi, chief executive of Providence Health & Services, which operates Sacred Heart and 10 other hospitals in the region, called the lawsuit an effort to clarify the transfer of assets of Inland Northwest Health Services and said the issues it raises are “critical but not earth-shattering.”

But Christine Varela – a spokeswoman for Empire Health Services, which owns Deaconess and Valley Hospital and Medical Center – said the lawsuit could be fatal to efforts to sell those hospitals to Community Health Systems Inc., of Tennessee.

“We were shocked and blindsided by Providence’s lawsuit,” Varela said.

Agwunobi insisted that the sale of the hospitals, which Providence supports, could go through while the hospital companies work out the details surrounding Inland Northwest Health Services, which is a joint venture of the two hospital systems. Community Health would have access to the air ambulance, rehabilitation services, community health and other assets operated by INHS, he added.

Empire officials have not seen or been served with the lawsuit – it was still being processed Thursday by Spokane County Superior Court – and only read a press release about it, Varela said. But litigation could throw a wrench into the sale, she said.

“A pending lawsuit during a change of ownership is not insignificant to a pending sale,” Varela said

Some of the issues highlighted in the lawsuit, Agwunobi said, involve Meditech, a system used by INHS that handles patient data. Empire owns the license for the software, and Providence wants to meet with Community Health to get assurances Meditech will continue to be used by INHS, he said.

Providence also wants to clarify questions about two other software systems developed by INHS, one for Providence and the other for Empire, and issues around Community Health, a for-profit company, sharing control of INHS, which is a not-for-profit entity.

The lawsuit asks the court to rule that INHS assets can’t be transferred without Providence’s consent, Agwunobi said, so that the partnership that has grown over the years can continue. While Providence officials have had discussions with Empire over the past 10 months, they’ve been unable to meet with officials from Community Health, he added.

“This is really about protecting INHS’ future,” he said.

Empire has been discussing the fate of INHS with Providence “for well over a year” and is committed to keeping the shared system, Varela said.

In reviewing the sale, the state attorney general and Department of Health have signed off on issues surrounding INHS, she said. Community Health can’t meet with Providence now, she said, because it doesn’t own INHS and won’t until the sale goes through.

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