Becker's Hospital Review

13 CFO / FINANCE Paladin to Buy 2 Tenet Hospitals for $170M By Alia Paavola D allas-based Tenet Healthcare will sell its two Philadelphia hospitals to El Segun- do, Calif.-based Paladin Healthcare for $170 million, to help lighten its debt burden of $15 billion. The sale will transfer ownership of Hahnemann University Hospital, St. Christopher's Hospital for Children and other related operations in Philadel- phia to American Academic Health System, a new company formed by Paladin Healthcare. "Paladin shares [Tenet's] commitment to provid- ing compassionate, exemplary care and service, and we believe that entrusting the stewardship of these institutions to its affiliate AAHS will ben- efit the patients, employees, physicians and community for years to come," said Mike Halter, CEO for Tenet's Philadelphia division and CEO of Hahnemann University Hospital. The transaction, announced Sep. 1, is expected to be completed in early 2018. It will need regulatory approval. The decision to sell the two hospitals comes a day after Tenet announced it would replace longtime CEO Trevor Fetter and "refresh" the composition of its board of directors. n AG Sues Washington Hospital Over Charity Care: 8 Things to Know By Alia Paavola T he state of Washington is suing Tacoma, Wash.-based St. Jo- seph's Medical Center over allegations it violated the state's Consumer Protection Act, since 2012, by illegally withholding charity care from tens of thousands of patients. Here are eight things to know. 1. Attorney General Bob Ferguson filed the lawsuit alleging the medi- cal center repeatedly violated state law. 2. Washington law requires all hospitals to screen patients for charity care eligibility, notify patients of their options and only require one income-related document to prove charity care eligibility. St. Joseph's was accused of violating all of these requirements. 3. e lawsuit further alleges St. Joseph's management knew about the violations and didn't fix the problem. 4. In addition, the AG accused the hospital of allowing its revenue management contractor to train and encourage employees to demand upfront payments and hide their right to apply for charity care. 5. A former employee told AG investigators she had to "encourage patients to pay a deposit by indicating that [she] could only provide them with a charity care application if they paid a deposit first." 6. e lawsuit claims St. Joseph's reported charity care numbers well below the regional average, at times up to 40 percent lower. 7. If accused, St. Joseph's may have to pay a civil penalty up to $2,000 per individual violation of the Consumer Protection Act. 8. e lawsuit comes aer a Columbia Legal Services review detailed charity care deficiencies among 12 of 20 hospitals in Washington state. St. Joseph's was not one of the 20 hospitals tested. "As a nonprofit charitable organization, we are committed to providing the highest quality care to everyone who needs it. We carefully consid- er all charity care applications we receive and approve all who qualify," Cary Evans, vice president of communications & government affairs at CHI Franciscan Health, who owns St. Joseph's, told Becker's Hospital Re- view. "We are disappointed by today's lawsuit and, as always, we'll con- tinue to provide care to absolutely everyone who needs it." n IRS Revokes Hospital's Tax-Exempt Status for Failure to Comply With ACA rule By Ayla Ellison T he Internal Revenue Service has revoked the tax-exempt sta- tus of an unnamed nonprofit hospital for failure conduct a community health needs assessment, adopt an implementa- tion strategy and make it widely available to the public. In a letter dated Feb. 14, 2017, and released in August, the IRS said it revoked the hospital's tax-exempt status for failure to comply with section 501(r) of the Internal Revenue Code. The ACA added new requirements that hospitals must meet to qual- ify as a tax-exempt facility under section 501(c)(3) of the Internal Revenue Code. Specifically, the ACA added section 501(r), which imposes four new requirements, one of which requires hospitals to conduct a community health needs assessment at least once every three years and adopt an implementation strategy to address com- munity health needs identified in the assessment. The IRS revoked the tax-exempt status of the unnamed hospital for what the agency referred to as "egregious failures when reviewed in the context of [section] 501(r)." Although the name of the hos- pital is not included in the letter from the IRS, previous correspon- dence from the agency identified the facility as a disproportionate share hospital and a critical care access facility. The IRS noted a revenue agent met with the hospital's CEO, CFO and COO during the audit, and the administrators made it clear the organization "had neither the will, the financial resources, nor the staff to follow through with the CHNA process." n

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