Acquisition talks between Howard Regional Health System and Community Health Network, Indianapolis, are still moving forward, Howard officials said Tuesday, with important upcoming meetings scheduled for both entities’ boards.
Both hospital groups released a letter of intent in January, setting out details of a planned takeover of Howard, in which Community would acquire the Kokomo hospital’s assets in return for assuming more than $50 million in debt.
Three key meetings in the process are expected to take place in the next two weeks, including meetings by the boards of both Howard and Community.
This week, state officials with the Indiana Finance Authority announced they’ll hold a May 15 public hearing in Indianapolis on a request to transfer Howard’s tax-exempt debt obligations to Community.
Howard chief financial officer Alan Biggs said a new corporation, Community Howard Regional Health Inc., will be formed as the new owner of all of the hospital’s assets and liabilities.
Just after the potential deal was announced, James Alender, president of Howard Regional, said the affiliation with Community Health Network will be more of a partnership.
“We will be a wholly owned subsidiary of Community Health Network,” he said. “Our goal was to look for a partner that would allow us to continue to provide health care in the region.”
Alender said Howard Regional will serve as the northern anchor of Community Health Network’s central Indiana strategy.
The hospital’s name would be changed to Community Howard Regional Health.
The deal must still pass a vote by both the Howard County Council and the Howard County commissioners, and hospital officials are planning to have the required public meeting on the proposal near the end of May.
Alender initially said he hoped the deal would be finished by May 1, and the letter of intent between Howard and Community set April 30 as the ending date of an exclusive negotiating period.
Howard officials said Tuesday that the negotiating period hasn’t been extended, and said they aren’t in talks with anyone else.
“We’re still buttoning up the final issues,” Knight said. “It’s a work in progress.”
Howard’s board of trustees is expected to have a special public meeting, possibly to vote on the proposal, at 6 p.m. May 8 in the education room on the lower level of the hospital, 3500 S. LaFountain Street.
Knight said she expected Community would hold a meeting this week, also possibly to vote on the deal.
Community spokeswoman Linda Dewitt said Tuesday she didn’t immediately know when the Community board was set to meet next.
If the deal moves forward, Community would get to name a majority of the new hospital corporation’s board, and would have final say over major expenditures and over the hiring and dismissal of the hospital’s CEO, according to the letter of intent.
The new corporation would be fully integrated with the Community system no sooner than Jan. 1, 2014.
The letter of intent doesn’t address staffing at the hospital, but would require the newly formed corporation to meet operating margin goals of zero percent in the first year after full integration, 2 percent in the second year, and 4 percent each year after that.
The hospital lost more than $9 million in 2009, and $4.8 million in 2010.
Hospital officials have pointed toward the recession as the main reason for an increase in both the hospital’s bad-debt write-offs and the amount of charity care provided.
• Scott Smith is a Kokomo Tribune staff writer. He may be reached at 765-454-8569 or via email at email@example.com