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Attorney General's FAQs Regarding Proposed Sale of DMC
MICHIGAN ATTORNEY GENERAL'S OFFICE
Proposed Sale of DMC Hospitals to Vanguard Health Systems
Frequently-Asked Questions (FAQ)
This FAQ provides summary information regarding the Attorney General's review of the proposed sale of the hospitals and other assets of Detroit Medical Center (DMC) to Vanguard Health Systems (VHS) under a Purchase Agreement between DMC and VHS dated June 10, 2010.
1. Where can I read the Purchase Agreement and other documents concerning the proposed sale?
In an effort to make as much information about the proposed transaction accessible to the public, the Attorney General's Office has posted the Purchase Agreement and other documents on the Attorney General's website at www.michigan.gov/ag.
2. What exactly is the Detroit Medical Center (DMC)?
The DMC is an eight-hospital system that includes a number of other subsidiaries and affiliates (which are diagrammed in the DMC's organizational chart, posted at the Attorney General's website, www.michigan.gov).
3. What are the key terms of the proposed sale of DMC to VHS?
What DMC will receive -
What VHS will receive -
What DMC will retain (after the transaction) -
4. After the sale to VHS, will charity care continue at the DMC hospitals?
Yes. VHS is obligated to maintain a charity care policy that is at least as generous as DMC's existing policy. The Attorney General anticipates, however, the VHS will apply a more generous policy consistent with policies followed in its other hospitals.
5. Why is the Attorney General's Office involved?
The Attorney General is the Michigan official authorized to act on behalf of the people of Michigan to protect and preserve charitable property for proper charitable uses.
Basic principles guiding the Attorney General's oversight include the following:
More information on the Attorney General's oversight of charities is available on the Charities section [http://www.michigan.gov/ag/0,1607,7-164-17334_18095---,00.html] of the Attorney General's website, www.michigan.gov/ag (Click on "Charities") and in the article, "How and Why the Attorney General Supervises Charitable Trusts" [http://www.michigan.gov/ag/0,1607,7-164-17334_18095-45038--,00.html]
6. What is the Attorney General's role in reviewing the proposed sale of DMC?
Charitable hospital assets that are invaluable to the community are proposed for sale to a for-profit company, and the Attorney General has the authority to review the transaction.
In recognition of the Attorney General's authority and interest in this transaction, DMC and VHS made the Attorney General's review and non-objection to this transaction a condition of the sale. In other words, if the Attorney General objects to the transaction, DMC and VHS may cancel the transaction.
7. Who is conducting the Attorney General's review?
The review is being conducted by an eight-person team from within the Attorney General's office, including Chief Deputy Attorney General Carol Isaacs, six Assistant Attorneys General, and the Attorney General's Charitable Trust Auditor, with the assistance of law student interns in the Attorney General's office and experts from two consulting firms specializing in health care and hospital finance, operations, and administration. The firms, selected from among a field of qualified applicants, are:
While these consulting firms work for and report exclusively to the Attorney General's Office, DMC is responsible for paying their fees as a cost of the transaction. Taxpayer funds are not being used.
8. What are the major issues in the Attorney General's review?
9. Has VHS's operation of hospitals in other states raised concerns?
Our office has interviewed DMC medical professionals and members of DMC's Board of Trustees and management who visited Baptist Health System in St. Antonio, TX. VHS has owned this system since 2003. On the basis of these interviews and other publicly-available information, our office is not currently aware of any significant, negative factors.
Our office has not undertaken an independent review of VHS's performance in other states.
10. Will there be a new management team and board of directors at the DMC?
The management team that has been operating DMC in recent years will remain in place for an indefinite period as VHS employees.
Each hospital will have a separate advisory board, to which VHS will be entitled to appoint a majority, and DMC (the surviving charity) a minority, of directors.
In addition, there will be an advisory board for VHS's combined Michigan operations of similar composition, which will report to VHS national board.
11. Who will have decision-making control over the hospital if the sale goes through?
VHS, as the owner of the DMC hospitals, will have ultimate control over the hospitals, subject to local, state, and federal laws and regulations and its contractual obligations under the Purchase Agreement.
DMC has the right to appoint a director to the VHS national board of directors.
12. If the sale is finalized, will the Detroit community have a way to voice its concerns about VHS's operations of the DMC hospitals?
Yes. The Attorney General expects DMC (the surviving charity), in carrying out its obligation to monitor VHS's performance, will solicit input from the public, possibly through an online suggestion box, telephone hotline, or combination of methods.
13. What other state agencies will review some aspect of the proposed transaction?
Michigan Department of Community Health (DCH) - http://www.michigan.gov/mdch - Five aspects of this transaction are
subject to review by the DCH:
Michigan Strategic Fund (MSF) http://www.themedc.org/Boards-Committees/MSF-Board/Default.aspx - The MSF has approved the application of DMC and VHS for property tax exemption for DMC's central campus as a Renaissance Zone. Documents setting forth details on the Renaissance Zone application, agreement, and approval are available on the Attorney General's website.
14. If the transaction goes forward, will the Attorney General have an ongoing role?
Yes. If the sale takes place, several charitable organizations will survive the transaction. These include three existing charities, including DMC (under a different name), the Dell Harder Foundation, and the Children's Hospital Foundation, as well as one or more new organizations created to hold and administer charitable gifts.
All surviving charities will report to the Attorney General's Charitable Trust Section annually. Some of the organizations may solicit charitable contributions for education, research and other charitable purposes and will be required to obtain solicitation licenses. The Attorney General may review the operations and activities of the DMC charities at any time.
15. When will the Attorney General's review be finalized?
The Attorney General's Office is working diligently to complete its thorough review as expeditiously as possible.
16. Will the results of the Attorney General's review be available to the public?
Yes. When the Attorney General's Office has review is complete, a comprehensive report will be posted at www.michigan.gov/ag.
17. How can I communicate concerns or questions to the Attorney General's Office about the DMC or VHS?
You may email comments to AG-DMCComments@michigan.gov until August 27, 2010.
You may also write to the Attorney General's Charitable Trust Section at:
Attorney General's Office
Attn: DMC Review
Charitable Trust Section
Toll free: 877-765-8388
Last updated: Aug 17, 2010
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