Media Myopia – The Exempla Transfer

As I wrote about earlier this week, it’s been a busy month for St. Mary’s Hospital and its parent organization, the Sisters of Charity of Leavenworth Health System (SCLHS). The completion of a new facility, introducing it to the community, and preparing to move into it must be a daunting challenge for SMH management and staff.

Additionally, the Sisters of Charity has been very busy taking over two hospitals in the Denver metro area. This is locally significant on many fronts, most recently because SCLHS tapped Robert Ladenburger, the Chief Executive of St. Mary’s, to head the newly reorganized Exempla Healthcare.

What hasn’t been substantively reported anywhere in the Grand Junction media is that the Sisters of Charity, partners in Exempla since it’s beginning, have just begun to assert operational control over the entire Exempla system, bringing to a seeming conclusion one of the most acrimonious and controversial transitions involving non-profits in recent memory.

Full disclosure: I was employed by St. Mary’s from August 2008 to August 2009.

The arrangement that created Exempla is a complex one – SCLHS is now assuming a role similar to that of a managing general partner. Think George Steinbrenner and the Yankees. As a result, the Sisters will operate these hospitals under directives established by the U.S. Conference of Catholic Bishops.

The proposed transition of Lutheran Medical Center in Wheat Ridge and Good Samaritan Medical Center in Lafayette into hospitals following these directives brought out many cries of foul in the western suburbs of Denver, mainly because these facilities would cease to provide certain reproductive services and end-of-life care options.

I began following the controversy surrounding this transfer of control in late 2007. The bulk of the media coverage of the dispute came from both the Denver Post and the Denver Business Journal. During this time several grassroots efforts were underway by community groups to attempt to block the transfer, which would have included a payment of $311 Million from SCLHS to its fellow sponsor of Exempla, the Community First Foundation. Some physician groups were opposed to the deal as well. Petitions and letters were sent to State Attorney General John Suthers urging him not to approve the transfer, which is required under state law when the assets of non-profit organizations are involved.

SCLHS claimed throughout the dispute that it needed operational control to be able to secure financing for extensive planned improvements to the involved hospitals.

During this time the local media in Grand Junction did not report on this developing issue involving one of Mesa County’s largest employers. In December 2007, I sent an e-mail to the editors of both local papers with a copy of a November 30 Denver Business Journal story that led off as follows:

Executives from the Sisters of Charity of Leavenworth Health System and the Community First Foundation say that if a proposed sponsorship change for Exempla Healthcare is blocked, the hospital system will “break up” and the Sisters’ $2.1 billion plan to improve facilities will be in jeopardy.

Given that St. Mary’s had already begun construction of their new tower, I wondered out loud to these editors what else it would take for some local media to report on this issue. The Sentinel assigned a reporter that same day, and in their December 12, 2007 edition reported on the proposed transfer, but none of the challenges associated with it. This story included the following:

Dan Prinster, vice president of planning and business development at St. Mary’s, said although the hospital is part of the Sisters of Charity Network it operates independently. “What takes place in Denver will have minimal impact here”, he said.

Well, it just cost us one really good CEO.

In 2008, the board of directors of Exempla sued its two sponsors to prevent the transfer of assets and control. An arbitrator ruled this past summer that while control over the hospitals could be transferred, no money could change hands between the two sponsors. The Exempla board agreed to the transfer of control this past October.

SCLHS began taking over Exempla at the beginning of the year. Mr. Ladenburger will head up a team of executives to replace five that were recently fired as part of the transition process.

I really don’t feel very strongly either way about the transfer. There have been equally persuasive arguments for the changes, and in an area as diverse as Metro Denver access to non-sectarian health care services is readily available within a reasonable distance.

An entirely different picture might emerge if such a transfer of control occurred in an area such as Mesa County. If, for example, SCLHS purchased the assets of Community Hospital and Family Health West, local health care consumers might have a problem with driving to Delta, Montrose, or Rifle for services that Catholic health care will not provide. As unlikely as such a scenario may be, it’s still something to think about.

My primary concern remains the seeming blind eye that the local media turned toward a nearly 4-year long controversy involving a major player in the local economy. There was a chance for a redemption of sorts with the reporting of Mr. Ladenburger’s departure, but all that was offered was one sentence in a sidebar. A tribute editorial in the Sentinel also deftly skirted the likely challenges facing Mr. Ladenburger as the head of Exempla. Coverage from the Free Press, or any local broadcast outlet, was no better.

In contrast, the corporate restructuring of an energy company based in Oklahoma, that may result in increased exploration for natural gas on the West Slope, was a Page One story in yesterday’s Sentinel. Yet a lengthy dispute involving the parent of a major economic and service sector player in our area went unreported for years, and received short shrift even as a major community leader is thrust into the middle of it.

I’m hoping for a better job of relevant reporting on these types of issues by our local media in the future.

Best wishes to Mr. Ladenburger in his new position.

Have a good weekend.

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