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City, hospital officials upset the Dignity deal fell through

New alliance for ACH likely will be with Asante, Providence
 Posted: 2:00 AM November 01, 2012

Ashland City Council members are disappointed that Dignity Health backed out of a nearly seven-month-long negotiation process to acquire Ashland Community Hospital last week, but are optimistic about striking new arrangements with another hospital system in the coming months.

The future of ACH likely will include either Medford-based Asante Health System or Providence Health & Services of Seattle, which operates Providence Medford Medical Center, said Doug Gentry, chairman of the ACH board of directors.

"There is no doubt that it's disappointing ... we were so close to it with Dignity," said Councilman Dennis Slattery. "As far as whether they were the one or weren't the one, we will never know ... . The people that need to make those decisions and vote on it never got to a point where we had the completed documents in front of us."

Officials were in the midst of wrapping up a lease arrangement between Dignity Health and the city of Ashland, and agreements for Dignity Health to acquire the hospital from the city and Ashland Community Hospital Foundation separately.

The city is the sole corporate member of the nonprofit Ashland Community Healthcare Services, which oversees ACH, making the City Council the lone decision-making entity for the hospital concerning sale, sublease, merger or consolidation of ACH assets with any affiliation partner. The city also retained ownership of the property, buildings, improvements and fixed equipment.

"Why Dignity pulled out is going to be up to Dignity to either explain or not," Slattery said.

That picture has not become any clearer for ACH officials either, said Janet Troy, director of development for the hospital.

"Obviously everyone here is disappointed about their decision," Troy said. "The hospital board is looking at all their options ... . The goal is to have a decision made by the end of the year."

Gentry said Dignity Health didn't cite specifics for walking away from the potential merger in its letter, other than "residual resistance" in the community, and uncertainty about being able to conclude the deal.

"I was shocked. I thought we had a very good deal in the works, and I was under the impression that they were working out details," said Councilwoman Carol Voisin. "I have no doubt about the fact that the board will find another partner ... . I strongly urge them to have public forums. The public needs to be informed of what they are doing every step of the way."

Councilman Russ Silbiger, who serves as a liaison to the ACH board for the city, said, the deal Dignity Health was offering ACH was "exceptional."

"We can't change what happened or didn't happen, we just have to go forward with the most positive outlook and see how it goes ... . Time to move on," he said.

Councilman Mike Morris said it will be a "challenge" for ACH to find as good a deal as Dignity Health was offering.

Roy Vinyard, Asante Health System president and chief executive officer, and Tom Hanenburg, chief executive officer of Providence Medford Medical Center, both said they would welcome discussing affiliation options with ACH.

Asante and Providence have agreed to revise their initial proposals for ACH to consider, said Gentry, who met with Vineyard and Hanenburg Wednesday. Mayor John Stromberg said the City Council would act swiftly if the ACH board is able to get a deal written up with another hospital system before the end of 2012.

"We simply have to go ahead and see what the other prospects are now," said Stromberg. "I was very disappointed with the decision. I had felt that the presentation by the hospital board at the last council meeting sounded promising "… but we need to keep our eye on the ball and pull together as a community. There is a lot at stake for us here."

Early this month, Mark Marchetti, ACH chief executive officer, said the hospital could be closed in a year if it remains independent. Former ACH board Chairman Dr. Doug Diehl told the Ashland City Council on Oct. 16 that ACH has four to six month's worth of operating cash left.

When ACH started seeking a merger more than a year ago, officials had said such a merger would guarantee a stable financial future for the hospital, which has reported losses in recent years. Unreimbursed costs associated with treating Medicare and Medicaid patients, other unpaid medical bills and charity care contributed to a $3.3 million loss last fiscal year and a $1.5 million loss in 2008-09, Marchetti said.

Slattery said community members should continue the "robust discussion," surrounding ACH and its future, but "there is going to be very few perfect mates out there, and we are going to have to weigh pluses and minuses."

Reach Ashland Daily Tidings reporter Sam Wheeler at 541-499-1470 or email

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