Attorney General's News Release

July 23, 2003

Nixon and Health Midwest sign settlement to form "A Rising Tide" health care foundation from sale to HCA

Jefferson City, Mo. — Missouri Attorney General Jay Nixon today announced the signing of the final settlement agreement regarding the sale of the Health Midwest hospital system to HCA Inc., and the creation of a new, independent health care foundation to serve the greater Kansas City area with more than $425 million in assets. Nixon said it will be one of the largest health care conversion foundations in the country.

"This agreement is the product of an unprecedented amount of public input and review," Nixon said. "Hundreds of people, from all walks of life in the greater Kansas City area, have stepped forward with concerns and ideas about how the proceeds of this sale can and should be used. This money now will be used to assess and address health care needs in this area, and the governance of the foundation will be directly accountable to the people it serves."

In the fall of 2002, Nixon pledged an open, public review of the proposed sale. When Health Midwest sued to limit that review, Nixon countersued to remove the current board and dissolve Health Midwest. Today's settlement resolves all of the issues arising out of the sale. Earlier this year, HCA assumed ownership and operation of the Health Midwest hospitals under a memorandum of understanding between Nixon and Health Midwest.

The articles of incorporation and bylaws of the new foundation were filed today with the Missouri Secretary of State, and the foundation is seeking tax-exempt status with the Internal Revenue Service. When tax-exempt status is confirmed early this fall, the foundation will receive its initial distribution from Community Health Group, which will oversee the wind-down of Health Midwest's affairs and the transition of the remaining non-profit subsidiaries of Health Midwest to independence.

Initial distributions to the foundation are expected to exceed $425 million, including 80 percent of the net proceeds of the hospital sale and all of the net proceeds of the sale of the Trinity Lutheran Hospital property to the Federal Reserve. Future distributions to the foundation will include 80 percent of the net assets of Community Health Group upon its dissolution when wind-down activities are complete, plus all of the net proceeds of the sale of the remaining real estate in Missouri.

A Kansas health care foundation, formed as part of a separate settlement between Health Midwest and the state of Kansas, will receive the remaining 20 percent of the assets, less an estimated $1 million in legal fees and costs paid to outside counsel retained by the Kansas Attorney General.

Nixon said today's settlement also names the foundation, "A Rising Tide — The Greater Kansas City Health Care Foundation."

"The community has clearly expressed its hope and vision for this foundation," Nixon said. "In return, this foundation will be governed through a deeply rooted commitment to the communities it serves. By identifying partners throughout the region, the foundation can improve access to quality care for everyone in the service area, and that is reflected in the foundation name."

The purposes of the foundation are to increase access to, and the quality of, health care services in Kansas City; Jackson, Lafayette and Cass counties; and three counties in Kansas. Nixon said the foundation will strictly adhere to Missouri's Sunshine Law. Since a tentative agreement was reached earlier this year, Nixon has received more than 120 applications and nominations for the initial board of directors for the foundation.

"I am gratified by the number of people who have stepped up and expressed a desire to contribute to the work of this foundation," Nixon said. "We have an incredibly diverse and talented pool from which to choose this all-important first board."

After nearly 100 interviews, Nixon said the appointment process will be complete and the board in place prior to the IRS ruling on the foundation's tax-exempt status.

A Rising Tide is the second large-scale conversion foundation created by Nixon. In 2000, Nixon formed The Missouri Foundation For Health as a result of his litigation against Blue Cross and Blue Shield of Missouri. That foundation, with assets of nearly $1 billion, serves 84 counties and the City of St. Louis, and distributes nearly $50 million in grants each year.

"Together, these two foundations will profoundly impact access to quality health care for millions of Missourians and for decades to come," Nixon said. "Both foundations were the direct result of community interest and input, and these two accomplishments are among my most proud after more than a decade in this office."

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818