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PMC and County Announce Potential Capital Partners for Hospital

POCATELLO, Idaho, July 8 /PRNewswire/ -- After more than a dozen indications of interest in the Request for Proposal (RFP) issued by Bannock County and Portneuf Medical Center (PMC), the County Commission, with advice from the leaders of PMC and its medical staff, has named two finalists as possible capital partners to complete construction of a new full-service hospital on its 61-acre campus. Each potential partner has agreed to a County- proposed shared ownership and governance structure with a local not-for-profit entity the County is forming in cooperation with PMC. Those finalists are Legacy Hospital Partners, Inc. and LifePoint Hospitals, Inc.

The process to partner with a healthcare system would include county voters' approval of the transfer of PMC's assets to the local not-for-profit and simultaneous formation of a Community Benefit Organization (CBO) joint venture between that not-for-profit and the selected capital partner. The joint venture will be required to operate in a manner that adheres to strict IRS rules requiring local control over community benefit standards affecting patients and the entire community.

Legacy Hospital Partners is a privately held company recently formed by an experienced healthcare management team to own, operate, and manage acute care hospitals in partnership with local not-for-profit entities throughout the United States. Headquartered in Plano, Texas, Legacy has financial backing from affiliates of private equity firm CCMP Capital Advisors, LLC and the Canada Pension Plan Investment Board as well as members of management. Legacy's senior executives, most of whom have worked together in other healthcare systems for more than 10 years, are known for pioneering the development of some of the most successful models for community benefit partnerships with not-for-profit hospitals.

LifePoint is a publicly traded company listed on the NASDAQ under the symbol "LPNT," and based in Brentwood, Tennessee. Established in May 1999, LifePoint is one of the nation's largest hospital companies focused on providing healthcare services in non-urban communities - the most rapidly growing sector of the national healthcare industry. Of the company's 48 hospitals in 17 states, 44 are in communities where the LifePoint hospital is the sole community hospital provider. An important part of LifePoint's strategy is developing community hospitals into true regional referral centers that can support smaller nearby hospitals by offering their patients convenient access to specialty services.

"Our goal is to achieve the best possible healthcare for our community," said Larry Ghan, Chair of the Bannock County Commission. "That includes working with a capital partner that will commit to providing the financial support and other necessary resources to build a full-service, technologically advanced regional medical center that will meet this community's present and future needs. What makes our plan the right one is that we do all this while enabling the Hospital to continue its community mission, while retaining significant local control. The vehicle for this local control," Ghan explained, "is the shared ownership and governance structure with the local not-for-profit we are currently forming in cooperation with the current PMC Governing Board. There are still many issues to be addressed; however, we are pleased that we have made enough progress to enter the next stage of this vital community process."

On the heels of the 2006 Idaho Supreme Court Frazier Decision, and after extensive study and review of the various options available, the hospital's leadership and the County Commission, with assistance from outside consultants, determined PMC's best option to acquire the financing needed to complete the construction of its replacement facility would be to seek a qualified financial partner. The group contacted more than 25 local and national healthcare systems, a majority of which were not-for-profit, to present an opportunity to form a partnership with the community. Those indicating interest were given a Confidential Descriptive Memorandum, including a Request for Proposals (RFP) based on a set of Community Values drafted by a Citizens Advisory Panel.

A group of medical staff, governing board and hospital administration leaders spent a day and a half reviewing every proposal and then made their recommendations to the County Commissioners. The legal and advisory team for PMC and the County then drafted specific language to clarify the actual commitments each candidate would make to honor the Community Values. With that input, the Commissioners and PMC have narrowed the list down to the two most qualified candidates for the public's consideration.

"The finalists have the financial resources and have made the commitment to complete the new hospital as soon as possible," said Kelly Hirning, Chair of Portneuf Medical Center's Board of Governors. "In addition, each of them embraces our shared governance model that will allow significant local control. This unique opportunity will allow us as a community to have a brand new facility that will be the regional referral center for the entire surrounding area. These are both high quality organizations with solid reputations. Either of them will bring us more than just financial resources."

"It is critical for the community to understand that throughout the process of exploring possible partners, we will all steadfastly adhere to the Community Values articulated by the Citizens Panel of 14 local residents, community physicians, and members of the PMC governing board. We appointed them to identify the needs, desires and values of our entire community, and they sure did," said County Commissioner Steve Hadley. "The Panel's objectives include: construction of an outstanding regional acute care hospital and the capital to support it; joint ownership of the facility, along with 50/50 shared governance; continued access to care for people from all walks of life; strong physician relationships; protection of employees and support of medical education in cooperation with Idaho State University. We are confident that either of these finalists can deliver on those objectives."

"We are anxious to see how each organization will specifically address each of our rigorous demands in their responses and in the community forums next week, at which they will present information about their companies and answer questions from the community about how they will live up to their commitments."

"Our primary concern is that our partner agrees to the commitments necessary to meet our community values and get our replacement hospital up and running as soon as possible. Whether the partner is for-profit, not-for- profit, faith-based or government-owned isn't the issue," said Hadley. "The issue is how we can best meet the healthcare needs of our community and region and still maintain the local influence and control necessary to ensure we are doing what's right for our patients."

"At this point the County, PMC, and its medical staff leaders will do what's needed to select a single partner for presentation to the voters in November," said Joe Lupica, President of Stroudwater Capital, the advisory firm for the project. "This week, for example, a group of PMC board members, administrators, and physicians will visit representative hospitals of each finalist. They will also interview independent leaders in the communities served by those hospitals. Next week, the County will put the finalists on stage in Pocatello for large public interviews on two successive nights. The finalists will describe their vision for the community and answer questions from the audience. Meanwhile, the legal teams for the County and PMC are conducting extensive reviews of the proposals so they can secure contractual agreements regarding the community's core values and expectations." Lupica projected that the County will select a single finalist by the end of August to meet the schedule for a county-wide election in November.

Describing some avenues for community participation, Ghan said, "Between now and November, we will make every effort to build two-way communication through public meetings, media interviews, printed advertisements with answers to public questions and a new community website and blog that will launch soon. The goal here is to help the community arrive at a decision that best enhances the mission of its hospital."

"We look forward to engaging members of the community in this process," said Ghan. "We will continue to be active listeners to people from all sectors of our community, and we need their active participation in return. This two- way street allows us to consider all concerns and seek precise responses from the finalists before a partner is selected."

SOURCE Portneuf Medical Center
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