Community Medical Center

Community Medical Center

MICHAEL GALLACHER, Missoulian

The Community Medical Center Board of Directors has decided how it will distribute proceeds from the sale of the hospital, estimated to be $74.9 million.

The board has informed the Montana Attorney General's Office, which must approve the hospital's sale to Billings Clinic/RegionalCare Hospital Partners, that $10 million will go to the University of Montana Foundation as a direct gift.

Another $1 million to $1.5 million will go to the CMC Reserve Fund, and the bulk of the proceeds, $64.2 million, will be held by Community Medical Center until a new Community Hospital Legacy Foundation is created and receives tax-exempt status.

The independent, private foundation will hold the money on an endowment basis. The foundation will have a health-care-minded mission to serve people within the same geographical area currently served by the hospital.

Community Board Chairman Scott Stearns said in a statement Wednesday that the new foundation will make Missoula a better place to live and work for generations to come.

“Our board spent many hours discussing the best way to serve the people of western Montana within the scope of Community’s important mission,” Stearns said. “With input from this community, we agreed that creating this significant new foundation is our best option. I’m proud of this board for making a decision that will benefit western Montanans.”

Community's Board of Directors decided earlier this year to sell the nonprofit hospital to the for-profit partnership between Billings Clinic and RegionalCare Hospital Partners.

Under Montana law, proceeds from the sale of a nonprofit must go to a foundation and the sale must be approved by the AG's office. The attorney general is still reviewing the proposed sale.

The attorney for Community Medical Center who sent the AG's office the terms of the proposal, Gary Chumrau, also included a stipulation that if the AG's office does not approve the sale by Dec. 31, "CMC reserves the right to reconsider and re-submit the terms of the proposal."

The attorney for the AG's office, Ed Eck, took issue with that stipulation in his email response to Community.

"The AG is concerned about your client's stated contingency," Eck wrote. "As part of the decision-making process, we are soliciting meaningful input. Given the holidays, we think that a Dec. 31 deadline is insufficient. As you know, we are disappointed that responses to our various inquiries have not met our expectations of thoroughness and timeliness. Despite those disappointments, we intend to proceed to fulfill our office's responsibilities with a thorough review of this proposed transaction."

Eck calculated that the AG's office has until at least Jan. 7 to complete its review.

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The proposed terms of the sale also include a stipulation that Billings/RCHP will make a $500,000 gift to the UM Foundation to help fund the health care programs and health care infrastructure at the new Missoula College to be constructed on East Broadway.

The $10 million gift from CMC to the UM Foundation will be used to help fund three health care-related projects: the CMC Legacy Health Professions Complex, program initiatives for health professionals and the CMC Promise Scholarships Pilot Program.

“We're honored to have the opportunity to perpetuate and extend the mission of Community Medical Center to provide improved health care for the region,” said Reed Humphrey, dean of UM’s College of Health Professions and Biomedical Sciences, in a statement. “This gift would provide for the necessary infrastructure to attract new students interested in all aspects of medicine and health, train new health professionals in a contemporary, interprofessional environment and continue our tradition of providing care to underserved populations and people with disabilities.”

The mission of the new Community Hospital Legacy Foundation will be consistent with the "Triple Aim Initiative" of the Institute for Healthcare Improvement, which focuses on improving the patient experience of care (including quality and satisfaction), improving the health of the population and reducing the per-capita cost of health care.

The new foundation's governing board will be comprised of nine members who reside in the Missoula area. Members will serve in a volunteer capacity without compensation other than reimbursement of expenses.

No member of the board may be an officer or employee of Community Medical Center, with the exception of physicians or mid-level employees who would be eligible to serve.

The final sale price of approximately $74.9 million, which is subject to certain adjustments, was determined to be fair market value by CBIZ, the firm the Attorney General’s office tasked with determining the fair market value of the proposed transaction.

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Scott Hacker, the incoming chairman of the CMC Board of Directors, said the decision on allocating the proceeds was "broadly supported" by the board, although he declined to say what the final vote was.

"Essentially, we needed to take the proceeds from the sale to use them to continue to fill the mission of CMC as closely as possible," he explained. "Obviously we’re not going to be running a hospital anymore, but we can positively impact the health care of western Montana."

In making their decision, Hacker said the board looked at many alternatives and investigated many existing foundations.

"We really found no existing entity that completely fulfilled the mission," he said. "Also, with the size of the proceeds, it's certainly feasible to set up a new foundation. Separately, as far as the $10 million piece to UM, they came to us with a proposal which was well thought out, thorough, and fulfilled the Triple Aim. Giving the money to an existing foundation allows us to put some of the money to work more quickly."

Hacker said that while it is likely the proposed new foundation will be doling out grant monies to different entities, the first step will be to develop a strategy on how to best fulfill the mission of Community Medical Center.

"I can't speak for the new board," he said. "We would like them to be thoughtful on developing a strategy and implementing a strategy."

The makeup of the board will be determined through negotiations between the existing CMC board and the AG's office.

"What we envision is a nine-person board with different skill-sets," Hacker said. "We want people with general business and investment experience. And we want to try to get it done in a timely fashion."

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