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The new independent monitor of HCA Healthcare’s $1.5 billion purchase of Mission Health has found the Nashville-based company potentially not in compliance with the purchase agreement it entered into in 2019, according to a new report released Tuesday by Dogwood Health Trust.
The 32-page report from Boston-based Affiliated Monitors Inc. detailed three areas where in 2023 HCA potentially did not honor commitments it made five years ago as part of the Asset Purchase Agreement: emergency department and oncology services, noncompliance with federal standards of care dictated by participation with the U.S. Centers for Medicare & Medicaid Services and charity care.
The Asset Purchase Agreement, or APA, is a binding document outlining in part how the HCA and Mission would maintain and grow services for 10 years after the sale.
Dogwood employs Affiliated Monitors, which began its work as independent monitor in April 2024, and released a statement along with the report Tuesday.
“Dogwood Health Trust provided notice to the North Carolina Attorney General’s Office (AGO) stating that it plans to notify HCA of potential noncompliance with provisions of the Asset Purchase Agreement (APA),” the statement said.
“This past year, we heard requests from both the Attorney General and the communities we serve for more education and transparency regarding Dogwood’s compliance oversight of HCA,” Dr. Susan Mims, CEO of Dogwood Health Trust, said in the statement. “We listened, which is why we are sharing this letter and report. Our hope is that sharing this letter and report will help educate the public on our compliance oversight work for the 2023 reporting year and help Affiliated Monitors engage the public for the upcoming 2024 reporting year.”
Asheville Watchdog reached out to HCA and Mission Health spokesperson Nancy Lindell for comment but did not receive a response before publication. HCA said in its own report on compliance this year it had not violated any part of the purchase agreement.
“We have determined that HCA is in potential noncompliance with Section 7.13(a) of the APA with respect to the reduction of emergency and oncology services at Mission Hospital in 2023,” Dogwood’s report stated.
Schedule 7.13(a) governs services that HCA was supposed to keep open and services it was supposed to expand.
N.C. Attorney General and Democratic gubernatorial candidate Josh Stein sued HCA and the Mission in December 2023, alleging it did not honor its APA commitments related to oncology and emergency department services. Earlier this year, HCA countered that it never committed in the APA to providing quality care.
The report also found that issues related to federal care standards dictated by participation with the U.S. Centers for Medicare & Medicaid Services caused probable noncompliance in 2023.
“Based upon the failure of Mission Hospital to be in ‘good standing’ during the Reporting Year of 2023, we find that HCA was in potential noncompliance with this provision of the APA,” the report stated.
The phrase “good standing” comes from the APA, which states, “Buyer shall cause the Material Facilities and the Local Hospital Facilities to remain enrolled and in good standing in Medicare, Medicaid or their successor program(s).”
The independent monitor also found HCA to be potentially out of compliance regarding charity care, discovering changes in HCA’s policy regarding patient payment collections and analyzing them in a detailed section of the report.
“AMI then compared the Policies and noted a substantive change in the Policy at Paragraph 14, which removed the limitation on the use of liens: ‘Under no circumstances will liens be considered on properties less than $300,000 in value,’” the report stated.
The independent monitor noted extensive back-and-forth with HCA leadership. HCA did not always readily provide information to the independent monitor on this topic, according to the report.
“After discussing this issue with HCA representatives, we acknowledge that HCA believed that they acted in good faith in revising the company-wide policy,” the report stated. “However, due to the unique provisions of the APA, approval for this change in the Policy was required. … Based on the foregoing, AMI determines that HCA is in potential noncompliance with this section.”
The Watchdog reported on these issues throughout 2023-2024, highlighting deficiencies in cancer care services because of the exodus of medical oncologists and lack of resources on one cancer care floor; the endangerment of 18 patients, including the deaths of four, in 2022-2023 related to lack of adherence to federal standards of care, which resulted in immediate jeopardy; and issues with charity care as analyzed in a report by Dr. Mark Hall of Wake Forest University.
The independent monitor concluded the report emphasizing the potential deficits.
“For the foregoing reasons, based upon the three sections of noncompliance detailed above, the Independent Monitor recommends to Dogwood Health Trust that HCA Healthcare be found to be not in compliance with the Asset Purchase Agreement for Reporting Year 2023.”
According to the purchase agreement, if HCA does not comply with the commitments it made, Dogwood will be notified and could trigger what it calls a “resolution process.” Other disputes would involve the North Carolina Business Court “or an arbitration process administered by the American Arbitration Association,” according to the independent monitor’s summary of the purchase agreement.
This is not the first time Dogwood has sent a letter to the attorney general notifying the office of HCA’s potential noncompliance. On October 26, 2021, Dogwood sent notification of issues of potential noncompliance to HCA, according to its second-year report.
For nearly all of the five years that HCA has owned Mission, Dogwood’s independent monitor was Nashville-based Gibbins Advisors. In January, Dogwood announced it would open a request for proposals for a new independent monitor. Gibbins was eligible to apply, but it declined, and Dogwood hired Affiliated Monitors.
“As the environment has shifted over these five years so has the work of the IM,” said Mims, Dogwood’s CEO, at the time. “In response to listening to our communities and through collaboration with the Attorney General’s Office, Dogwood has asked the IM to add responsibilities beyond what is in the current scope of work.”
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Andrew R. Jones is a Watchdog investigative reporter. Email arjones@avlwatchdog.org. The Watchdog’s reporting is made possible by donations from the community. To show your support for this vital public service go to avlwatchdog.org/support-our-publication/.
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