IU Health official: A new LaPorte Hospital facility is still planned. County commission: Where will it be built?

EDITOR’S NOTE: LaPorte County Commission Attorney Shaw Friedman has released two letters (printed in full below) regarding the current and future status of LaPorte Hospital. The first letter was sent to the commission Dec. 12 by IU Health official Joy Kleinmaier. The second letter is a response to Kleinmaier dated Dec. 26, sent by Friedman on behalf of the county commission. While Kleinmaier focuses on terms of the agreement in place between IU Health, LaPorte Hospital and overall owner CHS — including agreement to build a new hospital in LaPorte County — the county’s response questions where that hospital will be built (especially concerning proximity to the new LaPorte EMS base) and whether it will include a facility to address drug addiction. Neither letter addresses the concerns posted on WNLP and in other media by hospital employees regarding reported departure of  some physicians, nurses and other healthcare professionals, alleged decline in facility standards and other issues.

To read the county commission’s resolution that prompted the IU Health response, click on this WNLP link:

http://whatsnewlaporte.com/2016/11/20/county-commission-wants-answers-from-lp-hospital-owner-chs-on-financial-problems-future-status/

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Letter from IU Health official to LaPorte County Commission (PLEASE NOTE: “LPHS” in this letter stands for LaPorte Health System):

Dec. 12, 2016

Board of County Commissioners of LaPorte County, Indiana

Re: LaPorte Health System, LLC

Dear Commissioners:

We recently have become aware of a resolution passed by the Board of County Commissioners calling on Community Health Systems’ (CHS) leadership to make public the terms of the joint venture agreements by and between CHS and certain of its affiliated and subsidiary entities, Indiana University Health and Indiana University Health LaPorte Hospital Inc. and its affiliated and subsidiary entities (LaPorte Hospital) relative to the sale of the LaPorte Hospital business and operations to LaPorte Health System, LLC (LPHS). As you are aware, CHS and IU Health jointly own LPHS, with CHS owning an 80 percent interest in the organization and IU Health owning 20 percent.

The Board’s stated reasons for the resolution are (i) evaluation of plans for the construction of a new hospital as well as services and staffing plans and (ii) determining the conditions under which either LaPorte Hospital or IU Health have “reversionary rights” to “potentially re-acquire interests in LaPorte Hospital … .” The Board notes in its resolution that it is “incumbent on CHS to be as transparent and forthcoming with the community as possible on its plans, direction and approach to healthcare services in (the LaPorte) community including staffing, a new hospital facility and other issues.” These “other issues” are not outlined in the resolution and, thus, cannot be addressed here.

As an initial matter, we believe it is important that the Board fully understand, or be reminded of, the process by which CHS was chosen as a strategic partner in connection with the recapitalization of LaPorte Hospital.

After months of deliberation, a decision was reached by the Board of Directors of LaPorte Hospital, with the concurrence of the Board of Trustees of IU Health, that it was in the best interests of LaPorte Hospital, and the community it serves, to seek a capital partner with the expertise and wherewithal to continue the hospital’s mission of serving the people of LaPorte County through the provision of high-quality, cost-efficient healthcare services in a manner consistent with the rapidly changing care and payment system occasioned by the Affordable Care Act. The process of choosing a partner was undertaken thoughtfully and with great care. A series of possible affiliates, both for-profit and not-for-profit organizations, were solicited; those who expressed interest in a relationship were asked to submit proposals (with respect to a proposed affiliation/capital relationship) and were then vetted through an interview process that included representatives of the Board of Directors of LaPorte Hospital and Senior Leadership of IU Health. At the end of this process, the Board of Directors of LaPorte Hospital had the greatest confidence in CHS’ ability to meet the above-described objectives. After seeking the concurrence of IU Health, the LaPorte Board, with the assistance of IU Health, began the process of negotiating the relationship with CHS.

The negotiations with CHS took place over an approximate 13-month period — culminating in a closing of the transaction effective March 1, 2016 — during which time the economic and non-economic terms of the relationship were developed. As part of these negotiations, LaPorte Hospital retained two law firms on its behalf; IU Health and CHS each retained separate counsel. The negotiations were arm’s length and each party was represented by counsel experienced in the issues that arise in transactions of this nature.

As a result of the transaction, and in addition to the non-economic terms which are the subject of this letter, the Healthcare Foundation of LaPorte Inc., a successor to LaPorte Hospital (Foundation), received a substantial cash payment from LPHS, approximating the fair market value of the enterprise, the majority of which was paid at closing. The Foundation is scheduled to receive additional sums upon the expiration of an escrow period and following the satisfaction of certain liabilities of LaPorte Hospital. In addition to the cash purchase price paid by LPHS, the Foundation was allowed to retain cash and marketable securities as well as board-designated, temporarily and permanently restricted and trustee-held and escrowed funds as well as donor-restricted assets and beneficial interests in charitable trusts held by LaPorte Hospital as of the closing date.

As part and parcel of the transaction, the LaPorte Hospital Board of Directors appointed a local Board of Trustees for the LaPorte Hospital, comprised entirely of members of the LaPorte Community including the CEO of LPHS, the Chief of the Medical Staff of LaPorte Hospital and physicians from the LaPorte Hospital Medical Staff. This Board meets regularly, interfaces with the Board of Directors of LPHS and is responsible for providing advice and counsel to the LPHS Board on a number of issues including, among others (i) developing of annual budgets and (ii) approving, pursuant to certain pre-determined standards, any change to an essential service provided at LaPorte Hospital. It is noteworthy that IU Health appoints 2 members of the local community, including the Chair of the Board of Trustees, to the LPHS Board of Directors.

In response to the request for transparency, we respect the Board’s need to act as a sentinel for the LaPorte community related to the preservation of essential services and ensuring that LPHS complies with its commitments. We hold those principles in high regard and we have no intention of breaching our commitments. We do think, however, that it is important to remind the Board that LPHS is a private, for-profit company, and will continue to be operated as such.

The above notwithstanding, as for the plans relative to a new hospital facility, we, at LPHS, have been forthcoming both to the Foundation and to the local press. We committed to expend an estimated $125,000,000 for a replacement hospital facility in LaPorte County and are on track to make good on that commitment. Barring substantial disruptions beyond our control (and agreed to by LaPorte Hospital through its Board), the construction of the replacement hospital is to begin not later than March 1, 2018, and to conclude with 5 years.

Moreover, LPHS committed, as part of the transaction, to continue to operate LaPorte Hospital as a general acute care hospital and to continue, in all material respects, all essential services (the scope of which were agreed to by the LaPorte Hospital Board as part of the transaction), subject to environmental factors that could affect the maintenance of such services, all as reviewed and analyzed by the local Board of Trustees, and subject to the minimum quality standards determined by IU Health in its discretion (as long as IU Health remains an owner of LPHS). As you can see, the Board of Trustees, comprised of members of the LaPorte community and physician and lay leadership of LaPorte Hospital, have substantial influence relative to the maintenance of essential services in the LaPorte community.

You also have noted a desire to understand reversionary rights held by LaPorte Hospital and IU Health under the terms of the transaction documents. Consistent with transactions of this nature, there are some limited reversionary rights in the event LPHS desires to sell the LaPorte Hospital (and the Starke Hospital) either alone or in a package with other hospitals (subject to certain requirements). In such an instance, IU Health and the Foundation have consecutive rights to re-acquire the hospitals, with IU Health having the first such right.

In summary, we remain committed to the citizens of LaPorte County and to adhering to our commitments. We value our relationship with the good people of LaPorte County and its elected leadership. We look forward to continuing that relationship and creating a caring and healing environment that provides the highest quality of care possible.

Very truly yours,

LaPorte Health System, LLC

By: Joyanna Kleinmaier

Chairman of the Board

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County attorney’s response to Kleinmaier:

Dec. 26, 2016

To Ms. Joy Kleinmaier

Vice President, Business Development for IU Health

Chairman of the Board, LaPorte Health Systems LLC

Re: LaPorte Hospital correspondence of Dec. 12, 2016

Dear Ms. Kleinmaier:

As LaPorte County Attorney, I have been asked by LaPorte County Commission President David Decker to follow up on your correspondence dated Dec. 12, 2016, to inquire about two issues not covered in the correspondence, but that remain of significant concern to county officials.

While you reaffirmed the commitment of LaPorte Health System LLC to expend an estimated $125 million for a replacement hospital facility, you’ve provided no indication that you have sought significant input from local officials on either the siting or services to be provided at such a facility. The trusted and seasoned former CEO of LaPorte Hospital, Thor Thordarson, gave every indication to local officials that a replacement facility would be built either on the existing footprint downtown or nearby at NewPorte Landing. In fact, LaPorte County expended over one half million dollars in taxpayer funds building a new EMS facility at the corner of Tyler and State streets based on representations by Mr. Thordarson. Such facility was built strictly in reliance on assurances by IU Health officials that the EMS base would be adjacent to or very close to the hospital, and the hospital encouraged such reliance by donating land at this location to bring about the new EMS base.

Dr. Vidya Kora, former President of the Indiana State Medical Association, who serves on the County Commission, made very clear this past week that “… having an EMS base right next to a hospital is always a good arrangement.” He was speaking on the occasion of Franciscan Health CEP Dean Mazzoni’s announcement that Franciscan was donating land and cash to allow a new EMS base to be built on the site of the chain’s new hospital at the northwest corner of I-94 and 421 in Michigan City.

Just how important is it that an EMS base be located at or near the hospital? Former IU Health/LaPorte Hospital CEO Jonathan Goble, who as you well know now heads IU Health Saxony Hospital, made it clear just how important co-locating EMS services was at Saxony when IU Health announced a new onsite ambulance bay and sleeping quarters would be financed by IU Health and Saxony in 2013. Said IU Health in making the announcement at the time, “This new partnership not only decreases response times and improves quality of care, but it also improves visibility in the community and saves taxpayer dollars.” Fishers Town Council President John Weingardt made it clear that, “having emergency personnel housed at IU Health Saxony increases the efficiency of service delivery to the area and promotes staff training alongside talented IU Health personnel at no cost to taxpayers.”

For many years, LaPorte Hospital has viewed EMS personnel as partners in the delivery of quality health care and Mr. Decker has asked me to relay the sense of county officials that it is vital that the new hospital locale (be) either on the existing footprint or at nearby NewPorte Landing. While IU Health has just a twenty percent ownership stake in the new joint venture, we count on officials at IU Health to educate and inform your new partners on the historic, traditional commitment of LaPorte Hospital to the vitality of our downtown and civic life in this community.

The hospital is a key economic engine for the City of LaPorte and the ripple effect of moving this major employer out of the downtown would have significant adverse economic impact on our community, aside from the obvious disruptive and counterproductive effect of locating the new hospital miles from a new EMS base which the hospital itself promoted, sought and helped finance.

Secondly, Commission President Decker asked me to convey the community’s strongly held desire that in any new facility planning, that an acute detox unit and rehab unit be constructed as part and parcel of such hospital. We count on IU Health officials to raise with your new partners at CHS the very tangible concern that exists in our county regarding our alarmingly high drug and alcohol addiction rates here. In fact, the latest Indiana State Board of Health data indicates that from the time period 2011-2014, LaPorte County experienced the third greatest amount of drug overdose deaths of the 92 counties in Indiana with a rate of 34.58 deaths per 100,000. Such compelling numbers require an all-out effort by health institutions like LaPorte Hospital to address the problem head on.

We take note of the fact that LaPorte Hospital has been a solid income generator for IU Health and your form 990’s make very clear that LaPorte Hospital has upstreamed $30-35 million in net proceeds annually that have contributed to the overall health and prosperity of the IU Health chain. It is therefore not too much to expect that IU Health would concomitantly insist on a substantial investment back into a community that has been a profit center (rather than a cash drain) for the chain, and so requesting this new joint venture address our alarming rates of drug addiction with acute detox and rehab is certainly not unwarranted or unreasonable. We believe that an investment above and beyond sale proceeds is warranted considering that this hospital remains a very viable and valuable income generator for this new joint venture.

Candidly, the IU Health brand has stood for quality and excellence throughout the state and while you are just minority partners in this new joint venture, the leadership of our county must look to IU Health officials to recognize and respect various commitments made to this community by your leaders and to ask you to request that the majority partners at CHS go “above and beyond” to ensure that local commitments are adhered to, such as co-locating the new hospital near the new EMS base, and ensuring that the highest possible level of health services continue to be provided to this community including addressing identified health needs such as our alarmingly high addiction rates that require construction of a new detox unit in any new hospital.

We thank you in advance for your anticipated serious and careful consideration of the two key issues identified above.

Very truly yours,

Shaw R. Friedman 

21 Responses to “IU Health official: A new LaPorte Hospital facility is still planned. County commission: Where will it be built?”

  1. Suzquz

    Dec 28. 2016

    Every single person who is pushing for a new hospital, and thus, a new EMS base, ought to be required to tour cities in Europe, where old buildings are worked and re-worked to be made suitable for current needs. There are almost NO empty buildings, or builidings torn down at a whim. We see the same problem in La Porte schools. We have a few old schools still standing, some beautiful structures, with nary an attempt at making them meet current needs. Will a new hospital change the patient treatment? Did/do new schools give the students a better education? Hardly. Plus, there is not an endless supply of taxpayer money.

    Reply to this comment
  2. Papa doc

    Dec 28. 2016

    After reading the letter from Kleinmaier, everything becomes so crystal clear…..not

    Reply to this comment
  3. Whatadisappointment

    Dec 28. 2016

    It’s been a mess since day one of negotiations and continues to worsen. The feeling of “hope” for our community is at an all time low. Someone needs to come up with Plan “B” (“B” is for “better”)

    Reply to this comment
  4. Luke

    Dec 28. 2016

    Plan “B” is that we hold the hospital to their contractual obligations and they stay inside the City of LaPorte! Please like/join/share “Hospital for LaPorte” on facebook and stand against the loss of a hospital in the City of LaPorte.

    Reply to this comment
  5. raynell sandy

    Dec 28. 2016

    we don’t need a new hospital. we need someone who will run this hospital the hospital doesent need more hospital doctors who do not know you at all. the doctors are leaving laporte, my question is why

    Reply to this comment
  6. lawman

    Dec 28. 2016

    I am really worried when all we read about is bringing a few min. wage service jobs to la porte while in the background our health care facility comes apart. I have heard and read some very disturbing reports on the hospital recently. we are considering other options.

    Reply to this comment
  7. Del

    Dec 29. 2016

    A private company owns the hospital. They don’t owe you any more answers at this time. If they don’t follow through with any agreements that were previously made, then you deserve some answers.

    Reply to this comment
    • Luke

      Dec 29. 2016

      We are owed answers, the purchase agreement clearly outlines as much. Additionally, the people in the southern half of the county who’s lives will be put at risk when they move north of town have a right to understand the situation. This is an issue of corporate accountability and public health and safety.

      Reply to this comment
  8. Ryan

    Dec 29. 2016

    I see nothing wrong with the hospital we have. I mean, all the construction in expansions over the past twenty years just to relocate??? Also, why get the community hyped up in having new retail and dining at new Porte landing just to have it be taken over by a hospital? The current location is in a central part of the city and should remain there. If any place needs relocated to a new and better facility, it’s the post office. Then, that property along with the one where the church was can be used forwhatever the hospital may need. And if they were to move, what would possibly go in it’s place?

    Reply to this comment
    • Luke

      Dec 29. 2016

      The current CEO has stated that New Port Landing is not a suitable site and that the hospital intends to move farther to the north outside of city limits.

      Reply to this comment
    • RS

      Apr 20. 2017

      I understand that everyone has concerns, I have some, we all have some. But reading these postings gets a bit comical. ‘What’s wrong with the hospital we have’ shows a complete lack of the situation. This hospital was built in an era when people checked in and stayed for days for things we now get done in the morning and go home in the afternoon. People need and want a place where you can park near to what you need instead of two blocks away. (Don’t even mention a parking garage – the cost is astounding.) Our present hospital not only has old electrical and lighting and plumbing, it was built in an era where energy efficiency was not so critical and as such it costs a FORTUNE to heat and cool year round. We need a smaller main hospital with connected buildings that are easier to get to for outpatients.

      Reply to this comment
  9. NDame Man

    Dec 29. 2016

    Amazing!! I was led, as others,to believe, that part of the reason wee needed a NEW hospital was because the electical wiring and the water pipes were ALL bad, so henceforth,it is tear the building down and build New!! What the HEY!! It seems that our city leaders RUSH to tear down buildings (Woolworths) for example. If this is the case, look at most of the buildings downtown. They’re ALL OLD!! So what do, do we start tearing down all the buildings downtown?? Even historic buildings fall by the wayside. How about the courthouse built in the 1800’s.?? FIX WHAT WE HAVE and SAVE the taxpayers some MONEY!! Oh by the way, TO THE BRAINTRUSTS of THIS FORLORN CITY: Take a ride down I street south of the fire station!!! What city leaders thought of thiscrappy job??? YES, Mayor Milo, Nick Minnick, City Council members, etc. ALL of you have NO idea how to run a city!!!!
    GOD HELP ALL OF US!!

    Reply to this comment
  10. lawman

    Dec 29. 2016

    Del I beg to differ on this. we are placing our lives in the hands of these people and we need to know WHAT’S GOING ON! when you buy a new car and the dealership changes hands I guess you think it’s alright to tell the car owner ”too bad” we are new owners and don’t owe you anything. warranty void!

    Reply to this comment
  11. NDame man

    Dec 29. 2016

    TO Lawman——– whaaaaaat are you talking about??? It’s always nice to have EVERTHING NEW and NICE. Unfortunately there comes a price tag for any of these things! If I understand you correctly, it’s would be nice to have a new police station, fire station, new sidewalks (which noone uses any way). The point is ——— how much can the citizens afford to pay? You sound like a kid ( along with the other city overseers) in a candy shop. Wake up and smell the coffee and get real. Thank you.

    Reply to this comment
  12. Annoyed

    Dec 29. 2016

    Our new hospital owners are a joke. The previous owners spend all that money getting their security department certified as an actual police department then these morons come in and strip them down to Paul Blart mall cop status. Now this! Not to mention the fact that they tore down that beautiful old church on lincolnway for what? A grass lot and no extra parking. How is it that difficult to successfully run a hospital?????

    Reply to this comment
    • MSR

      Dec 30. 2016

      The hospital was not involved in the demolition of St. Paul United Church of Christ. Attendance had dwindled down and the congregation could no longer maintain the building. The United Church of Christ organization owned the building and lot; They made the decision to tear down the building. The lot is now for sale.

      Reply to this comment
  13. lawman

    Dec 29. 2016

    NDame man chill out. I was merely commenting on the comment made by Del-where new owners owe us no explanation of what they are doing-nothing said about NEW OR NICE was in my comment. I actually believe we don’t need a new building. read and comprehend-you obviously DON’T understand me correctly

    Reply to this comment
    • Del

      Dec 30. 2016

      Lawman, I don’t see anything in Mr. Friedman’s letter that says that they are in violation of an agreement. I see that Shaw is stating that it’s best to have the EMS station near the hospital and that an outgoing commissioner would like to have some things in the new hospital. Let’s give them a little time and find out what is actually planned instead of thinking the worst.

      Reply to this comment
  14. NDame man

    Dec 30. 2016

    Funny letters between both hospital entities. 12 paragraghs from
    one, 10 paragraghs from Friedman. NOTHING but SMOKE and MIRRORS!! Both parties should run for political office. Nothing but lip service.

    Reply to this comment
  15. Perspectve

    Jan 16. 2017

    Friedman & Decker sound like they don’t understand the current ownership structure. CHS, a very large for-profit publicly-traded (currently) company who also owns Lutheran in Ft Wayne & Porter in Chesterton, has 80% ownership. They are calling the shots. IU Health’s 20% ownership is manifestly retained in order for La Porte Hospital to have a professional/technical connection to the resources in Indy & Bloomington. Whatever verbal agreements, arrangements, or indications made prior to the merger (including those made by former CEO Thordarson) are void.
    If there is something on paper (written obligations, for instance, to keep the hospital within the city limits, if that exists), then CHS is beholden to that and we can expect them to comply.
    (MSR is correct by the way, LPH had nothing to do with the razing of St Paul’s and avoided it all together)

    A new company has come to town and bought our healthcare system. Done. The money from this sale (and it looks like a lot of money) went to the non-profit entity (used to be the Foundation)with a dedication & mission for the betterment of the health of the people of La Porte. Done. As part of this purchase, the company committed to bringing the facilities, systems, & processes of the hospital into the 21st Century. Looks like they’re working on it.
    Not every person (citizen, employee, physician, etc) does well with change and not every person is a good fit with a new system. Don’t forget… LPH was a Clarian company and when Clarian became IU Health, HOW many La Porte Hospital employees lost their jobs in the massive RIF? Before we start sounding the alarm that the sky is falling because a relationships changed with a handful of providers, keep in mind that there is a level of attrition with every merger.

    Millions of dollars staying local to support healthcare (think wellness programs, park improvement, youth education, healthcare assistance, scholarships, etc) in our community… a new hospital… improved systems & processes.

    The original building is in need of a significant & expensive overhaul of electric, plumbing, heating/AC, and general layout. Retreading the current facility makes no sense, if you have any perspective for the future. In addition, from a curb-appeal standpoint… yeesh. The original facility looked dated by the mid-80’s and when it came time to add to it, they winning design was a concrete box stuck out in front of it (???)… then they doubled-down with the wonky chapel addition. Just a bunch of ill-fitting pieces stuck together like it was planned by toddlers.
    Unfortunately, you can’t build a new facility on the same site as the old facility unless you don’t want to have hospital services at all for 5 years.
    What will the city do with that amazing location? Tough to say.
    One thing seems certain… it won’t be a hospital.

    Reply to this comment
    • Tired of it all

      Mar 24. 2017

      you have some knowledge, that only current/former admins have. The building is shot and needs costly replacements. Cheaper to build new. The old building was held together with duct tape basically, as IU took out most of the funds and transferred it down to Indy. BTW, it cost them $45K to buy mulch around the downtown hospitals, so LaPorte and Goshen had to help fund that.

      All that money given to the foundation should have been to the City to begin with back when IU bought the building. CHS wont help the situation and are looking to sell the operation. They are loosing funds fast and need some sort of cash to keep their other 500 hospitals going. They just sold a block of them in October to give them capital to finish the 2016 year strong.

      Good Luck LaPorte as you will need it to keep a hospital in town.

      Reply to this comment

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