Attorney General's News Release

January 22, 2003

Nixon announces agreement with Health Midwest to establish $700 million foundation for health care needs

Kansas City, Mo. — Attorney General Jay Nixon announced today that his office has reached an agreement with Health Midwest. The memorandum of understanding between Nixon and Health Midwest will establish a new foundation, valued at nearly $700 million, to serve health care needs in the Kansas City area.

"This agreement is an important step forward for the Kansas City area and will greatly benefit the health care needs of this community," Nixon said.

Under the agreement, Health Midwest will pay all of the net proceeds it receives from HCA into a new foundation that will be established for the purpose of funding and promoting health care in the Kansas City area. The foundation will be independent of the existing Health Midwest board of directors and will be directly accountable to the community, Nixon said. The new foundation will be governed by a new board of directors, selected by a community-based process.

The agreement between Health Midwest and HCA requires HCA to pay approximately $1 billion for the system and to make $450 million in improvements to Health Midwest hospitals. After adjustments and payment of outstanding debts, nearly $700 million will be left over to be put into the new foundation.

"This new foundation will exist for the purposes of improving community health in the metropolitan Kansas City area without regard to state lines or political subdivisions," Nixon said. "The new foundation will conduct a needs assessment and will spend its money based on the finding of need in that assessment."

Nixon said the new foundation will conduct all of its business in public and will be subject to Missouri's Sunshine Law, allowing the public access to the meetings and decisions made by the board.

The new foundation will be governed by a board of directors that will initially consist of 25 people. The Attorney General will appoint the initial board of directors based on nominations from the community and Health Midwest. Once the initial board is chosen, Nixon said, the foundation board will choose all future directors based on nominations from a community advisory committee appointed by the mayors of the cities that are currently served by the Health Midwest hospitals.

This agreement also requires Health Midwest's chief executive officer, Dick Brown, to pay $500,000 to the new foundation to resolve Nixon's concern that Brown's compensation package may not have been appropriate in a not-for-profit hospital setting.

"This agreement is a victory for the people of the Kansas City area," Nixon said. "Over the past few months, many people have come forward to comment on the Health Midwest sale, their input has been constructive, thoughtful and articulate.

"I am very proud of the way this community has come together to express our concerns about the future of health care," Nixon said. "Today's agreement is a significant step forward for quality, affordable health care in this area."

The memorandum of understanding also dismisses a lawsuit filed by Health Midwest in Cole County Circuit Court against the Attorney General and a counterclaim filed by Nixon against Health Midwest and its board of directors.

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