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Detroit Medical Center Sale Raises Concerns About Charity Care

John Commins, for HealthLeaders Media, March 19, 2010

The capital improvements list earmarks $500 million for specific projects approved by the DMC board, including a new Children's Hospital of Michigan tower, new patient units at Detroit Receiving Hospital, doubling of the Sinai-Grace Hospital emergency department, a major renovation of OR space at Harper University Hospital, and new physician office buildings at Harper and Sinai Grace. The other $350 million will be for ongoing repairs and capital and equipment needs at DMC.

The existing DMC Board chaired by D'Arcy will remain and administer the existing $140 million in charitable funds given to DMC over the years and will make sure all donor funds are spent as intended. The DMC Board will also have the legal right to enforce Vanguard's commitments under the purchase agreement.

The letter of intent is non-binding and extends through June 1, when both parties are required to have completed a mutually acceptable agreement. If they haven't, the letter of intent terminates unless they agree to extend it. The final agreement must be approved by the DMC and Vanguard boards, and will be reviewed by the Attorney General of Michigan, and other state and local government entities.

DMC's eight hospitals include Children's, Detroit Receiving, Harper, Sinai-Grace, Huron Valley-Sinai Hospital, Hutzel Women's Hospital, Rehabilitation Institute of Michigan, and DMC Surgery Hospital, with a combined 1,734 licensed beds and 2008 total revenues of approximately $1.9 billion.

Vanguard operates 15 acute-care hospitals in Rhode Island, Texas, Illinois, and Arizona, with 4,135 licensed beds. The company's total revenues in fiscal 2009 were approximately $3.2 billion.


John Commins is a senior editor with HealthLeaders Media.

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