Asset Purchase Agreement
What is the Asset Purchase Agreement (APA)?
Note - blue text denotes a link.
The APA is the overarching set of legal documents that set forth the conditions of the sale of Mission Health System to HCA Healthcare Inc. The paragraphs below lay out the timeline from the announcement to sell the hospital system through the closing of the transaction, with accompanying documentation of specific events.
The sale of a non-profit organization, in this case, Mission Health System, to a for-profit organization, HCA Healthcare, Inc., created a hugely complex transaction. Members of SEARCH and other organizations around the 18 counties served by this hospital system teamed up to study the transaction, ask questions, host educational public events, write Resolutions, and make suggestions to improve the outcome of the transaction (particularly for our smaller regional hospitals), which ultimately led to significant improvements on the conditions of the sale.
When the Attorney General made his announcement that he was not objecting to the sale of the hospital system as long as certain changes were made, the NC Department of Justice made available the updated documents as well as letters, summaries of the changes, and a graphic describing the changes to the Dogwood Health Trust Board’s composition. Below are links to the most crucial of those documents:
Nonobjection letter - final - executed
Letter Agreement between Dogwood Health Trust and NC Attorney General
Amended and Restated Asset Purchase Agreement - Main Text
Amended and Restated APA - Updated Disclosure Schedules and Exhibits
This next link is to the original 2,640-page list of Schedules; note the "Amended and Restated APA - Updated Disclosure Schedules and Exhibits" at the link above only has the Schedules that were updated, items that were not updated are in the document at the link below. Be warned, it is a large document.
Original APA from September 2018 - Disclosure Schedule of Asset Purchase Agreement
Overview of DOJ Review of Mission/HCA Transaction
We offer this history for the benefit of our communities as we continue to monitor that the conditions of the sale are being honored, but also for other organizations that may face the sale of their hospital.
March 22, 2018 - Mission Health System’s Board announces its letter-of-intent to sell to HCA Healthcare Inc. in a press release.
May 8, 2018 - Mission begins hosting a series of Facebook Live events. The format of these events was that generally, four experts from Mission Health System discussed aspects of the sale, and questions were posted to FB and answered as time allowed. These events were recorded, and as of early August 2020, the videos of them were still available on Facebook. Click on each title to view the event.
May 8 - “Answering your questions about Mission Health and HCA”
June 12 - “Transforming Health and Wellness in our Community”
July 24 - “Mission Health and HCA: Process & Progress”
July 30 - “What Joining HCA Means for Our Rural Communities”
May, 2018 - Mission Health System sets up an interactive website, Mission Health Forward, to respond to questions and comments from the public about the sale. While not every question was answered to the depth the public hoped, this website was helpful in getting questions answered and gaining an understanding of the transaction.
July 16, 2018 - Mission Health System announces the creation of the Dogwood Health Trust (DHT), the planned successor foundation from the sale to HCA. The mission of DHT is “To dramatically improve the health and well-being of all people and communities of Western North Carolina.” Here is the press release for the announcement.
As the graphic below shows, a successor foundation is created out of the net proceeds of the sale of the non-profit hospital system to the for-profit hospital system. DHT was expected to receive approximately $1.5 billion after the sale was finalized.
August 3, 2018 - the non-profit Communities for Older Adult Health and SEARCH co-hosted the WNC Conversion Health Foundation Forum on the campus of UNC-A in Asheville. This forum was used to educate us and the attendees about conversion foundations (also called successor foundations), which are created from the sale of a non-profit to a for-profit. The forum was well attended and the speakers helped us understand the role the public can and cannot have in how the foundation is created and run, defined for us the Social Determinants of Health, and the positive impact a foundation can have for its community.
Dogwood Health Trust itself is a conversion foundation and some of the Board Members of the foundation were in attendance, which was quite useful during the question and answer period.
Event Materials (PDF format):
WNC Conversion Health Foundation Forum - Issues & Opportunities - Program
Social Determinants of Health - by Ciji Dellinger
Eight Lessons from Danville, Virginia - by Karl Stauber
WNC Conversion Health Foundation Forum Slides - by Kim Stravolo
August 7, 2018 - The Asheville Citizen-Times releases the redacted Asset Purchase Agreement on its website, which allows the public to begin reviewing the details of the transaction. As the various groups across the region began reviewing the APA we realized that there were many concerns that we wanted to address.
For example, the original APA indicated that HCA was committed to providing services at Mission Hospital in Asheville for 10 years, but the regional hospitals, which included Blue Ridge Regional Hospital in Spruce Pine, only had a 5-year commitment. And the list of the specific services to be provided at Mission was much more explicit and complete than the list for the regional hospitals.
Another important part of the transaction was the creation of the successor foundation, Dogwood Health Trust (see earlier graphic describing how the foundation was to be created). When we realized that much of the Board for DHT would be composed of previous Mission Health System executives, we decided that was another issue we would want to address. We wanted to make sure that our rural counties where the regional hospitals are located would be appropriately represented in the running of the foundation. Below is the list of regional hospitals within the 18-county region, along with their locations.
Blue Ridge Regional Hospital – Spruce Pine, Mitchell County
McDowell Hospital – Marion, McDowell County
Transylvania Community Hospital – Brevard, Brevard County
Angel Medical Center - Franklin, Macon County
Highlands-Cashiers Hospital – Highlands, Macon County
Because significant changes did occur to the original documents, only the final “amended and revised” versions of the documents, which are in effect now, are posted further down on this page.
August 14, 2018 - SEARCH publishes a resolution on the conditions we want to see the proposed sales agreement. After publishing our own position, we began to work with other groups across the region to educate them on how the transaction was evolving, and to request their support by having them also write resolutions.
The following are the links (in blue) to all of the resolutions (in PDF format), which were published from September through December of 2018:
Early September 2018 - SEARCH creates a position paper on the Conflicts of Interest within the proposed Dogwood Health Trust Board.
September 6, 2018 - The Governing Board of the Town of Burnsville adopted a RESOLUTION concerning the sale.
September 19, 2018 - Bob Scott (Mayor of Franklin, NC), writes a Guest Column in the Smoky Mountain News expressing his concerns about the sale.
September 27, 2018 - The Town Board of Highlands, North Carolina, passes a RESOLUTION on the proposed sale.
October 2, 2018 - The Board of Commissioners of Mitchell County passes a RESOLUTION on the proposed sale.
November 13, 2018 - The Yancey County Economic Development Commission adopts a RESOLUTION Concerning the Proposed Sale.
November 26, 2018 - Members of the Town Council of Bakersville pass a RESOLUTION on the proposed sale.
December 13, 2018 - The Town Council of Spruce Pine adopts a RESOLUTION on the proposed sale.
We learned that comments and concerns could be sent directly into the Department of Justice’s office, but only until the final decisions were made All through the fall of 2018 SEARCH and other organizations encouraged elected officials, non-profit leaders, federally qualified health centers (FQHCs), and individuals to write to the AG, and dozens of them did. Ultimately the Asheville Citizen-Times made a Freedom of Information Act (FOIA) request and published the comments.
August 20, 2018 - Mission Health’s Board of Directors announces that if and when the Mission Health and HCA Healthcare transaction is closed, each Entity Legacy Foundation will receive a distribution of $15M to improve the health and wellbeing of their community.
August 31, 2018 - Mission Health System’s Board of Directors announces that they were entering into a definitive agreement for HCA to acquire Mission Health System.
Mission Health Signs Definitive Agreement To Be Acquired By HCA Healthcare
October 23, 2018 – Former Governor of Missouri Jay Nixon and others participate in a public Listening Session on the proposed sale at the Unitarian Universalist Congregation of Asheville. Why was Jay Nixon invited? Here’s the press release:
If one person in America understands both the promise and pitfalls of hospital sales like the one proposed between Mission Health and HCA, it is former Missouri Attorney General and Governor Jeremiah “Jay” Nixon.
The good news for Western North Carolina is that Nixon will share his insights with the officials responsible for overseeing the sale of Mission to HCA, the nation’s largest for-profit hospital chain. While attorney general, he created not one but two strong, independent health foundations for the people of Missouri – one out of a transaction involving HCA, the other involving Blue Cross Blue Shield.
Nixon will start by listening to people affected by the sale and spreading the message that their opinions count with the decisionmakers in Raleigh who must approve the sale. Both the media and the public are invited to attend a roundtable at which representatives of affected communities share their hopes and fears about the future of their healthcare.
On Friday, Oct. 26, Nixon will be in Raleigh, where he will confer with staff in the office of the Attorney General – the people evaluating whether the sale truly serves the public interest, as the law says it must.
A number of community groups and local officials in rural areas have voiced alarm over certain aspects of the sales contract submitted by Mission and HCA. They include:
That promised protections for the hospitals and key medical services are flimsy and riddled with loopholes;
That Mission is selling its assets too cheaply, and the public will have no knowledge of how the final figure was reached;
That the foundation charged with making HCA live up to its promises will hesitate to do so, because its proposed board is full of Mission holdovers;
That members of the foundation board are drawn primarily from Buncombe County and not representative of the people across the region whom they are supposed to serve.
These are issues Nixon knows first-hand from two transactions he oversaw as Missouri attorney general. In one, HCA bought a nonprofit hospital system, Health Midwest. Nixon personally appointed the board of the foundation that received the proceeds, insisting that board members have no ties to either HCA or Health Midwest. That foundation later sued HCA for breaching the sales agreement, winning hundreds of millions of dollars and proving why it’s vital to have an independent board.
In the second transaction, Blue Cross Blue Shield of Missouri shifted from nonprofit to for-profit status. The giant insurer argued that it had no obligation to establish a charitable foundation in the process, and the state insurance department went along. But Nixon sued Blue Cross and won, creating a foundation that today has assets of well over $1 billion.
Nixon’s goal, he said, is to help those involved in the sale create a win for all the people of the western region. “This is a tremendous opportunity,” he said. “I look forward to listening and learning as well as sharing whatever is of value from my own experience.”
Nixon is coming to North Carolina at the invitation of groups and individuals located across the region. They include SEARCH (Sustaining Essential and Rural Community Healthcare), based in Yancey and Mitchell Counties; the mayor of Highlands; COAH (Communities for Older Adult Health), based in Asheville; and Elder Law Carolina, based in Asheville.
Videos of the Listening Session
Listening Session Video – One hour and forty minutes
Gov. Jay Nixon on items to consider with regard to the sale – 3 minutes
Carmen Ramos-Kennedy on the composition of the Dogwood Health Trust Board – 2+ minutes
Jacob Willis on the need for ambulance service in rural communities – 3 minutes
Jacob Willis on the economic impact of rural hospitals – 1+ minute
January 16, 2019 – North Carolina Attorney General Josh Stein comes to Asheville and announces that he did not oppose the sale of Mission Health System as long as specified changes to the agreement were made. The redacted and amended versions of the APA documents became available on the NC Department of Justice website.
Here is a one-page overview of the Department of Justice’s review of the transaction.
Josh Stein with SEARCH and HEC
February 1, 2019 – Effective date of HCA assuming ownership of Mission Health System.