September 30, 2002
Sale of San Antonio hospitals moves on
___By Marv Knox
___Editor
___Messengers to the Baptist General Convention of Texas annual session will consider selling Baptist Health System of San Antonio to a for-profit company, following approval of the deal by the BGCT Executive Board Sept. 24.
___The Executive Board overwhelmingly affirmed the proposal after the BGCT Human Welfare Coordinating Board "reluctantly" recommended selling Baptist Health System to for-profit Vanguard Health Systems of Nashville, Tenn. The BGCT will take up the issue at its annual session Nov. 11-12 in Waco.
___"We have worked on this to do what is best for the San Antonio area," Bill Skaar, chairman of the Human Welfare Coordinating Board and pastor of First Baptist Church in Grand Prairie, told the Executive Board. "Our convention either must say yes or no to the BHS board's decision to preserve quality health care and meet the needs in San Antonio."
___Baptist Health System operates five hospitals and has struggled financially for several years. The system is owned by the BGCT, which elects its trustees.
___Acting on behalf of the BGCT, the Human Welfare Coordinating Board urged the Baptist Health System board of trustees to consider an offer from Valley Baptist Health System, which also is owned by the convention.
___But Baptist Health System trustees voted down three Valley Baptist offers, sticking with the more lucrative Vanguard offer.
___Vanguard proposes to pay off $174 million in long-term debt, fund $28 million in debt that is due next year, spend $200 million on capital expenses between 2003 and 2008, and provide about $100 million to support Baptist ministry in San Antonio.
___The last part of the deal possibly could create a non-profit organization, Baptist Health & Family Services, from a merger with the BGCT's San Antonio-based Baptist Child & Family Services.
___The Valley Baptist proposal offered $60 million over three years, including $50 million the first year. It also pledged $203 million for capital expenditures and asset acquisitions in the next six years, guaranteeing $100 million within the first three years.
___Baptist Health System trustees described for the Executive Board the system's financial and operating woes and the challenges they faced in seeking a solution.
___As late as 1999, Baptist Health System's audit showed a profit, reported Earl Cutler, chairman of the BHS board of trustees. But in 2000, financial investigation revealed that profit actually was a loss, the size of which grew as the investigation widened. The board fired the system's chief executive officer that year, and financial losses continued.
___Today, BHS is in critical condition, Cutler said. He cited a litany of financial and operational woes--lack of access to capital funding, loss of physicians, decline in patient volume, bond defaults, inability to recruit and retain employees, jeopardized accreditation for some programs and increasingly aggressive competition.
___The board initially considered a merger with Christus Santa Rosa Health Care, a non-profit hospital system in San Antonio, he said, adding, "We simply could not get that deal to work."
___At the urging of BGCT leaders, including Executive Director Charles Wade, BHS trustees also considered the Valley Baptist Health System proposal before settling on Vanguard.
___Dowell Loftis, a BHS trustee and pastor of Shearer Hills Baptist Church in San Antonio, acknowledged Texas Baptists' desire to keep the hospital system within the Baptist fold and the pressure to work a deal with Valley Baptist.
___"This was not an easy decision for trustees of Baptist Health System," Loftis told the Executive Board. "We worked on this for a year and a half, and 15 Baptists just like you looked at this very, very carefully and voted not once but three times to go with this."
___Noting the Human Welfare Coordinating Board stipulated that it "reluctantly" agreed to the Vanguard sale, Loftis explained, "We felt if there were a viable option to keep this in the Baptist family, we would have done it."
___Only Vanguard could provide the "cash infusion" Baptist Health System needs to pay off debt and make necessary capital improvements, he said. "People may tell you there are other viable options. We looked at it and don't think so."
___The BHS board has received several guarantees in writing from Vanguard that will preserve the Baptist Health System legacy, Loftis added.
___These include continued funding for the chaplaincy program, maintaining the hospitals' chapels, and employing a system vice president for Baptist ministry; commitment to keep the system's five hospitals open, including two facilities in poor parts of the city; and pledges to provide the same level of charity care historically provided by BHS. "No one will be turned away when they need help," he said.
___The new system will be directed by seven trustees, three of whom will be selected by Texas Baptists, Cutler said, adding they will have "reserve powers" to block unacceptable actions approved by the other four trustees.
___For example, the Baptist trustees' presence on the board will ensure the system will take the same approach to moral issues as they have in the past. "Issues such as abortion will be treated exactly the same way they have been in Baptist hospitals," Loftis said.
___The three Baptist trustees also could prevent the sale of hospitals in the system, Cutler said. And they will have control of "Baptist" in the name--determining whether to retain or drop it.
___Al Flores, an Executive Board member and pastor of First Mexican Baptist Church in San Antonio, asked Wade to say what he thought of the issue.
___"This is a rather difficult decision for all of us," Wade conceded. "The Human Welfare Coordinating Board made the decision they reached; it was not their job to negotiate a settlement.
___"We tried to facilitate a settlement with Valley Baptist Health System, and they made a good offer. But 15 members of the Baptist Health System disagreed.
___"It was my concern that we did not give any signal that we do not care deeply about our hospital systems. If I could have facilitated a decision (in favor of Valley Baptist), I would have been delighted. But this is the option most possible."
___Wade advocated the integrity of the BGCT board system for institutional operation and encouraged support for the Baptist Health System's proposal.
___The recommendation to approve the sale to Vanguard includes authorization for a special committee to review the sale and assure compliance with the terms ratified by the Human Welfare Coordinating Board and Executive Board. That committee is to be comprised of the chairman of the Executive Board, as well as the chairman, chairman-elect and executive committee of the Human Welfare Coordinating Board.
___The Executive Board affirmed the proposal with only one dissenting vote.
___The Executive Board also responded with sustained applause when Skaar announced the Human Welfare Coordinating Board had passed a resolution commending Wade for his "unending efforts, wisdom and grace."
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