Emanuel Medical Center in Turlock Sold for $131 Million

David Fransen

Tenet Healthcare Corporation will pay $131 million to purchase Turlock's Emanuel Medical Center, according to documents submitted to the State Attorney General's Office.

The sale was first announced Feb. 21. At that time Emanuel board members said the sale would ensure the hospital's continued presence in the community, despite rising costs of doing business.

“(Emanuel Medical Center) Corporation’s Board of Directors (Board) believes Hospital needs to explore new ways to deliver healthcare in order to provide better value to patients, employees, and payers,” the documents read. “Board feels that Hospital's current healthcare service delivery model is unsustainable due to healthcare reform, rising healthcare costs, and funding cuts in government healthcare programs.”

The documents also cite a sizable loss of income due to the March expiration of a contract for services with Kaiser Foundation Hospitals Inc.

“The opening of the Kaiser-Modesto Medical Center in 2008 greatly reduced the number of Kaiser patients seen at Hospital over subsequent years. At the height of the relationship with Kaiser, Hospital saw approximately 40 Kaiser patients per day. That figure has reduced to only 1 or 2 patients per day in the last year.

“As a result of these factors and increasing competition, Board has determined that the strategy to
operate as a standalone hospital is not viable in the long term. Thus, Board determined it was in
the best interest of the local community to pursue an affiliation with another healthcare entity in
order to sustain Hospital’s role as a major local provider of healthcare services.”

If approved by the Attorney General, the $131 million sale would include all Emanuel Medical Center assets save for cash, some religious artifacts, and four non-hospital operations: Brandel, Cypress, Hospice of Emanuel, and Jessica's House. Emanuel, operating under a new name as “EMC Health” would continue to operate Hospice of Emanuel and Jessica's House, while Covenant Retirement Communities West would inherit Brandel and Cypress.

Proceeds from the sale would be transferred to the newly-created Legacy Health Endowment. The endowment would also receive all previously-fundraised dollars held by Emanuel Medical Center.

A further $5 million would be paid to purchase Emanuel Medical Center's inventory of goods. And $600,000 per year would be donated to the Emanuel Covenant Church, for ten years.

Per the terms of the agreement, the hospital would continue to serve as a full-service general acute care hospital. Intensive care, cardiac care, emergency care, pediatrics, obstetrics, orthopedics, cardiology, and oncology would remain for at least ten years, with the open heart surgery program remaining for at least three years.

But the hospital's governing board and license would be integrated with those of Modesto's Doctors Medical Center, which is also owned by Tenet. Staff and administration would be integrated as well, but all current Emanuel employees in good standing would be offered continued employment.

Tenet also agrees to spend at least $30 million per year to develop or expand the hospital, or on hospital staff. A further $398,158 would be spent on community benefit programs – like sponsorships of local events and activities – for at least five years, increasing based on the consumer price index.

The document states that Tenet has agreed to preserve the religious orientation of Emanuel in perpetuity, including religious statuary.

But one thing that will change is the availability of abortion services. Emanuel's ethical guidelines previously barred abortion except in cases of rape, incest, or to safeguard a mother's life.

“There will be no restriction of the type and level of medical services that Purchaser may offer at Hospital,” the document reads. “The transaction does not prohibit the expansion of women’s reproductive services, including those services currently prohibited, and is not expected to reduce the availability or accessibility of reproductive health services.”

Turlockers may comment on the proposed sale of Emanuel Medical Center next week. A public hearing will be held at 4 p.m. May 31 at Emanuel Medical Center, classroom C in the east wing, 825 Delbon Ave.

Related Articles:
Emanuel and Tenet Explain Hospital Sale, Possible Changes

Emanuel Medical Center Sold to Tenet Healthcare

Emanuel Medical Center in Turlock Cuts 24 Positions

Emanuel Medical Center Considers Ownership and Partnership Changes Toward Long-Term Sustainability of Hospital Services in Turlock

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