By Vickie Aldous
for the Mail Tribune
Asante Health Systems says it will make $10 million in capital improvements at Ashland Community Hospital and will attempt to retain as many current employees as possible as part of proposed terms for a merger between Asante and ACH.
In a Thursday memo to Asante employees, Asante President and Chief Executive Officer Roy Vinyard said ACH, the ACH Foundation and Asante have agreed upon a letter of intent outlining terms for a merger agreement.
The Ashland City Council will consider whether to approve the letter of intent during a council meeting that starts at 7 p.m. Tuesday in the Ashland Civic Center, 1175 E. Main St.
"Though we remain optimistic that ACH will join Asante, I emphasize that this is just a step -- albeit a very significant one -- toward that goal," Vinyard wrote in the memo to employees of Asante, which also operates Rogue Regional Medical Center in Medford and Three Rivers Medical Center in Grants Pass.
"This is a complex business transaction that includes the City of Ashland and requires Ashland City Council approval," Vinyard wrote.
The city of Ashland owns the hospital, which in past decades was a city department before being spun off to operate on its own.
If the council does approve the letter of intent, the next step would be to create a definitive agreement, which would also need the approval of Asante, ACH, the ACH Foundation and the council, according to Vinyard.
"We anticipate that step to be completed within 60 to 90 days at which point the real process of ACH becoming a part of Asante will begin," Vinyard wrote.
ACH Board of Directors Chair Doug Gentry, reached Thursday night, said the board was prohibited at this time from commenting on the letter of intent.
"Ashland Community Hospital remains committed to meeting the health care needs of the community, and believes Asante is the right partner to accomplish that goal," said Janet Troy, vice president of development for the ACH Foundation.
Troy added that, out of respect for city's process, additional comments would be delayed until next week's City Council meeting..
Among other terms in the proposed letter of intent, the city would agree to transfer the hospital's real estate and its corporate ownership of the hospital to Asante.
Asante would agree to operate the hospital as a general hospital for a least three years, or pay the city $8 million and return the corporate ownership.
If it stopped operating the hospital in years five through 15, it would pay the city $4 million.
Asante would make $10 million in capital improvements in the first three years.
The letter of intent also states that Asante would commit every effort to offer -- but would not guarantee -- employment to all current ACH employees.
With 400 employees and a $25 million annual payroll, the hospital is Ashland's third largest employer and provides the highest average wage, according to a fact sheet created by the hospital in late 2012.
ACH has been pursuing a merger because of financial difficulties.
It lost $2.5 million last fiscal year primarily because Medicare doesn't pay enough to cover the amount the hospital bills to treat senior citizens.
The hospital also lost money because of Medicaid patients, charity care and other unpaid medical bills, according to an annual report the hospital delivered to the City Council in August 2012.
A proposed merger between ACH and San Francisco-based Dignity Health fell through in late 2012 after community members voiced opposition to proposed restrictions on abortion and physician-assisted suicide for terminal patients. Dignity Health had affiliations with the Catholic Church.
In the memo to Asante employees, Vinyard said the merger would benefit Asante and ACH.
"We believe healthcare decisions are best when they are kept local," he said. "Bringing ACH into the Asante family will achieve that goal and benefit the people of Ashland while strengthening Asante."
Ashland Daily Tidings reporter Vickie Aldous can be reached at 541-479-8199 or email@example.com.
This story originally appeared in Medford Mail Tribune.