Judge Blocks Sale of NKC Hospital

| March 20, 2013 | 11:18 am
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A Clay County judge has ruled in the battle for control of North Kansas City Hospital.  The hospital’s board of trustees filed a lawsuit earlier this month attempting to block the city from appointing new board members.  Officials said they feared the city wanted to sell the hospital to a for-profit corporation.

Judge Shane Alexander said the city cannot move forward with any sale of the hospital while the matter remains in legal limbo.  However, Alexander did rule that the city can appoint additional members to the hospital board.  The city owns the medical center, but hospital officials said its authority is limited to selecting board members and not to deciding whether to sell it.  The North Kansas City Council hired an investment bank last year to review the hospital’s options, which included a sale.

Statement from the Board of Trustees issued on March 19, 2012

Today Judge Shane Alexander of the Clay County Circuit Court issued a ruling to stop the city of North Kansas City from selling North Kansas City Hospital for the duration of the litigation between the city and the hospital. Judge Alexander also ruled that the city is not barred from appointing new members to the hospital’s Board of Trustees, nor from changing city ordinance to expand the size of the board.

The ruling was made in response to a motion filed by the Board of Trustees of North Kansas City Hospital that was argued in Judge Alexander’s court last week. The motion is part of the hospital’s lawsuit to obtain judicial confirmation that the city does not have the authority to sell the hospital under Missouri law.

“We are pleased that Judge Alexander has stopped the city from taking any direct action to sell the hospital,” said Peggy Schmitt, President & CEO of North Kansas City Hospital. “We are optimistic that any new board members appointed by the city will support the continuation of North Kansas City Hospital as a community hospital.”

At the hearing, the city’s attorneys said there was a strong likelihood that the city will amend its ordinance to increase the size of the board from 11 to 15 trustees. Late this afternoon, the North Kansas City Council posted on its website the intent to discuss the approval of eight new members to the hospital’s Board of Trustees. The city has not appointed a new trustee since 2009.

Statement from the Board of Trustees issued on March 5, 2012

The Board of Trustees of North Kansas City Hospital today filed a motion in Clay County Circuit Court to prevent the city of North Kansas City from proceeding with its plan to change the composition of the hospital’s Board of Trustees and to block the city from any attempt to sell the hospital during the pending litigation.

This motion is necessary following the city’s announcement in the media – made hours after the city’s notice to the hospital – that the city plans to appoint several new Trustees to the hospital’s Board. The city’s announcement necessitated the court’s intervention and triggered the termination of a previous agreement between the hospital and the city under which the city had agreed to cease actions to sell the hospital while the question of proper authority to sell is decided by the courts. The hospital’s motion requests that Judge Shane Alexander issue an injunction or other preliminary relief to prevent the city from packing the hospital’s Board and to protect the hospital from being sold while this matter is judicially determined.

“The purpose of the motion is to protect our community hospital and to preserve the continuity of our Board while we seek judicial confirmation that state law does not give the city the authority to sell the hospital,” said Peggy Schmitt, President & CEO of North Kansas City Hospital. If the motion is granted, the hospital’s existing Trustees will continue to serve the hospital throughout the litigation.

“Our Trustees are very experienced in healthcare governance and are knowledgeable about the challenges facing healthcare,” said Michael Montgomery, M.D., Chairman of the Board of Trustees. “We have been working on healthcare reform issues at the Board level and within our organization for some time. Appointing ‘several new members’ disregards the statutory requirement that the terms of the Trustees be staggered, and harms the continuity of the Board and its initiatives,” said Montgomery.

While Chapter 96 of the Missouri Revised Statutes authorizes the city to appoint members to the hospital’s Board of Trustees, the city has not appointed a new Trustee since 2009, despite vacancies on the Board. The city’s sudden decision to appoint several new members causes the hospital concern that the city may attempt to interfere with the Board’s reasoned decision to oppose the sale of the hospital, which the city expressed an intention to do when it indicated its desire to exit the healthcare business.

About North Kansas City Hospital: For 55 years, North Kansas City Hospital has been at the forefront of providing medical care in the Northland. The Hospital is an acute-care facility with 451-licensed beds with specialties in cardiac care, oncology, women’s health, orthopedics and emergency services. They provide a full continuum of care from the highest level of neonatal intensive care to award-winning cardiovascular and orthopedic programs to home health and hospice. The medical staff includes over 550 physicians representing 49 medical specialties. North Kansas City Hospital is the first hospital in Missouri and one of only a few hospitals in the country to receive the Mission: Lifeline Heart Attack Receiving Center accreditation from the American Heart Association. In addition, the Hospital is an accredited Level III Chest Pain Center by the Society of Cardiovascular Patient Care, a major trauma center for emergency care and rated as one of the busiest adult/pediatric emergency departments in Kansas City. For more information, contact North Kansas City Hospital at 2800 Clay Edwards Dr., North Kansas City, MO 64116, on the web at nkch.org, at 816-691-2000 or follow the Hospital on Facebook, Twitter and YouTube.

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