St. Francis' fiscal health, reputation take another hit

It has become clear in recent days that the news for St. Francis Hospital is going to get ominously worse before it gets any better.

The Columbus medical facility was already in deep financial straits due to an almost $30 million hole in its books, disclosed late last year after hospital management had denied any such problems despite multiple vendor complaints. The discrepancy was called an "accounting error," and St. Francis began looking for a "strategic partner" to help straighten things out.

We don't know who that partner might be, but as of Friday, everybody can be pretty sure who it won't be. CHSPSC, one of the health care companies with which St. Francis had been in discussions, has filed a $5 million-plus federal lawsuit alleging St. Francis has "intentionally hidden and lied about material facts regarding the hospital's problems."

CHSPSC, a subsidiary of Community Health Services of Franklin, Tenn., is obviously convinced St. Francis has more serious and troubling problems than accounting errors.

According to the suit, CHSPSC spent months earlier this year studying and negotiating the acquisition of St. Francis, which announced in April that it was in "exclusive discussions" with Community Health Systems. Then, on July 29, hospital trustees announced there were no longer exclusive discussions with any company; the next day, St. Francis announced a letter of intent to be acquired by another Tennessee company, LifePoint Health.

Before that time, the suit alleges, Community Health made a "good faith" deposit of $5 million, only to learn that the hospital had "made these misrepresentations intentionally to induce CHSPSC into a deal and specifically into fronting St. Francis the $5 million." When confronted, St. Francis "terminated the transaction without cause and without refunding CHSPSC's $5 million deposit."

The details of what problems and "misrepresentations" Community Health Systems claims to have uncovered are not yet public knowledge; the plaintiffs have moved to seal the suit "out of an abundance of caution to protect the purported confidentiality of the defendant's information." But the request was only that the suit be sealed for 30 days, so surely we will know before too long what caused CHSPSC to balk after investing $5 million in St. Francis.

Meanwhile, legalese and institutional jargon can have the effect -- often, we suspect, quite intentionally -- of obscuring the reality that all of this ultimately comes down to decisions made by human beings with names and job descriptions and responsibilities.

An April editorial in this space said, in part: "Does the leadership of St. Francis have a clear sense, even now, of how many eyes saw these reports before they were put on the record as financial fact? Some intensive and unblinking fiscal forensics are in order, and we have no way of knowing that process has ever really started."

One way or another, it's started now.

This story was originally published August 10, 2015 at 5:04 PM with the headline "St. Francis' fiscal health, reputation take another hit."