In Metro Health’s proposed joint venture with the Franklin, Tenn.-based for-profit Community Health Systems (NYSE: CYH), $45.1 million in net proceeds would go to the Metro Health Foundation $34.4 million from the sale after net debt and liabilities, plus $10.7 million in existing foundation assets, according to documents outlining the deal that were submitted to the Michigan Attorney General’s office.
Based on past transactions, the Metro Health Foundation could either spin off from Metro Health or could agree to provisions imposed by the state attorney general that assure any net proceeds it receives go to a charitable cause.
The agreement requires the foundation to use the proceeds from the venture for “charitable, health care-related purposes” and to obtain the attorney general’s approval before altering its own charitable mission, according to a November 2014 report Attorney General Bill Schuette issued in approving the deal.
Bob Schellenberger, an attorney and CPA in Grand Rapids, told the review team that the Grand Rapids Community Foundation “is excellent at carrying out donor intent” for the past contributions Metro Health received for its foundation.
Lody Zwarensteyn, the former president of the Alliance for Health in Grand Rapids, said that the Grand Rapids Community Foundation could establish a donor-advised fund assuring the proceeds from the joint venture and existing assets of the Metro Health Foundation go to support charitable causes in health care “in ways that would be acceptable to the Metro Health community.”
A former executive at Metro Health, Ken Nysson, urged the attorney general review team to steer the proceeds either to the Grand Rapids Community Foundation or perhaps to two other organizations.
A post-sale organizational chart submitted to the attorney general’s office shows Metro Health Foundation continuing as part of Metro Health Corp., which would hold a 20-percent stake of the joint venture with Community Health Systems. The chart indicated the foundation would have a new 11-member board, with five members each appointed by Metro Health and Community Health Systems, plus a representative appointed by the attorney general’s office.
The Grand Rapids Community Foundation “can provide services that honor donor intent,” has experience in making health care grants and “long relationships” with heath care organizations such as Cherry Street Health Services, Catherine’s Health Center, the YMCA and “many others,” Sieger said.
