HomeMy WebLinkAboutAshland Healthcare Agrmt
DRAFT
DEFINITIVE AGREEMENT
by and between
THE CITY OF ASHLAND
and
ASHLAND COMMUNITY HEALTHCARE SERVICES
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ARTICLE 4
4.1
4.2
4.3
4.4
4.5
4.6
3.1.6.1 Material Breach .............. -. . . . . . . . . _ _ 5
3. L 6.2 Insol veney . .. ~ .. . . . . . . .. .. .. .. .. . . . . . . . - - - _ _ 5
3_ 1.6.3 Capital Depletion .............. - - . . . . . . .. 5
3.1.6.4 Debt Service Coverage . - .. .. - - .. . . . . . . . . . . ... 5
3. 1.6.5 License. . . . . .. .. . - . - - . . . . . . . . . . . - .. - .. 6
3.1.6.6 Accreditation .. .. _ .. .. . - . . . . .. . .. . .. - - . - . . . .. 6
3. L 7 Provision of Financial Information .. . . . . .. .. - . . . . .. - .. . .. .. . .. 6
3.1.8 Dissolution of ACHS . . . . .. . . .. . . . . . . . . . . .. . _ . .. - .. - . .. 6
EMPLOYEES OF FORMER ACH . . . . . . . . _ . . . .. .. . . . . . . . . . ... 6
Identification of Employees and Personal Service ContractorS.of Fonner ACH6
Present Benefits .............................................. 6
Collective Bargaining Agreements. . . . .. . . . . . . .. . . _ . . . .. . . . . . .. 6
Offer of Employment by ACHS and Related Processes _ . . . . . . . . . _ ... 6
Termination by City of Employees of Fonner ACH . . . . . . . _ . . . . . .. 7
Employees on Leave or Special Status . : . .. . . _ _ _ .. . . . . . . .. . . . _ _.. 8
ARTICLE 5 RELA TED ORGANIZA TrONS . .. . . . .. . . . . . . . . . .. . . . . . . . .. . .. 8
5.. I Foundation _ _ _ .. . .. .. _ . . . . _ . . . .. _ . . . . . . . . . . . . .. . . . . . . .. 8
5.2 Auxiliary . . . . . . . . .. . .. . .. .. .. . .. .. . . . . . . . . . . . _ . _ . . . . . .. .. ... 8
5.3 Medical Staff . . . .. .. .. .. .. . . . . . . . . . .. . . . . . . . . . . . . . . . _ _ . .... R
ARTICLE 6
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
6.9
6.10.
6.11
6.12
6.13
6.15
6.16
OTHER PROVISIONS .. _ . - . _ . . . . . .. . _ - .. .. . . . . . . . . . .. - .. . -. 8
Execution of Signature Cards ...... _ . _ - - . .. . . . . . _ _ . _ .. - . . .. 8
Notification Regarding Assignment of Accounts Receivable . _ _ .. . . . . .. 9
Notification of Third Parties Regarding
Assignment of Contracts and Leases ............ _ . . . . . . . . . . .. 9
Licenses and Provider N unlbers .. . . . . . . . . . .. . . . . . . _ _ . _ _ . . . .. 9
Extended Reporting (Le., "TaiPC) Insurance . . . . . . . . . . .. . . . . . . . .. 9
Indemnification of the Parties ............................... 10
6.6.1 Indemnification of City . . . . . . .. . . . . . . . .. .. . . . . . . . .. . ... 10
6.6.2 Indemnification of ACHS ................... _ _ .. .. .. . .. 10
6.6.3 Related Notices ........................... _ . . . . . . . .. . .. 10
Disclaimer of Warranties . .. . . . . . . . . . . . .. .. . . . . . . .. _ . . . . .. .. 11
Costs of the Transaction ................................. I I
Notices . . . . .. . . . . . .. . .. .. .. .. . .. . . . . . .. . . .. . . .. . .. . .. .. .. .. . . .. 11
6.9.1:- If w City ........................................... 11
6.9.2 If to ACHS . . . . . . . . .. . . . . . . . . . . . .. .. . . . .. .. . . . . .. .... 1.1
Governing I..a.w . . .. . .. .. . . . .. .. .. . . .. .. .. . . . . .. .. . . . . .. . .. . . . . .. 11
Captions . . . . .. . . .. .. . _ . .. . . . . . . . . . . . . . . . .. . . _ .. .. .. . . . ... 12
Waiver .. . . . . . .. . . .. . .. . . . .. . . . .. .. .. . . . . . .. . . . .. .. .. 4 .. . . .. ... 12
Parties in Interest .. . . . .. . .. .. . .. .. . .. . . .. . . . .. . . .. . .. . .. . . .. . . . .. 12
Further Assuran.ces .. . .. .. . . . . . .. _ .. . .. . . . . . . . . . . . . . . .. .. . .. .... 12
Warranties of Authority . . .. .. . .. . . .. . . .. . . . . . . . . . . .. .. .. .. . .. . .. 12
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DRAFT
DEFINITIVE AGREEMENT
by and between
THE CITY OF ASHLAND
and
ASHLAND COMMUNITY HEALTHCARE SERVICES
THIS DEFINITIVE AGREEMENT (the .. Agreement") is entered into on the _ day of
, 1996 by and between the City of Ashland ("City") and Ashland Community
Healthcare Services (M ACHS") to be effective on , 1996 (the "Effective Datett).
City and ACHS are at times referred to herein as the "Parties".
ARTICLE 1
RECITALS
1.1 City Oreanization and Location. City is an Oregon municipality located in Jackson
County, Oregon.
1.2 City's Present H~t4care Operation. The City owns an acute care general hospital and
related healthcare services and facilities, which it operates through an unincorporated operating
division known as Ashland Community Hospital {"Fonner AClr') as authorized pursuant to
Article XVII of the City of Ashland Charter. Former ACH is governed by a City-appointed
Board of Trustees and is operated for the benefit of City residents.
1.3 Cityts Study and Determination of the Need for Restructurine. Following an extended
process of study, focusing on the increasing challenges and requirements of operating as a
hea1thcare provider, the City concluded that it will better setVe the long-term inter~1s of its
residents by having its healthcare services and facilities operated for their benefit by a separate
not-for-profit public benefit corporation of which the City is the sole member and in which
governance responsibility and authority is vested in a board of directors.
1.4 Creation of AGHS Corporation. Thereafter~ the City created. in accordance with Oregon
law, a not-for-profit public benefit membership corporation known as Ashland Community
Hea1thcare Services, including approving its articles of incorporation and establishing itself as
WaISBA '237837.04
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2. 1.5 B<x)k~ and I{c;c~. All patient lists; medical records, flIes and charts; financial
records; computer files and diskettes containing any information regarding any of the assets
and/or business affairs; permits, licenses, provider numbers, certificates and authorizations frolll
any governmental authority; any trade names, telephone listings and tights to use of telephone
numbers; and other intangible assets.
2.1.6 Leases. Contracts and Aereemeots. Any contracts in effect as of the Effective
Date between Former ACH and other persons or entities (collectively, "Third Parties"), written
or oral, except for Excluded Uabilities as defmed in Section 2.2.2, including but not limited to:
leases of equipment, furnishings and other personal property; contracts with. providers of goods
and services; maintenance contracts; contracts with insurers, suppliers, personnel, managed care
and govemnlental programs for the provision of goods or services; software license agreements;
employee benefit plans; accounts receivable; accounts payable. If any Third Party refuses to
consenlLO assignrnent of its contract with Former ACH to ACHS, or attempts to impose some
condition which has not then been met, ACHS shall nonetheless, as between the parties to this
Agreement, assume responsibility for performance of the contract and the City shall cooperate
in facilitating such performance as needed as a conduit.
2. L 7 Moveable EQuip.llent and Fumishine:s. Any equipment, furnishings, fixtures, and
machinery ~ except fixed equipment.
2.1.8 Liabilities and Oblieations. Any obligations, debts, claims, delnands, expenses,
of any character, regardless of by whom or when asserted or the legal basis on which asserted,
based on acts or circumstances which occurred before the Effective Date, with the sole exception
of those clailDS, demands, and expenses which relate to Excluded Liabilities as defined in
Section 2.2.2 (collectively, the "Assumed Liabilities"). It is the intent of the parties that. except
for Excluded Liabilities, the assulnption of Assumed Liabilities by ACHS be interpreted broadly
and liberally so as to include and transfer to ACHS primary responsibility for all possible costs,
expenses and liabilities of City t its officials, employees, agents and/or representatives, relating
to Former ACH, to the extent they are not actually covered and paid by insurance coverage on
behalf of the City and/or subject to the Oregon Tort Claims Act. To that end, and except for
Excluded Liabilities, total responsibility shall be transferred to ACHS for any legal obligation
or responsibility of whatever character or cause related to the ownership and operation of
Former ACH prior to the Effective Date to which the Oregon Tort Claims Act or insurance in
force with respect to the City. its officials, employees, agents and/or representatives. does not
apply, whether known or unknown, discovered or undiscovered. matured or inchoate, contingent
or not, asserted or unasserted. accrued or not, in contract, tort or other legal basis, and
regardless of the nature of damages or other remedy sought or the category of claimant.
City also hereby assigns and transfers to ACHS, and authorizes ACHS to assert against third
parties (not including City, its officials and/or employees) any right of offset, credit, or defense
which City may have against such third parties which is in any way based on or related to City's
ownership or operation of Former ACH. City further hereby assigns and transfer~ to ACHS and
authorizes ACHS to assert against any third party (not including City, its officials and/or
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3.1.3 Maintenance and Repair. ACHS shall be responsible to use the Leased Premises
with due care and shall be obligated to Inaintain them in good order and repair, making such
repairs, restorations, replacements and additions a~ may be necessary or desirable during the
term of the Facilities Lease, including those caused by ordinary wear and tear and those which
become stnlctural1y necessary or desirable; provided, however, that the City will not
unreasonably withhold its agreement to acquire and finance such structural repairs, restorations,
replacements and additions if requested to do so by ACHS so long as ACHS is willing and able
to adjust its lease payments under the Facilities Lease by an amount sufficient to meet the
additional principal and interest payments on debt incurred in connection therewith.
3.1.4 Insurance. ACHS shall maintain adequate comprehensive public liability and
replacement value property damage insurance on the Leased Premises and the activities being
carried on in or around the Leased Premises and shall agree to save, indemnify, defend and hold
the City hannless with respect to any loss or damage incurred with re~-pect to the Leased
Premises.
3.1.5 Tenn. Subject to the continued existence of ACHS, the initial term of the
Facilities Lease shall be ten (10) years. In addition, ACHS shaJ] have an option to extend the
Facilities Lease for four (4) additional terms of five (5) years each, up to an aggregate of thirty
(30) years. provided it is not in default under the Facilities Lease at the time of such extension
and further provided that this provision shall not permit the aggregate term of the Facilities
Lease to be extended beyond the maximum number of years permitted by law.
3.1.6 Termination and Recovery of Assets. The City shall have the right but not the
obligation to terminate the Facilities Lease and assume responsibility for operation of the Leased
Premises if one or more of the following events occurs:
3.1.6.1 Material Breach. ACHS materially breaches the Facilities Lease or its
lease payment obligations and fails to cure such breach within the specified timefranlc;
3.1.6.2 Insolvency. ACHS becomes insolvent; the term "insolvent" as used herein
is defined to mean: a condition in which for a period of thirty (30) or more days,
ACHS' cash and other liquid assets are insufficient to meet its debts or discharge its
liabilities when due.
3.1.6.3 Capital Depletion. ACHS's working capital ratio, as defined in accordance
with generally accepted accounting principles, at the end of any two consecutive calendar
quarters is less than 2 to 1;
3.1.6.4 Debt Service Coveral!e. ACHS~s debt service coverage (including lease
payments under the Faci lities Lease) for any fiscal year is Jess than 1.25 to 1; "debt
service coverage" as used herein is determined by dividing Haft by tfb" where -a" is the
sum of (1) the excess of revenues and gains over expenses and losses. (2) depreciation
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4.4 Off<;.r of EJllp10ynlcnt Qy ACHS and Related l~. As or the Effective Date, ACHS
shall offer employment in positions comparable to their last employment or personal services
contract with l:"onner ACH to all eOlployees and personal services contractors of Former ACH,
with an initial total compensation pac~1.ge and total benefits package comparable in value to that
in effect immediately prior to the Effective Date. ACHS shall not be required to offer or
provide identical benefits to employees of Former ACH, except with respect to continuation of
the retirement plan with the Public Employees Retirement System of the State of Oregon, which
ACHS hereby agrees to do to the extent permitted by law. City shall assign and ACHS shaH
assume sponsorship of those Former ACH Employee Benefit Plans listed on Exhibit 4.2 B; City
and ACHS shall ex.ecute such other agreements and take any and all other actions necessary or
appropriate to effectuate the assignment and assumption of such plans. City hereby agrees to
terminate as of the Effective Date those Former ACH Employee Benefit Plans listed on Exhibit
4.2 D.
ACHS shall recognize Former ACH-recognized continuous length of service for employees of
Fomler ACH as if earned at AClIS for purposes of eligibility and accDIal of vacation, sick
leave, bereavement leave, and other ACHS employee benefits. If, for any reason, ACHS is not
permitted by law to continue the participation of the employees of Ponner ACH in the PERS
retirement plan. the parties hereto agree to cooperate with respect to the termination (or freezing
of the assets) of such plan, and ACHS agrees that in such event it will use it<; best efforts to
replace such coverage with a similar retirement plan.
ACHS shall carry forward accumulated vacation and sick leave (as shown 00 Exhibit 4.2 E, as
updated to the Effective Date) for all employees of Former ACH except as City has paid such
persons for such accruals pursuant to its legal obligations and notified ACHS in writing of the
extinguishment of the accrual in that manner, prior to or as of the Effective Date. Time carried
forward shall be limited to any maximum accumulation provisions in ACHS's employment
policies, and the future use~ forfeiture, and other terms of the time carried forward shall be
subject to ACHS's current or then existing policies in all respects. ACHS shall notify City in
writing not less than 5 days before the Effective Date of any accumulated time which exceeds
its maximum accumulation policies, and City shall make any legally-required payment for time
which cannot be carried forward.
ACHS~s future relationships with the employees of Former ACH will be subject to applicable
policies of ACHS and will not be based on their prior City employment or contract status. After
the Effective Date, ACHS shall be free to implement its own employee policies and programs;
provided that the specific requirements of this Agreement shall be honored in doing so. ACHS
shall be under no continuing commitment or obligation to continue the employment of any or
all of the Fonner ACH employees.
4.5 Termination by City of Employees of Former ACH. City shall take all steps and give
all notices required to terminate all employees of Former ACH. Such notices will be given in
compliance with any employment agreements then in effect and all applicable laws and
regulations, including giving notice of any; layoff or "plant closure.' required under federal or
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the responsibility to determine any such documents required and to timely present them to the
City for execution.
6.2 NQtification Reeardin~ Assi~nn)eot of Accounts Receivable* After the Effective Date,
at ACHS's request, City shall proolptly sign appropriate notices of assignment of accounts
receivable to be given by ACHS to all payers and other relevant parties, and City shall otherwise
give reasonable assurances of the assignment to any other party as necessary to facilitate ACHS's
collection efforts. City shall promptly forward to ACHS any payments received after the
Effective Date on accounts assigned to ACHS pursuant to this Agreement.
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6.3 Notification Qf Third Parties R~ardinL! Assienment of Contracts and Leases. Prior to
the Effective Date. City shan notify each other person or entity which is a party to a contract
or lease assumed by ACHS pursuant to Section 2.1.8 whose consent to assignment is required,
of City's intent to transfer such contract or lease to ACHS as of the Effective ~ate. ACHS shall
assist and cooperate with City in providing any fmancial statement or other assurance reasonably
necessary to induce such other parties to accept the proposed assignment. If any such person
or entity fails to respond favorably, objects or attempts to impose some condition which has not
then been met, ACHS shall nevertheless, as between the parties to this Agreement, assume
responsibility for performance of such contract or lease and City shall cooperate in facilitating
such performance as needed as a conduit.
6.4 Licenses and Provider Numbers. ACHS shall take all actions necessary to obtain any
license or transfer of license required for its future operation of the assets transferred and leased
by the City pursuant to this Agreement, and arrange for transfer of Former ACH's existing
provider number(s), or issuance of any new provider agreement and nunlber necessary for its
continued participation in federally or state funded healthcare programs, including but not linlited
to Medicare and Medicaid. City shall assist and cooperate by signing any necessary documents
releasing the prior license or hospital provider number.
6.5 Ex~ded R~vorting (i.~., "Tail") Insurance. For a period of five years from the
Effective Date, ACHS shall (a) obtain an extended reporting ('ttail") insurance extension for at
least a five year period for any coverage related to Fonner ACH or its operations which is being
terminated by the City; or (b) procure a new policy of insurance for ACHS operations which
is endorsed for coverage of prior unreported claims arising from the City's ownership and
operation of Former ACH prior to the Effective Date.
Any replacement insurance shall be designed to leave no gap based on the reporting date for
liabilities prior to the Effective Date and claims not reported within the five-year period
following the Effective Date.
City agrees to cooperate with ACHS to the fullest extent to see that its liability protection under
the Oregon Tort Claims Act is made fully applicable to any financial responsibility assumed by
ACHS with respect to such claims arising prior to the Effective Date.
WOJSWI 237gJ7.04
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xhall thereupon tender defense of such mailer to Ole otller party. The not.ifying party shall have
the additional right, if it so cle.cts. to participate in the defense of any such matter through
counsel of its own selection but shall do so at its own expense unless separate counsel is legally
or ethically required to be offered by the other party. The notifying party shall fully cooperate
with the indemnifying party and its counsel and make available all books. records and documents
in its 'possession and all personnel who have information which the indemnifying party or its
attorneys request.
6.7 Disclaim~r of Warranties. The assets transferred by City to ACHS pursuant to Section
2.1 are being transferred and accepted in their condition as of the Effective Date, "AS IS II ,
WITH NO WARRANTIES, INCLUDING THE W ARRANfIES OF MERCHANT ABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, any and all of which warranties (both express and
implied) City disclaims. Notwithstanding the foregoing, City shall use its best efforts to secure
the transfer of any merchant's or manufacturer's warranty currently in effect with respect to any
of the assets transferred.
6.8 Costs of the Transaction_ The expenses related to this transaction, including but not
limited to costs of transferring the assets and liabilities of foroler ACH and terolinating the
Former ACH employee.s, which have been incurred (by City, Former ACH and/or ACHS) prior
to the Effective Date shall be home by Former ACH and, to the extent the same remain unpaid
as of the Effective Date, shall be assunled by ACHS~ expenses related to this transaction which
are incurred later than thirty (30) days after the Effective Date shall be borne by the party
incurring such expense.
6.9 Notices. All documents, notices, requests, demands and other comn1unications that are
required or pennitted to be delivered or given under this Agreement shall be in writing and shall
be deemed to have been duly delivered or given upon: (a) the date of delivery thereof if
delivered in person, (b) one business day following the date on which such notice is sent by
facsimile or telecopy, or (c) three business days following the date on which such notice is sent
by registered or certified mail, retum receipt requested, postage prepaid, properly to the
following addresses and/or telecopy/telefax numbers:
6.9.1 If to City:
City Administrator
City of Ashland
20 East Main
Ashland, OR 97520
6.9.2 If to ACH$:
Prcsiden t
P.O. Box 98
280 Maple Street
WOlSP.A :237637.Oi
Proruary 8. 19% D~l'''
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CITY OF ASHLAND
By
Its
By
Its
ASHLAND COMMUNITY HEALTHCARE SERVICES
By
Its
By
Its
WGI8BA 237837.04
Fcbruuy 1,1996 DRAfT
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