State AG contends agreement illegal

New Hampshire Attorney General Michael Delaney announced on Friday his opposition to the planned affiliation between Catholic Medical Center and Dartmouth-Hitchcock Health, according to the report released by the attorney general’s office outlining his objections to the proposed affiliation. Among other reservations, Delaney raised concerns that the affiliation plan would compromise CMC’s autonomy as a charitable organization, and that the two organizations have not provided adequate information about the effect of the affiliation on residents of Manchester, where both organizations have clinics.

Executives at both Dartmouth-Hitchcock and CMC said they were “surprised” and “disappointed” by the decision, and plan to consider their options for having the decision reviewed by a court, according to a joint statement on behalf of Thomas Colacchio, president of Dartmouth-Hitchcock Health and Alyson Pitman Giles, president and chief executive officer of CMC.

Rick Adams, media relations manager for Dartmouth-Hitchcock Medical Center, declined to comment because Dartmouth-Hitchcock officials are still analyzing and assessing the report.

Although both organizations are calling the reorganization an “affiliation,” Delaney’s report said it is actually an acquisition of CMC, a charitable organization, by Dartmouth-Hitchcock, violating state laws that govern charitable organizations. The transaction would unlawfully put Dartmouth-Hitchcock in control of important tasks carried out by CMC and reduce the fiduciary responsibilities of CMC’s board of directors, “which will inhibit the ability of the CMC Charities to carry out their charitable missions,” the report stated.

In an interview, however, CMC executive vice president Raymond Bonito maintained that the transaction is an “affiliation,” and is neither a “merger” nor an “acquisition.”

Despite Delaney’s disapproval, the affiliation can still be legally approved by the Probate Court, according to the report.

“We strongly disagree with the conclusions and will actively consider our options to go before a judge to have this reviewed by a court,” the joint statement from CMC and Dartmouth-Hitchcock stated.

Delaney’s report raised concerns about the lack of information given by Dartmouth-Hitchcock and CMC on how the affiliation would influence health care delivery costs in Manchester. The affiliation calls for “the integration of the DHC Manchester-based physician practice group services with the services of CMC.”

“It’s interesting that [Delaney] would bring that up because we, in the discovery phase, pointed out projects that we have worked together on already that have demonstrated significant savings to the [Manchester] community,” Bonito said.

One such project improved their collaboration on an intensivist, or intensive care, medicine program. CMC and Dartmouth-Hitchcock found the program saved more than $1.5 million over 12 to 18 months, according to Bonito.

The report noted that Dartmouth-Hitchcock and CMC have yet to institute adequate safeguards to prevent the misuse of “post-affiliation” surplus.

Representatives from Dartmouth-Hitchcock and CMC said they were surprised by Delaney’s decision, given that they had provided all information asked of them to the New Hampshire Attorney General’s Office, according to the organizations’ joint statement. Representatives also met repeatedly with Michael DeLucia, director of the attorney general’s charitable trusts division, in a “totally transparent review process,” according to the statement.

“We provided an opportunity for Attorney General Delaney to meet with us,” Bonito said. “He never took us up on that.”

The report also raised concerns about the implications of a Catholic institution working so closely with a secular institution like Dartmouth-Hitchcock.

“We’ve worked diligently to communicate and work on all of those questions [related to religious affiliation],” Bonito said. “We’re working to address all of the issues raised by all parties, and we think we reached a conclusion that meets the needs of both organizations.”

The report used an unprecedented standard of review in evaluating Dartmouth-Hitchcock and CMC’s affiliation, the joint statement said. Delaney also brought up concerns in the report that were never discussed at the meetings between the attorney general’s office and the organizations, according to Bonito.

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