Sponsors of Exempla to modify governance agreement; SCLHS to gain more control

September 1, 2012

The Sisters of Charity of Leavenworth Health System and the Community First Foundation plan to modify the terms of their cosponsorship of Exempla Healthcare. The change in the organizations' governance agreement will give the Denver-based Sisters of Charity system more operational and governance control of Exempla, which includes three hospitals and a network of physician clinics around Denver.

"The changes we announced streamline governance of Exempla so that there are no potential deadlocks on making strategic or operational decisions, and (they also enable) us to align governance for Exempla to the same model and approach that we use for our other care sites," Michael Slubowski, president and chief executive of the Sisters of Charity health system, said.

The Sisters of Charity system and Arvada, Colo.-based Community First have cosponsored Exempla since 1998. In the Exempla network, the Sisters of Charity system owns Denver's Exempla Saint Joseph Hospital. Exempla owns Exempla Lutheran Medical Center of Wheat Ridge, Colo., and Lafayette, Colo.'s Exempla Good Samaritan Medical Center.

Prior to 2010, the Sisters of Charity system had no operational control of Exempla and no membership representation on the Exempla board. That year the Sisters of Charity system and Community First modified their agreement to give the Sisters of Charity system some operational control and the right to appoint five of the 10 members of the Exempla board of directors. The Sisters of Charity system also got a say in Exempla senior leadership appointments. The proposed change would expand the Sisters of Charity system's operational control and give the Catholic system the right to appoint nine Exempla board members; and Community First, one.

Additionally, as part of the new agreement, the Sisters of Charity system will provide about $275 million to Community First over the next 20 years to address community needs, particularly in Jefferson County, Colo. Community First will use $20 million of the $275 million to create the Lutheran Legacy Fund, which will promote health and wellness in communities served by Exempla Lutheran. Community First will use another $5 million of the total investment to support Exempla Lutheran charitable activities.

The cosponsors submitted their "notice of filing" to the Colorado attorney general in late July; the attorney general has 60 days to review the agreement.

Sisters of Charity system administrators said if approved, the new agreement will simplify governance and will give that system the confidence to make needed investments in Exempla. Some of these investments will relate to readying for the future health care environment, including market and regulatory changes that are occurring, according to Slubowski.

He explained, "With health care reform, we are challenged to transform our ministries from hospital-centric, fee-for-service organizations to accountable health networks that take responsibility for the health of an assigned population and are paid for outcomes and health improvements.

"The changes in rights agreement and governance basically give SCL Health System the freedom to make investments in this transformation," he said.


Copyright © 2012 by the Catholic Health Association of the United States
For reprint permission, contact Donna Troy or call (314) 253-3450.

Copyright © 2012 by the Catholic Health Association of the United States

For reprint permission, contact Betty Crosby or call (314) 253-3490.