In anticipation of the affiliation between St. Vincent’s Hospital and CHRISTUS Health, in December 2007 SVH SupportCo (rebranded to SVHsupport in 2012) was formed as a New Mexico nonprofit organization. The Internal Revenue Service (IRS) recognizes SVHsupport as a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code. SVHsupport qualifies for tax exemption because it is organized, governed and operated to support the interests and purposes of CSVRMC. Click Here to view our IRS Form 990.
SVHsupport and CHRISTUS Health are the 50 percent members of CSVRMC. While members of a nonprofit corporation are not the same as owners, they do have the rights and obligations similar to a shareholder of a for-profit corporation. As members, SVHsupport and CHRISTUS have certain member reserved powers which are explained in the governance section below. The relationship between SVHsupport and CHRISTUS Health over the past four years has been one of mutual respect and a shared vision of health and wellness for our entire community. Click here to learn more about our mission and purpose.
Process Leading to Affiliation with CHRISTUS Health and the Organization of SVHsupport
In early 2006, the St. Vincent Hospital Board began a strategic planning process to enhance its strategic plan and competitive position and identify its options for furthering the best interests of St. Vincent Hospital and the local community. As part of this strategic planning process, the St. Vincent Hospital Board and management team identified the following risks and challenges:
- Aging hospital facilities
- A need for capital
- Service quality
- Patient satisfaction
- Physician satisfaction
- Managerial stability and experience
- Declining reimbursement
- Competitive environment
The ultimate goal of the strategic planning process was to make a recommendation for action on a particular option to the St. Vincent Hospital Board. As part of the strategic planning process, the St. Vincent Hospital Board adopted the Stewardship Principles mentioned above to meet their vision of Exceptional Medicine, Extraordinary Care, Every Person, Every Day.
Partner Selection Criteria
In June 2006, the St. Vincent Hospital Board appointed a transaction oversight committee to continue the strategic planning process. Prior to beginning the process to identify a partner, the Oversight Committee and the St. Vincent Hospital Board developed the following criteria to assess a potential partner and affiliation. The criteria were intended to follow the Stewardship Principles discussed above.
- Local control of, responsibility for and participation in SVRMC;
- Commitment to charitable mission, including clinical excellence, local access to care in Northern New Mexico regardless of ability to pay, support of public health programs and the continuum of community care in Northern New Mexico;
- Capital commitment to SVRMC and other financial value to the community; and
- Support of key stakeholders, including SVRMC physicians and employees.
- Continuation of all services, including the treatment of all patients regardless of their ability to pay.
- Enhancement of overall Management to guide the hospital in achieving excellent clinical outcomes.
Process for Identifying Partner
In order to conduct a national search, St. Vincent hired a national health care advisor to assist in identifying potential partners. The advisor sent letters of interest to numerous for profit and nonprofit hospital operators soliciting interest in potential affiliations. St. Vincent received expressions of interest from eight organizations. St. Vincent Board members and senior management met with representatives of the four organizations and conducted due diligence on the potential partners, including on-site visits at certain of their facilities. Following extensive deliberations and extensive due diligence, the Oversight Committee and the St. Vincent Hospital Board determined that CHRISTUS Health made the most attractive proposal because it:
- Proposed an affiliation that best met the Partner Selection Criteria and St. Vincent’s other goals;
- Proposed a mission, vision and culture that were completely compatible with those of St. Vincent Hospital;
- Enabled St. Vincent Hospital to maintain and strengthen its charitable purposes and mission and to retain its tax-exempt status (St. Vincent Hospital learned through due diligence that the CHRISTUS system was ranked number two among national systems in the provision of charity care);
- Would continue St. Vincent’s mission of treating all patients regardless of ability to pay.
- Spelled out a governance and ownership structure that achieves a true “partnership” in furtherance of better health care for Northern New Mexico;
- Created a far more attractive financial structure, including a $50 million pledge for future investment in St. Vincent’s
- Provided for a transaction that would result in the full repayment of all St. Vincent debt, allowing the new entity to emerge debt free, beginning April 8, 2008.
- Provided a Management agreement that would attract a senior, experienced management team supported by the significant back office resources of the CHRISTUS Health system.
- Enabled St. Vincent the resources, management and national benchmarks to continue their path to clinical excellence.
- Recognized the need for St. Vincent Hospital to continue to take care of the medically indigent and address the community’s requirement for medical and allied health education and public health.
Affiliation Transaction among SVHsupport, St. Vincent Hospital and CHRISTUS Health
Approval of Partnership
The parties’ negotiating teams conducted extensive arm’s-length negotiations with CHRISTUS Health concerning the material terms and conditions of the affiliation transaction and negotiated the Contribution Agreement and the Management Agreement (collectively, Definitive Agreements) and the St. Vincent Bylaws. The Oversight Committee kept the St. Vincent Hospital Board informed during the negotiations. On February 27, 2008, the St. Vincent Hospital Board approved the affiliation with CHRISTUS Health and the Definitive Agreements by a unanimous vote. The effective date of the Transaction was April 9, 2008.
St. Vincent Hospital Bylaws
Joint Membership Structure
CSVRMC is governed through a joint membership structure set forth in the St. Vincent Hospital Bylaws. Under this structure, CHRISTUS Health and SVHsupport are the two “members” of CSVRMC, the nonprofit corporation that has owned and operated SVRMC and held its New Mexico hospital operating license for decades. As members, SVHsupport and CHRISTUS Health have the following reserved powers to approve or disapprove the following actions of CSVRMC:
- Appointment of the CSVRMC President/CFO;
- Amendment of CSVRMC bylaws or CSVRMC’s articles of incorporation;
- Dissolution or liquidation of CSVRMC;
- The sale, contribution, donation or other transfer of all or substantially all of CSVRMC’s assets;
- The merger or consolidation of CSVRMC with a third party;
- Calls or other requests for the members to contribute capital to CSVRMC other than contributions approved by the members on or before April 8, 2008, which is the transaction closing date;
- Transfer in any 12-month period of more than $5 million to any other person;
- Creation of a new CSVMRC affiliate or affiliation with a third party;
- Establishment, termination or transfer of any significant CSVRMC program or service line;
- Incurrence of indebtedness in any 12-month period in excess of $5 million;
- Approval of any loan of funds from a member to CSVRMC;
- Acceptance of gifts conditioned on a long-term or other significant obligation; and
- Adoption, amendments or change of the St. Vincent mission, strategic plan or charity care policy.
CSVRMC Board Powers and Structure
Subject to the reserved powers, the authority to govern CSVRMC is assigned to the CSVRMC Board. The CSVRMC Board is divided equally into two classes: the SVHsupport class and the CHRISTUS Health class. The SVHsupport class appoints its successors in order to meet the Internal Revenue Code’s organizational requirements for a 501(c)(3) supporting organization. CHRISTUS Health appoints the CHRISTUS Health class. Each class is required to confer with the other concerning its respective appointees to the CSVRMC Board with the goal of appointing qualified individuals who will be able to work cooperatively in furtherance of CSVRMC’s mission.
CSVRMC Directors serve two-year terms up to maximum of eight consecutive years. Majority votes of both classes are required for CSVRMC Board action. In the event of a deadlock between the classes, the Chairperson casts the deciding vote. Each class selects the Chairperson in alternating two-year terms.