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ProMedica agrees to pay UT medical school after AG Yost threatens to sue

Attorney General Dave Yost announced Tuesday that ProMedica has agreed to make two outstanding payments to the medical school.

TOLEDO, Ohio — ProMedica has agreed to pay $7.6 million to the University of Toledo College of Medicine and Life Sciences to make up for two outstanding monthly payments related to the health-care company's affiliation agreement with the medical school, Ohio Attorney General Dave Yost announced Tuesday.

Last week, Yost, whose office represents the Toledo medical school along with other Ohio public universities and colleges, threatened to sue ProMedica if the overdue payments were not made within a week. The deadline to pay was Wednesday.

The payments are part of an affiliation agreement started in 2015 between ProMedica and UT's medical school, in which ProMedica sends monthly payments to the school. According to Yost, these payments are 44% of the medical school's annual budget. 

The benefits ProMedica receives from the agreement include support for Toledo Hospital and Toledo Children's Hospital from UT's medical faculty.

"The University of Toledo and ProMedica have resumed conversations regarding the status of the Academic Affiliation Agreement," UT spokeswoman Christine Billau said. "ProMedica has committed to making up one of the recently missed payments and fulfilling the upcoming financial commitment for October under the agreement with the College of Medicine and Life Sciences. We are committed to work through these recent issues so we can ensure the necessary investment in medical education to benefit the quality of healthcare in our community."

ProMedica withheld the payments for August and September to recoup money owed to the health care company "for prior and current months," because reimbursement payments from UT have been insufficient, ProMedica spokesperson Tausha Moore said last week.

Tuesday, Yost praised the move and said he believes ProMedica and the University of Toledo Medicine and Life Sciences College can negotiate a new arrangement that benefits both.

“This is the best possible solution to the impasse – ProMedica will make good on its monthly payments, and the University of Toledo will receive the $7.6 million it is due without litigation,” Yost said. “Both parties are returning to the negotiating table in good faith, and I look forward to seeing this partnership flourish for the good of the region.”

ProMedica spokeswoman Tausha Moore issued the following statement late Tuesday afternoon:

“ProMedica has always been open to talks with UT College of Medicine & Life Sciences (COM&LS) and will continue to be. We are actively pursuing a meeting with UT COM&LS within the next week to resolve our differences collaboratively, rather than resort to litigation at this time. We have asked that the meeting include all budgetary decision-makers. Once that meeting occurs, we are hopeful we will be able to quickly reconcile the amounts owed to each organization and establish an appropriate budget going forward so that we can avoid financial disputes and keep our joint focus on the academic mission. As a good faith gesture, ProMedica has committed to making a payment to UT COM&LS while that process takes place. However, we have been very disappointed in the false and misleading statements issued to the media. ProMedica will continue to consider all options moving forward as we evaluate progress toward a resolution.”

ProMedica and the university signed their 50-year affiliation deal in 2015. Since then, both institutions have faced financial struggles.

In 2022, ProMedica reported financial losses, removed top executives from their positions and laid off non-clinical employees.

ProMedica reported a first quarter operating loss of $126 million and a second quarter operating loss of $155 million, totaling $281 million lost in the first six months of 2022.

In May, ProMedica President and CEO Randy Oostra left his position as president and was replaced by Chief Operating Officer Arthur Polizzi. Oostra is still the ProMedica CEO. Chief Financial Officer Steve Kavanaugh was also laid off.

In May, Finance and insurance company Fitch Ratings downgraded ProMedica's credit rating from a "good credit rating" of BBB- to a "speculative" rating of BB+. Fitch Ratings said ProMedica has "very limited financial flexibility."

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The University of Toledo Medical Center has also faced financial struggles in recent years. In April of 2020, UT officials announced that because the medical center had incurred large financial losses and faced big budget deficits in the future, the university would request bids to buy, lease or manage UTMC.

ProMedica was the only known bidder to step forward. But, UTMC supporters primarily blamed the healthcare giant for the financial issues, claiming the affiliation agreement drained away medical students and residents, medical staff, and patients.

That same year, the Save UTMC Coalition was organized to lobby lawmakers to block the hospital's sale, pressure UT to restore services and rally neighbors to support the effort.

In July of 2020, UT officials announced they were no longer considering proposals to sell, lease or outsource the management of UTMC. Instead, the university focused on improving the hospital's financial health. By September of 2021, instead of running a deficit, as had been predicted, UTMC ended the fiscal year roughly $4 million in the black.

RELATED: ProMedica lays off a number of non-clinical employees

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