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AG Yost orders ProMedica to pay UT at least $3.8 million in 7 days, threatens lawsuit

Amid its own financial struggles, ProMedica has refused to honor its side of an affiliation agreement to support UT's College of Medicine & Life Sciences.

TOLEDO, Ohio — Ohio Attorney General Dave Yost ordered ProMedica on Wednesday to pay at least one of the two $3.8 million monthly payments it owes the University of Toledo's College of Medicine and Life Sciences in seven days, or the state will file a lawsuit.

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.

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.

According to Yost, ProMedica has also told UT officials it does not plan to make any future payments until the affiliation agreement is revised or replaced.

However, Moore said this statement from Yost about what ProMedica told UT officials "is blatantly false."

"We continue to reiterate that ProMedica withheld its August and September installment payments to recoup money that UT COM&LS owed," Moore said.

In a Sept. 14 letter to staff, UT medical school officials said that ProMedica's failure to make the monthly payments may force the university to make budget cuts.

ProMedica officials have said the University of Toledo College of Medicine and Life Sciences owes ProMedica money instead. Moore said the reimbursements are "for expenses associated with supporting the agreement on our campus."

Moore claimed ProMedica explained the reasoning behind its decision not to pay the medical school to the school's finance team and requested the college "issue a revised communication" of the Sept. 14 letter "to accurately reflect the process that has been underway."

In Yost's announcement of the seven-day deadline for ProMedica to pay up, he said the healthcare company's financial struggles are not an acceptable reason to not honor the affiliation agreement.

“If I run into money problems and can’t pay my mortgage, do I get to stop paying it and demand that my lender re-negotiates the deal? Of course not,” Yost said. “We will do what is necessary to compel ProMedica to meet its obligations under the contract.”

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.

CFO 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."

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.

UTMC supporters called upon UT administrators on Wednesday to hold ProMedica accountable for the money owed through the agreement.

Randy Desposito, the president of the AFSCME Local 2415 labor union that represents UTMC workers, said Wednesday the hospital is now a Level II Trauma Center and received a four-star rating from the Centers for Medicare and Medicaid Services.

"We have built ourselves back up from a lot of programs and positions that have left this facility," Desposito said. "We're stronger today than we were yesterday."

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