WESLACO—Knapp Medical Center will become part of South Texas Health System, representatives of both entities confirmed at a news conference Wednesday.
Leaders of the health care organizations also disclosed that embattled Knapp CEO Jim Summersett will step down when the acquisition is finalized Jan. 31. The search for his replacement has not yet begun.
The sale of the hospital will shift Knapp from a private nonprofit hospital to the eighth facility under STHS, a for-profit subsidiary of Pennsylvania-based Universal Health Services Inc. STHS operates McAllen Medical Center, Edinburg Children’s Hospital, Edinburg Regional Medical Center, McAllen Heart Hospital and South Texas Behavioral Health Center.
That decision was a financial one, Knapp Board Chair John Lackey said. The hospital has significant bond debt and in May hired health system financial consulting firm Kaufman Hall to evaluate its position.
“They said ‘We can tell you one option you don’t have, and that’s to stay a standalone not-for-profit hospital,’” Lackey said. Then, “we were made an offer we couldn’t refuse by South Texas Health System.”
STHS buying the hospital will relieve its debts and provide money for new medical equipment and future facilities, Lackey said. He also hopes services will be more extensive as part of a bigger system.
“Where were we going to get the capital to expand? That problem has been solved,” he said.
Dick Wright, vice president of development for Universal Health Services, said the organization was committed to helping grow Knapp’s medical facilities and foundation that supports them.
Summersett did not attend the conference, or return phone calls Wednesday evening, but Wright and Lackey called his departure a mutual decision.
“He thought it would be in the best interests of the hospital not to continue as CEO and we didn’t disagree,” Wright said.
Summersett has been a controversial figure since he took over the hospital’s leadership in December 2005. Last year, doctors successfully blocked Summersett from merging with Valley Baptist Health System hospitals. Since then, Knapp employees have held several protests calling to oust the CEO, based on his staffing decisions, refusal to release some financial information and other complaints.
Litigation is ongoing over how much information Knapp will have to release of a list of 17 categories of documentation a group of Knapp doctors requested in February including minutes from board of directors meetings, audited financial reports, internal control reports, federal tax returns, travel expense reports, documents relating to CEO compensation and others from 2006 to present.
A judge ruled in October that some information will have to be released, but it has not yet been determined which documents.
Lackey acknowledged that physician unrest played some role in Summersett’s move.
“He was cognizant of the fact that with all the existing issues with some of our docs that it would be a smoother transition if they brought in their own CEO,” Lackey said, but added that the group had the “utmost respect” for Summersett.
Weslaco City Manager Leo Olivares, who broke the news of the deal via Twitter ahead of the afternoon news conference, said he was not aware of the transition in advance, but supported it so long as hospital services did not decrease. The city has helped issue Knapp some $65 million in tax exempt bonds in recent years.
Knapp first opened in 1961 and maintains 226 beds.