Palmetto Health, Tuomey Healthcare move closer to merging

The governing boards of Palmetto Health voted unanimously this week to take the beleaguered Tuomey Healthcare System of Sumter into its membership and move forward with plans to finalize a merger between the two hospital systems by Oct. 1.

Palmetto Health, the largest health care system in the Midlands and one of the largest private employers in the state, and Tuomey have been publicly considering a merger since February, when the Tuomey Healthcare System Board said it would enter exclusive negotiations to partner with Palmetto Health.

Tuomey, the not-for-profit health system anchored by Tuomey Regional Medical Center in Sumter, is under a $237 million federal judgement for submitting false claims to Medicare. Toumey officials have said the judgment caused them to look for a partner to avoid closing the hospital’s doors.

The 4th U.S. Circuit Court of Appeals in July upheld a lower court decision that Tuomey submitted $39 million in false claims to Medicare between January 2005 and November 2006. Additional damages and penalties raised the total judgment to $237 million.

Some sources, including the South Carolina Hospital Association and the American Hospital Association, have defended Tuomey against the charges, citing bad legal advice from their attorneys. But the courts have roundly rejected those defenses.

Palmetto Health and Tuomey said they want to reach an agreement to merge by Oct. 1, with the goal of becoming united by Jan. 1. The decision this week to accept Tuomey into Palmetto Health triggered an expansion of the Columbia system’s board from 16 to 19 members, making way for three Tuomey representatives.

“We are very pleased about moving forward with our partnership with Tuomey Healthcare System,” said Charles D. Beaman Jr., Palmetto Health chief executive officer, in a statement released Friday. Palmetto Health is governed by the Palmetto Health Board of Directors and two sponsoring boards, the Richland Memorial Hospital Board and the Baptist Healthcare System Board.

Baptist Hospital and Palmetto Healthcare merged more than a decade ago.

Columbia healthcare economy Lynn Bailey said the potential merger still leaves unanswered the question of how the $237 million fine against Tuomey will be paid.

“Call me a skeptic,” Bailey said. “Nothing is actually going to happen until they – Palmetto Health and Tuomey’s leadership – figure out the Tuomey debt situation. Palmetto Health cannot, will not, deal with the debt that Tuomey is carrying in relation to their Medicare fraud case.”

This story was originally published September 11, 2015 at 8:08 PM with the headline "Palmetto Health, Tuomey Healthcare move closer to merging."