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 unpaid monthly payments related to an agreement to join the medical company with the medical school, Ohio Attorney General Dave Yost announced Tuesday.
Last week, Yost, whose office represents the Toledo School of Medicine along with other Ohio public universities and colleges, threatened to sue ProMedica if overdue payments have not been made within a week. The deadline for payment was Wednesday.
The payments are part of an affiliation agreement entered into in 2015 between ProMedica and the UT School of Medicine, under which ProMedica sends monthly payments to the school. According to Yost, these payments make up 44% of the medical school’s annual budget.
Benefits ProMedica receives from the agreement include the UT School of Medicine’s support of Toledo Hospital and Toledo Children’s Hospital.
“The University of Toledo and ProMedica have resumed discussions regarding the status of the Academic Affiliation Agreement,” said UT spokeswoman Christine Billow. “ProMedica has committed to pay one of the last missed payments and meet future financial obligations for October in accordance with the agreement with the College of Medicine and Biological Sciences. We are committed to addressing these recent challenges to ensure the necessary investment in medical education for the benefit of quality health care in our community.”
ProMedica delayed payments for August and September to recover money owed to the health company “for previous and current months” because reimbursement payments from UT were insufficient, ProMedica spokeswoman Tausha Moore said last week.
On Tuesday, Yost praised the move and said he believes ProMedica and the University of Toledo College of Medicine and Life Sciences can negotiate a new arrangement that will benefit both.
“This is the best possible way out of the impasse – ProMedica will pay monthly payments and the University of Toledo will receive $7.6 million without litigation,” Yost said. “Both sides are returning to the negotiating table in good faith, and I look forward to seeing this partnership flourish for the benefit of the region.”
ProMedica and the university signed their 50-year affiliate deal in 2015. Since then, both institutions have faced financial struggles.
In 2022, ProMedica reported financial losses, fired top executives and laid off non-clinical employees.
ProMedica reported operating losses of $126 million in the first quarter and $155 million in the second quarter. worth 281 million dollars for the first six months of 2022.
In May, the president of ProMedica and CEO Randy Ostro has left took over as president and was replaced by chief operating officer Arthur Polizzi. Ostro is still the CEO of ProMedica. CFO Steve Kavanagh was also fired.
In May, financial 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 reported ProMedica has “very limited financial flexibility.”
The University of Toledo Medical Center has also faced financial problems in recent years. In April 2020, UT officials announced that because the medical center had incurred heavy financial losses and faced a large budget deficit going forward, the university would solicit bids to buy, lease or operate UTMC.
ProMedica was the only known bidder to come forward. But UTMC supporters have primarily blamed the health care giant for its financial woes, arguing that the affiliation agreement has distracted medical students and residents, medical staff and patients.
That same year, the Save UTMC Coalition was organized to lobby lawmakers to block the sale of the hospital, force UT to restore services, and rally neighbors to support the effort.
In July 2020, UT officials announced that they were no longer considering proposals to sell, lease, or outsource the management of UTMC. Instead, the university focused on improving the hospital’s finances. By September 2021, instead of running a deficit as projected, UTMC ended the fiscal year with a surplus of about $4 million.
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