Central Health, Ascension Take Each Other to Court

Each claims the other is breaching their contract

Seton Shoal Creek Hospital
Seton Shoal Creek Hospital (Photo by Seton / CC BY-SA 3.0)

Central Health, Travis County's tax-supported local health care district, announced Tuesday morning that it's filed suit for breach of contract against Ascension Texas. The hospital chain announced a few hours later that it's returning the favor, bringing an apparent end to a collaboration that dates back to then-Seton Healthcare taking over operations of the city-owned Brackenridge Hospital in 1995; Central Health inherited the relationship when it was formed by voters in 2004.

The contracts at issue are services agreements where Ascension Seton's level of federal compensation for low-income hospital care was set in 2013; since then, Central Health says, Ascension has restricted access to hospitalization and specialty care for low-income patients, effectively doing much less work for the same money. Ascension disagrees, saying it's contracted to see 25,000 patients in CH's Medical Access Program but is now seeing 29,000. The district cites Ascension's own data to refute this claim, showing that since 2013 it's never seen more than 18,239 MAP patients; in 2022, the number was 14,462. This data is incomplete because, CH says, Ascension isn't meeting its contractual obligation to share more info, and that if they really revealed their utilization data it would make Ascension look even worse. By asking for declaratory judgment that Ascension is in breach of the contract, Central Health aims to invoke an escape clause in the 2013 agreements that would allow it to take back safety-net health care, and the federal funding that supports it, to run a hospital itself, as do all of the state's other local health care districts. (In practical terms, CH would someday, perhaps 10 years from now, buy out Ascension's stake in Dell Seton Medical Center.)

In its response, Ascension references 23 agreements since 2013 that it says have satisfied Central Health's objections, and throws a side-eye at the district's ample reserve funds and recent acquisition of the old Hancock Center Sears for a new headquarters, at a cost of $63 million, saying this illustrates how Central Health has consistently underfunded its own obligation to pay for low-income health care. On Wednesday, Central Health responded to Ascension's response – as of this writing it had not seen the actual lawsuit: "Central Health reserves are for patient care, not corporate profit ... Ascension apparently wants Central Health to use its reserves to pay Ascension more for doing less. It is not financially responsible for Central Health to forgo its reserves to further increase profits of the largest, most profitable non-profit hospital system in the U.S." The district also points out that 100,000 square feet of the old Sears (the ground floor, basically) is to be devoted to providing specialty clinical services – "the same specialty services that Ascension is not providing to our community."

This dispute has been brewing for years, and CH and Ascension went though increasingly tense talks and into mediation without succcess. The district says filing a lawsuit was a last resort, and Ascension says the same; both sides insist that they were being reasonable and the other party said, "Talk to the hand." Wonder who's telling the truth? That's why we have trials! It's more likely that this all gets settled out of court, since Ascension is going through plenty of bad press right now, from The New York Times and The Wall Street Journal to down here in Austin, where newly unionized Seton Medical Center nurses plan to hold a candlelight vigil tonight at Ascension's local Mueller HQ, in memory of the lives lost by Ascension's understaffing and profiteering.

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