November 30, 2017
PATH Foundation to sell its share of Fauquier Health
Tennessee-based LifePoint Health will take complete control of Fauquier Hospital and related businesses.
Redeeming our 20-percent ownership will allow us to better serve our communities by focusing solely on the foundation’s work of strengthening overall health and wellness, without the complexities of 20-percent ownership of the health system.
— PATH Foundation Chairman John McCarthy
The Warrenton-based PATH Foundation announced Thursday morning that it will sell its 20-percent stake in Fauquier Health.
The transaction — worth about $33 million — should take place early next year, giving Tennessee-based LifePoint Health complete ownership of the Warrenton hospital and related businesses.
A publicly-traded corporation, LifePoint bought 80 percent of Fauquier Health four years ago.
The foundation in late 2013 started with an endowment of about $150 million from Fauquier Health’s sale.
The retained 20-percent share has given the community a voice in Fauquier Health decision-making, including the hiring of new CEO Chad Melton earlier this year.
“This was the purpose of the joint venture agreement – to ensure our local leadership was involved on these important issues during the transition,” PATH Foundation Chairman John McCarthy said. “In fact, the terms for redeeming our 20 percent were established when the joint venture was created.
“This was very intentionally defined so that we could remain flexible years into the joint venture, should the PATH Foundation feel its resources could better serve the community in other ways,” Mr. McCarthy said. “We are eager for the opportunities this transaction will provide.”
After divesting itself of Fauquier Health ownership, PATH late next year will convert to a “private” foundation. Under Internal Revenue Service regulations, the foundation will be required to donate 5 percent of its total assets annually.
The foundation has about $225 million in total assets, including real estate and other holdings beyond cash, stocks and bonds. Some of that total will get excluded from the assets used to calculate the 5-percent IRS requirement, according to PATH President/CEO Christy Connolly.
That means PATH will distribute about $9 million in 2019 — a dramatic increase. The foundation supports nonprofit health and wellness initiatives in Fauquier, Rappahannock and northern Culpeper counties.
PATH pledged or distributed $4.4 million in 2016 and more than $6 million this year, according to Ray Knott, the PATH Foundation treasurer and Fauquier Health board chairman.
“As we finalize the end of the joint venture and move toward private foundation status late in 2018, the PATH Foundation will have more funds that go to our mission of strengthening the health and vitality of our community,” Mrs. Connolly said. “This will be reflected in both grants offered to area nonprofits and government entities, as well as in programs initiated by the foundation.”
PATH will continue to work with healthcare providers including the Fauquier Free Clinic.
“These programs benefit the health of community members, as well as reducing avoidable ER visits and readmissions to hospitals,” Mrs. Connolly said.
“The leadership of the PATH Foundation reached this decision thoughtfully after much discussion over the past year,” Mr. McCarthy said. “Redeeming our 20-percent ownership will allow us to better serve our communities by focusing solely on the foundation’s work of strengthening overall health and wellness, without the complexities of 20-percent ownership of the health system.
“Given the vision for the future under LifePoint’s leadership, we’re confident that now is the right time to proceed.”
Fauquier Health earned a profit of $19.1 million in 2015, the most recent year for which reports are available.
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