Missouri AG says planned Liberty Hospital-KU Health merger not legal under state law
Missouri Attorney General Andrew Bailey on Wednesday said Liberty Hospital cannot merge with the University of Kansas Health System without approval by Missouri lawmakers, according to a letter obtained by The Star.
Bailey, a Republican, wrote in a letter to Missouri Senate President Pro Tem Caleb Rowden, a Columbia Republican, and other lawmakers that a “clear conflict” exists between Missouri and Kansas law that prohibits KU Health System from taking over Liberty Hospital unless the Missouri General Assembly approves the action.
“A Missouri hospital district may not legally enter a management services contract with a political subdivision or instrumentality of Kansas without approval from the Missouri General Assembly,” Bailey concluded.
The letter was also addressed to Missouri House Speaker Dean Plocher, a St. Louis area Republican, and state Sen. Mike Cierpiot, a Lee’s Summit Republican.
The letter comes as lawmakers in both Kansas and Missouri target the proposed merger between Liberty Hospital and the KU Health System. Lawmakers in both states have filed bills aimed at blocking the deal. In Missouri concerns have been raised about a Kansas institution encroaching across state lines.
Liberty Hospital announced in May that it was weighing whether to partner with another health system to expand its services to meet the growing demand in Kansas City’s Northland suburbs. In November, Liberty Hospital said it had signed a non-binding letter of intent with the KU Health System to initiate a merger. The agreement allows the two entities to negotiate before reaching a final agreement.
Liberty Hospital and the KU Health System did not immediately comment.
Bailey wrote in his letter that a Missouri political subdivision may contract with another political subdivision in another state as long as the contract is within the powers of both parties and includes a termination date. However, Bailey wrote that when an agreement crosses state lines, the agreement has to be in line with the laws of each state.
Kansas law, Bailey said, conflicts with Missouri law and elevates such contracts as “interstate compacts.” An interstate compact can only exist if both parties intend to create one, and Missouri law does not include a provision that elevates interstate agreements into interstate compacts.
“We conclude that a clear conflict between Missouri and Kansas law prohibits a Missouri political subdivision from entering an ‘interstate compact’ without approval from the Missouri General Assembly,” he wrote.
Missouri lawmakers next week will consider a bill filed by state Sen. Greg Razer, a Kansas City Democrat, that would stop the partnership, barring hospital boards from partnering with health care systems operated by an out-of-state “institution of higher education” without voter approval.
In Kansas, lawmakers introduced a bill Wednesday that would block the KU Health System from acquiring property outside the state without legislative approval.
