A proposed health care alliance among Coffee Health Group, Helen Keller Hospital and Huntsville Hospital is in jeopardy because officials cannot agree on a key component of the deal.Officials at the three hospital groups say they are not giving up on the proposal but add Huntsville Hospital’s decision not to provide $60 million to the project makes it more challenging.In December, Coffee and Keller presented Huntsville Hospital with a proposal that would require a $60 million investment by Huntsville Hospital, a component area officials say is needed to help Coffee manage its debt. Huntsville’s board has rejected that sum and countered with a lesser amount.”It’s been a bit of a roller coaster over the last six months when I felt like it wouldn’t get done and then felt like it would,” said Bill Anderson, Keller’s chief executive officer. “I’m not totally pessimistic, but I’m not overly optimistic. I’m in the middle. It could happen, but in reality, it may not. I’m just not ready to say we’re going to walk away.”Keller, Coffee and Huntsville have been working toward an alliance since September, with the ultimate goal of forming a merger between Coffee and Keller. Hospital officials see the merger as a way for the Shoals to maintain control of health care instead of allowing that control to fall into private hands.Several private interests have contacted Coffee officials about working with them to take over ownership of their properties or forming a partnership. Coffee operates Eliza Coffee Memorial Hospital and ECM East, both in Florence, and Shoals Hospital in Muscle Shoals.Talks among Coffee, Keller and Huntsville have revolved primarily around how to eliminate Coffee’s $140 million debt and move forward with improved health care for the Shoals.The bulk of Coffee’s debt, around $120 million, comes from the 1999 purchase of three hospitals: Shoals, Russellville and Humana hospitals. Russellville has since been sold, and Humana has become ECM East.The debt is insured by MBIA, and so far, Coffee has met its bond payments, but there is a question about its ability to continue to do so with the rising cost of health care, the increased number of uninsured patients and falling reimbursements from the Centers for Medicare and Medicaid Services.At MBIA’s request, Coffee hired FTI, a consultant group, to help formulate a plan to move forward. Additionally, Shattuck-Hammond, a financial advisory firm from Atlanta, has been retained by Coffee and is marketing the health care organization to potential buyers. These discussions are taking place separately from talks with Huntsville and Keller.Jody Pigg, Coffee’s interim CEO, said he could not comment on the specifics on discussions involving Shattuck-Hammond since all parties have signed confidentiality agreements.He has said, however, that he is “pleased with the quality and quantity with regard to the level of interest shown by potential investors. Those who have expressed an interest see the Shoals as an opportunity to enhance and strengthen the medical services offered in the community.”Pigg said he expects a conclusion to the talks by the end of the first quarter of the year, or March 31.One of the interested parties is RegionalCare Hospital Partners, a private hospital firm based in Brentwood, Tenn. At least two other organizations also have emerged as frontrunners in the discussions – IASIS, of Franklin, Tenn., and Legacy Hospital Partners, based in Plano, Texas.Legacy has expressed interest in Coffee in the past. In December 2008, representatives from the company made an informal proposal to then-CEO Carl Bailey, but Coffee’s board took no action at the time.Details of the deals from all three haven’t been made public, but one common theme that emerges from each is that it would mean Coffee would shift from a not-for-profit, community-based hospital to one that is private.David Spillers, Huntsville’s CEO, said he would hate to see Coffee become a private hospital “but, if there’s someone willing to pay $140 million to get them out of debt, we’re not, so they’d have to sell to them.”Like Anderson, Spiller said he remains hopeful, but not as optimistic as he was that a deal could be reached among the three entities.”As best I can tell, a lot is going on with the leadership and board and bond council for Coffee, and they’re having a hard time trying to figure out a way to refinance the debt,” he said. “When you put a hospital like that up for sale, there will be a lot who take a look at it, but how many will come up with the dollars to pay for it at the end of the day?”It’s the debt that seems to be the sticking point, Anderson said.”We’ve said all along we want to get rid of Coffee’s debt to get MBIA out of the picture and find a way to move forward that’s financially viable,” he said. “I still think our best long-term solution is to put our organizations together under local control with a local board.”The question is whether that can be done by March 31.In addition to Huntsville’s monetary commitment, there has been talk of involving loans from a local bank as well as from the Retirement Systems of Alabama to make up the difference. Those were all components in the proposal to Huntsville Hospital.It’s unclear how much money Huntsville Hospital offered in its counterproposal.Barring the deal materializing with Huntsville and Keller, there may be no choice but for Coffee to become a private health care facility.In November, Keller’s board passed a resolution reaffirming its commitment to remaining a community-based, nonprofit health care provider for the Shoals.Spillers said there’s an affiliation agreement between the organizations “that would provide access to shared services to reduce overhead costs, such as purchasing and maintenance, laundry and things like that. It wouldn’t involve clinical care as that would stay local, but it would help reduce (Keller’s) overhead cost to better compete with a for-profit.”Some local doctors have indicated a desire to see Coffee move to a for-profit organization since that could afford greater opportunities for improved health care and the potential for a new hospital.Should Coffee become part of a private company, it could change the competitive landscape in the Shoals.”The irony is that we’ve had a long history of not competing with the not-for-profit systems, but we’d compete pretty heavily with a for-profit system,” Spillers said. “We’d be more aggressive than we have in the past because I think (for-profit hospitals) take money out of the state and send it to shareholders elsewhere.”