|Ocala, FL -
September 18, 2011|
Published in Ocala Star-Banner on Sunday, September 18, 2011 at 6:30 a.m.
One of the more important steps in the Marion County Hospital District Trustees exploration of alternative leasing options for Munroe Regional Medical Center is defining some basic requirements of a new lessee. This will be imperative for community acceptance of the options evaluation process by the trustees, with the help of a consultant (Ponder & Associates).
Let's examine some of the requirements that have already been introduced into the discussions about Munroe over the past two or three years. Some are already being delivered via the current lease arrangement. Others are touted by those who have been critical of Munroe's financial and operational situation as what a new lease arrangement could provide Munroe.
I won't comment on the reasonableness of the requirements. It will be up to the trustees to determine what is realistic or not and define other important requirements. Here is a summary of some suggested lease terms:
Guarantee a total profit margin of at least 5 percent in the first year of the lease, 6 percent in the second year and 8 percent in the third year; retained earnings being used to meet any capital or long-term financing commitments and the on-going operational needs of Munroe.
Agree to fully execute Munroe's approved long-term capital improvement budget of approximately $190 million. Additionally, any capital improvements implemented become the property of the district trustees for the benefit of the residents of Marion County.
Guarantee quality standards will not diminish and show progress in improving the existing level of standards. The following points included in the lease: 1) unconditional accreditation; 2) Medicare certification; 3) requirement to provide urgent and emergent services directly to any and all patients requiring acute medical care regardless of ability to pay; 4) community needs assessment every three years; and 5) annual business plan, including three-year financial projection capital requirements.
All current lines of critical community services will be maintained (e.g., obstetrics, pediatrics, emergency department, heart programs, etc.) for the duration of the lease.
Assure the maintenance of Munroe's current sovereign immunity status, or absorb the costs of maintaining required additional personal liability insurance for hospital physicians and staff employed by Munroe.
Assume the obligation for payment of any contractually agreed severance pay arrangements that would become applicable to departing Munroe executives/staff.
No Munroe employees will lose their jobs as a result of a new lease arrangement.
Assume full financial responsibility for all indigent care and patient bad debt incurred and accept full liability insurance coverage responsibility for financial settlement of any legal cases that might result from the operation of Munroe.
No public tax support will be provided by county taxpayers for the duration of the lease.
Operate Munroe in full compliance with all Florida statutes relevant to public records and open meetings.
The term of the lease will be 10 years and may be cancelled by the trustees with two years written notice.
In the event of lease cancellation, the costs of replacing any proprietary operational systems (e.g., information technology, accounting/billing, human resources, etc.) installed and removed by the lessee will be absorbed by the lessee.
If the trustees identify an organization claiming they can provide a lower-cost operation, compared to the current situation, experience at some other hospitals that have changed lessees would indicate caution. Along with that low cost came a resulting decrease in service lines, market share and quality. The very items the trustees are attempting to avoid.
In a few years when revenues start to see a downturn caused by lost market share and lower quality, the lessee will likely try to change the lease terms with the district trustees to assure its profit margins are not lowered. Without the provision of some type of "subsidy," another lessee will most likely have to be recruited.
Does the term "bait and switch" come to mind?
Bottom line: I suggest the trustees not rush to cancel the current lease until they can be assured of finding a new lessee willing and able to accept the basic requirements discussed above and those added by the trustees.