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Munroe panel hopes to test the waters on potential suitors by year's end

Ocala, FL - November 22, 2011
Published in the Ocala Star-Banner on Tuesday, November 22, 2011

The search for prospective health care company suitors interested in leasing or creating a partnership with Munroe Regional Medical Center could start before the end of the year.

December 20 was the target date to send letters to prospective companies with an eye for Munroe, hospital officials decided Monday during a meeting with their Chicago-based consultants Ponder & Co., in an effort to find money and turn the facility's finances around. The hospital also hopes to start interviewing a short list of potential suitors by early April.

Ponder predicted the search would end with about four, for-profit contenders and two not-for-profits.

The group overseeing the search is the Strategic Options Workgroup, comprised of hospital trustees, board members, doctors and administrators.

The final step, between April and late July, would be for both the hospital trustees and future lessee to review the lease agreement and finalize the agreement. The Hospital District trustees, however, would still at that time be able to nix the proposed deal if they thought it best to look at other options, such as asking local residents for a hospital tax to help the facility make ends meet. David Atchison, a Ponder executive, said the time line was aggressive but attainable.

During the two-hour meeting, the workgroup told Ponder they were interested in seeing who would be interested in operating Munroe and whether the hospital could ensure that services they deemed important to the community would still be offered.

Hospital officials want Ponder to try and negotiate a commitment from future lessees to the hospitals $150 million plans to expand its hospital system.

Without some guarantee of that investment, said Hospital District trustee Kulbir Ghumman, there is little reason to continue to look.

"This whole exercise is about having capital for a new facility," Ghumman said during the meeting.

Otherwise, any plan to find a financial partner or lease the hospital would be like "shooting ourselves in the feet."

"If we do not want to be a hospital of the past ... then without a major infusion of capital, we might as well wind up shop," he said.

Without the needed money, Ghumman said the hospital could survive on its current path but wouldn't be able to keep providing the public with the level of services it has in the past.

"We're very good at limping by. ... We've been doing it for years," he said.

Atchison said such a large capital investment would likely be a difficult sell to prospective buyers or investors unless it was in their financial interest to invest in the hospital's expansion. But that would also only be possible if the lessee had knowledge about the details of the expansion plan, he said.

Until now, hospital officials have not publicly divulged details of their expansion plans.

Workgroup members also agreed that they wanted to lease the hospital, as opposed to selling it. Atchison recommended that if a lease was the goal, a 30-year to 40-year lease was typical in such agreements.

Atchison also told the workgroup that in many cases, new lessees want local input and that there would not be anything to keep current hospital board members and trustees from sitting on future hospital boards.

But District Trustee Chairman Dr. Mike Jordan said that along with looking for potential lessees, Ponder should also look to see if there were alternatives, such as merger options with other health care facilities, including other not-for-profit hospital groups.

Hospital officials also wanted anyone that took over the hospital to commit to provide the full services Munroe currently provides, regardless of whether some programs were profitable.

Some of the services hospital officials wanted included Heart of Florida Health Center, to which Munroe annually donates $400,000 and another was $200,000 to help pay for medicines and transportation for the poor.

But ensuring whether a new lessee would continue all of Munroe's services at their current levels is difficult, Atchison said. That's because many of those services are difficult to measure and enforce, such as patient infection rates and nurse-to-patient ratios.

The best thing the hospital could do was look at how the lessee had performed when they took over other hospitals, Atchison said.

What also would be difficult to determine with potential lessees, Atchison said, is how they could make a financial go of the hospital without cutting services when the current not-for-profit hospital district was struggling. He warned that prospective lessees likely would not want to share that financial information.

Workgroup member Brian O'Connor said he wished that there was an independent, third party that could give a value to a hospital lease with Munroe. Atchison responded that Ponder throughout the process would compare the price that's offered to other hospitals that are being leased.

The group meets next on Dec. 13.


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