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Due diligence

IN OUR OPINION

Ocala, FL - Sunday, February 19, 2012

Published: Sunday, February 19, 2012 at 6:30 a.m.

When the Marion County Commission and a handful of residents pressed the Marion County Hospital District trustees to solicit outside purchase or long-term lease proposals for Munroe Regional Medical Center, the thinking was it would broaden and clarify the options available for ensuring the community hospital's long-term viability.

Trustees got their first glimpse of seven proposals submitted through their consultant, Ponder & Co., Wednesday night. All were from for-profit companies. All would involve nine-figure transactions. All but one would be for a minimum of 25 years or outright acquisition, and five of the seven would require at least a 40-year lease. All would include local representatives on the new board of directors. All would invest tens of millions in capital and maintenance improvements.

That all sounds pretty good. But...

Each of the proposals calls for either outright acquisition or, in the majority of cases, a "joint venture agreement" in which the new management would have at least 60 percent control or, in most cases, 80 percent, with one proposal calling for 97 percent control. Moreover, while each proposal calls for maintaining existing services, they are less definitive on how long they would continue. While each proposal called for including local representation on any future board, it was clear โ€” and understandably โ€” that any major fiscal decisions would be made by the new leaseholder or owner. As for continuing Munroe's current charity and indigent care policies, each proposal indicated yes โ€” that is, subject to "due diligence" and "review."

Finally, there were the bids, in amounts that would be paid over five years. We found them surprisingly low, given Munroe's size and reputation for quality care and management. The highest offer came from Nashville-based Ardent Health Systems, which put $275 million on the table, not including future capital and maintenance funding. The rest of the offers were considerably less, ranging from $100 million to $214 million.

To put those figures in perspective, last year Munroe had $339 million in total revenues.

The trustees, the majority of whom have indicated they do not believe selling or leasing the hospital is in the community's best interests, nonetheless are wise to delve into all possible opportunities. What was revealed at Wednesday's meeting of the hospital's Strategic Options Working Group, which is charged with examining these options, is that leasing or selling the century-old hospital will cost the community almost all control and, most likely, services and at least some of the indigent and charity care that have been Munroe's hallmark since its inception. Those are no small things, for sure.

No matter how big the numbers may seem, it must not be forgotten that Munroe is more than a community hospital. It is one of Ocala/Marion County's biggest employers, one of the best community hospitals in the land and, according to a small army of consultants and experts in recent years, a superbly managed facility. Then there is the incalculable indigent and charity care factor.

The trustees are doing the due diligence necessary to make a fully informed decision. The discussion about Munroe's future started in 2006, so the trustees have proven themselves methodical. We urge them to continue. Yet, we saw nothing in Wednesday's presentations that suggests they should rush to sign a deal for a new lease or to sell what is inarguably one of our community's most valuable assets.


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