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Consultant: 2 nonprofits - late arrivals - no longer interested in Munroe

Ocala, FL - January 30, 2013
Published in the Ocala Star Banner on Wednesday, January 30, 2013 at 5:22 p.m.

Any thought of Munroe Regional Medical Center forging a partnership with either of two recently announced suitors went by the wayside this week.

Ponder & Co., hired by Marion County Hospital District trustees to help lease Munroe, told district leadership this week that the Baycare Health System and the University of South Florida Health System were no longer interested in a partnership with Munroe.

The two nonprofit healthcare companies were late arrivals — their names surfaced in December — in lease talks for the 421-bed Munroe. Leaders are considering a lease arrangement in exchange for hundreds of millions of dollars in payments and capital improvements.

So now the district is back to considering two private, for-profit healthcare companies with deep financial pockets: HMA/Shands Hospital, which is offering between $440.2 million and $500.2 million to lease the hospital; and Duke LifePoint Healthcare, a joint venture of Duke University Health System and LifePoint Hospitals, which is offering $375 million for a 40-year lease.

“I wasn’t surprised,” district member Joe Hanratty said of the two nonprofits stepping aside. “They’re not going to cough up that kind of money to lease…and another $150 million in capital projects.

“They were also (too) involved in other acquisition/merger activities to give full attention to this (Munroe) opportunity,” Hanratty said.

Munroe is owned by the state-sanctioned Marion County Hospital District and is overseen by seven trustees who are appointed by the County Commission. The trustees now lease the hospital to Munroe Regional Health System Inc., which is overseen by a 13-member board, some of whose members also are district trustees.

The trustees formed Munroe’s Strategic Options Workgroup, which is made up mostly of district trustees, and tasked with finding the best lease partner.

Hospital District trustees are entertaining lease bids as a means of generating the money that hospital executives say is necessary for Munroe to remain competitive. As part of any lease agreement, the hospital wants a commitment of $150 million for improvements to the facility.

The announcement of the pullouts comes about the same time as Moody’s Investors Service gave a 2013 negative outlook for the not-for-profit healthcare sector amid a sluggish economy, changes in government reimbursement, and pressure from insurance groups.

In November, Marion County voters voted down a referendum for a Munroe hospital property tax to help support the facility.

Originally, most district members said their preference was to create a partnership/lease with another nonprofit.

“It (considering the two not-for-profit companies) didn’t really set us back. It delayed (the process) a couple of weeks,” trustee Larry Strack said. “I was against it (allowing the late participation), but if there’s a viable alternative, let’s look at it.”

Neither Baycare Health System nor University of South Florida Health System could be reached for comment.

Meanwhile, HMA and Duke/LifePoint are scheduled to make their final lease offers in the coming days. Representatives from the healthcare companies visited Munroe again Tuesday.

Munroe’s Strategic Options Workgroup is slated to meet again Monday to determine its next move in recommending one of the healthcare companies to the trustees.


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