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Munroe gets final lease bids

Ocala, FL - February 12, 2013
Published in the Ocala Star Banner on Tuesday, February 12, 2013 at 11:12 a.m.

Munroe Regional Medical Center leadership was handed final lease offers Monday as HMA/Shands and Duke LifePoint Healthcare jockey to take over the not-for-profit hospital.

Duke LifePoint offered $138.7 million, in addition to spending $150 million for Munroe's master facility plan improvements. HMA/Shands topped that by offering $200 million in addition to $150 million in master plan improvements.

Munroe's overseers, the Marion County Hospital District trustees, are looking to lease the 421-bed facility. The public hospital is struggling financially and lacks money to expand and remain competitive, hospital officials say.

In November, voters shot down a $65 million Munroe property tax that would have helped the hospital and at least postponed the lease issue.

Duke LifePoint Healthcare is a joint venture between Duke University Health System, Inc. and LifePoint Hospitals. Tennessee-based LifePoint owns or leases more than 50 hospitals in 22 states, including a 99-bed facility in Palatka.

Naples-based HMA owns or leases 70 hospitals nationwide and has affiliations with 32 hospitals in Florida, including some in the Shands at the University of Florida group.

Munroe is owned by the state-sanctioned Marion County Hospital District and the nonprofit hospital 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.

As HMA is trying to woo Munroe with a lease offer, it also is working to finalize a lease agreement with the non-profit Bayfront Medical Center in St. Petersburg.

Although the HMA/Shands offer is better financially, some Munroe affiliated doctors worry that an HMA/Shands lease would only serve to funnel Munroe patients to Shands at the University of Florida.

Munroe officials are now working on plans to visit some of the health care groups' other hospitals and talk with staff and leadership about how those partnerships have worked out.

Fourteen months ago, trustees created the Strategic Options Workgroup, made up of some district trustees, board members and the public, to review lease options and make recommendations to the full trustee group.

The $61.3 million difference was impressive, said some workgroup members, but the lease issue is complex and raises questions about how either health care giant would maintain the public hospital into the future, financially support medical services and treat staff and patients.

"You can look at this as a business transaction," said workgroup member Dr. Harvey Taub of the higher offer, but, he warned, Munroe's goal was never profits but providing good health care.

Aside from the financial offers, Munroe consultant Eb LeMaster of Ponder & Company said there are many similarities in what each company is willing to do for Munroe.

"Both have a very good track record (at fulfilling capital improvement project promises)," LeMaster said. "I think we have very good success at both these groups following through."

Both HMA/Shands and Duke LifePoint are offering annual $15 million capital improvements for Munroe for the next five years as part of their offer. But district trustee chairman Jon Kurtz said five years wasn't enough and he wanted both to make at least 10-year-long promises.

Currently, Munroe spends between $15 million and $20 million annually for capital improvements.

Both entities also agreed to $150 million master facility plan improvements. Even though Munroe is secretive about the master facility plan because it describes the hospital's long-range strategies, it is believed to include a new wing for single-patient rooms and expanded emergency room facilities.

Both suitor companies also are offering to allow some trustees to sit on advisory boards that will have input regarding Munroe.

Addressing workgroup concerns about eliminating unprofitable services, both companies offered to not do so without trustee approval.

The two companies are dissimilar in that Duke University Health System would have a 3 percent interest in the joint Duke/LifePoint venture. Shands would have no financial interest in its partnership with HMA.

Some workgroup members said Monday they fear that with a HMA/Shands lease, Shands would benefit at Munroe's expense.

"I think they would try and siphon as many patients up there (Gainesville) as possible," Taub said during the public meeting.

Taub also complained that in many cases, Shands has refused to accept his patients who didn't have private insurance or Medicaid. He said Shands often seemed more concerned about how it would be paid, rather than about his patients.

Taub said he thought that between the two health care companies, Duke/LifePoint — which operates only one small hospital in Florida, LifePoint in Palatka — would work harder to improve Munroe. He said he worries that HMA already operates dozens of Florida hospitals and Munroe would be just one more.

Taub said he predicts Duke/LifePoint would try and make Munroe a hospital that would one day no longer need to send patients to Shands for specialized care.

But HMA Florida president Alan Levine said Munroe would be operated by HMA, not Shands, and that HMA would do what's best for Munroe.

"Why would we spend $200 million (to lease Munroe) and send patients to Shands?" Levine asked. "We want to grow Munroe … not send patients out of town."

Shands Chief Medical Officer Dr. Timothy Flynn said Shands takes more unfunded Marion County patients than Munroe or Ocala Regional Medical Center. If the HMA/Shands lease goes through, Munroe would be a "conduit" for Shands only when it came to patients needing the specialized care Shands could offer.

As for HMA's lease offer of $61.3 million greater than that of Duke/LifePoint, Levine said Munroe was worth the additional money. He said Munroe would be part of a larger Florida Healthcare system and would benefit from economy of scale and support.

"We're a Florida company. We have deep roots here," Levine said. "Munroe is an incredibly valuable asset."


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