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Munroe hopes to have lease deal ready by October


Munroe hopes to have lease deal ready by October

Published: Tuesday, October 1, 2013 at 6:59 p.m.
Last Modified: Tuesday, October 1, 2013 at 6:59 p.m.

The Munroe Regional Medical Center team working to lease the hospital to a private company hopes to have a finished lease in hand by the end of October.

Jon Kurtz, the chairman of the Marion County Hospital District trustees who oversee Munroe, said during a trustee meeting Monday night that the team is negotiating just a half dozen or so issues with Health Management Associates of Naples.

Barring any last-minute snags, Munroe and HMA should finish working out a lease in the next three or four weeks. The full board of trustees would then review the document and vote on it, perhaps sometime in November.

Under the terms of the agreement, HMA would pay the trustees $200 million for the right to operate Munroe for the next 40 years, and HMA would also commit $150 million to expanding and improving the facility, plus $75 million on maintenance.

The trustees sought the deal because, while Munroe remains profitable for now, its long-term prospects for competing in a health care market dominated by corporate giants are not good.

They selected HMA after an exhaustive search based largely on the company's size, financial commitment and reputation for delivering quality medical care.

Many of the lease issues still being negotiated are financial, of course, and one of them deals with how the trustees may spend the $200 million HMA will pay for the lease.

The trustees plan to invest the money and spend the proceeds on health care needs around the community, perhaps programs that aid the poor or that address significant medical issues here.

But Kurtz said HMA wants some restrictions on the money to ensure it isn't used to prop up for-profit clinics or hospitals that compete with Munroe.

Kurtz said he doesn't want to place too many restrictions on the money — and may not be able to by law — but understands HMA's position. He is considering recommending that the money be doled out specifically to nonprofit institutions and organizations that address indigent health care problems.

Among the other issues being negotiated:

HMA would be committed under the lease to carry out a massive hospital expansion to the tune of about $150 million. Kurtz wanted to make sure, however, that if HMA is able to deliver the expansion for less than $150 million, any clinics or other facilities built with the left over money would belong to the trustees and not HMA.

The trustees are trying to make sure that Munroe employees transition seamlessly from their existing benefits to an HMA benefit plan. "One of the district's priorities throughout this process is to make sure the employees are well taken care of in this transaction," said Linda Fleming, an attorney with Carlton Fields in Tampa, the law firm representing Munroe in the negotiations.

Who rebuilds or repairs the hospital in the unlikely event that it is severely damaged or destroyed: the trustees or HMA? The trustees' position is that HMA would rebuild or repair it, but the trustees would have approval over the building plans.

Kurtz said none of the issues being negotiated seems sticky enough to keep the lease from being finalized in the coming weeks.

The trustees are in no rush, however. They are anxious to see whether HMA is gobbled up by another hospital company giant, Community Health Systems out of Franklin, Tenn. in a $3.9 billion merger that would make the combined hospital companies the largest in the world, by number of beds and facilities.

The boards of HMA and CHS are expected to vote on the merger in November.

If it goes through, it would be CHS and not HMA that would end up running Munroe under the lease.

That seems fine with trustees, who recently visited CHS hospitals in Indiana and Tennessee and came away deeply impressed by the experience.

The hospitals were independent community medical centers before CHS purchased them, and in both cases, CHS committed resources, training and support. At the same time, the trustees said, the company welcomed input from the local communities and allowed the hospitals to maintain their distinct identities.

One of them, Porter Regional Hospital in Valparaiso, Ind., doesn't even mention CHS on its website.

"These people seem to operate autonomously with a lot of input from the board, and a lot of local people sit on the board," Trustee David Cope said. "I thought it was a very good thing, and it made me feel like if CHS became the operator of (Munroe), it could be a very good outcome."

HMA, on the other hand, is facing some struggles.

While Munroe officials laud HMA's reputation for quality healthcare services, they are becoming increasingly uneasy about the company's legal troubles and a recent overhaul of its leadership.

HMA is facing twin investigations from the Securities and Exchange Commission and the U.S. Justice Department over its aggressive admissions practices, which were first aired on "60 Minutes." It also is the subject of a federal whistleblower lawsuit alleging that it paid kickbacks to clinics that directed expectant mothers living in the country illegally to their hospitals and filed fraudulent Medicaid claims on those patients.

Upset by those entanglements and dissatisfied with the company's earnings, HMA's largest shareholder, Glenview Capital, recently led a successful overthrow of the board of directors.

Then last week, analysts predicted that if the deal with CHS doesn't go through, HMA's stock could slip from around $12 a share to $7.


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