Hospital: Sell-out rather than lease?
HUNTSVILLE — County Commission’s Hospital Committee met here Monday evening to review Mercy Health Partner’s lease-purchase proposal with an eye toward making a counter proposal.
But during the course of the 90-minute meeting at the Scott County Office Building, the committee took a dramatic detour.
While not scrapping the lease-purchase plan as one of its options, the committee voted to ask Mercy Health to submit a proposal for an outright purchase of the county-owned facility.
Then, just minutes later, the committee approved a motion to locate and review the qualifications of a third-party professional appraiser to determine the value of the hospital buildings, property and net worth of the business itself.
Both motions carried by 5-0 votes of the committee with one member absent. Both will also have to be endorsed by a vote of the full commission before final passage, even though several non-committee commissioners were present for the meeting.
Commissioner Jeff Watson said he felt the county needs “an idea of what it’s worth” whether it decides to sell or lease the facility.
Prior to the votes on Commissioner Alan Reed’s motion to ask Mercy Health to submit a purchase price, and Commissioner Paul Strunk’s motion to review qualifications of an appraiser, each of those present had an opportunity to state their opinions on what should be done.
Strunk said he felt the committee should gather and compile all the financial information available into one document to study before making any decision. He added that the planned $500,000 annual lease payments reduction represents 17¢ on the property tax rate and whatever decision is made, the committee needs to “put a lot of thought and consideration on the front end of this.”
Reed said he would like to know what Mercy’s up-front purchase price would be and also would like to know what the facility is actually worth.
Odeva Byrd’s concern was the possibility that the county might lose the hospital if a decision is not made in the near future.
“The public wants us to move on — lease or sell — but get something done shortly,” Byrd said.
Gerry Garrett told his fellow commissioners that he had the same concerns as Reed, and felt that the hospital was a “big asset to the community,” adding, “we need to do our best to keep them [Mercy Health] here.”
Daniel Murley, meanwhile, said he favored the buy-out option, primarily because “a lot of employees up there are scared to death.” Murley said: “We don’t want to sit on this too long,” that the committee and commission “need to get on the ball one way or the other.”
County Finance Director Keith Jeffers stated that he felt that the independent appraiser idea was a good one.
Neither Mayor Rick Keeton nor County Attorney John Beaty seemed willing to state their preference on either side of the issue, but both indicated their willingness to work with the committee in any direction it decided to take.
“I’m not sure we can get one hundred percent of what we want, or Mercy can get one hundred percent of what they want. We’ll work with you as a body and try to do what this body wants,” Mayor Keeton said.
“I will do anything to help expedite a counter proposal,” Beaty said, adding that whatever decision is arrived at it “would be better sooner rather than later.”
Beaty also pointed out that he had thus far only been able to locate one firm qualified to do an appraisal of a hospital that didn’t have a conflict of interest, and cautioned the commissioners about the cost of such an appraisal. His estimate was in the $50,000 to $60,000 range.
Mike Slaven stated he didn’t have a preference on which way the county should go with regard to the hospital, but added: “I don’t want St. Mary’s to leave.”
Slaven’s primary concern appeared to be the loss of $500,000 a year in lease payments which the county had built into its budget. He said that St. Mary’s knows the hospital business “better than we do” and knew what the lease payments were when it entered into the agreement with the county.
Ron Blevins said that he would be able to work with either a lease or sell of the hospital, adding that, in either case, he felt “a third party’s numbers might be significant.”
Earlier in the meeting, Mayor Keeton summarized comments from commissioners on a survey of Mercy Health’s lease-purchase proposal, with several individual counter proposal ideas being offered.
Chief among the concerns in the responses to the survey were the proposed cuts in lease payments, both initially, and when major capital improvements are made. Some pointed out that the county can’t build its budget not knowing what money will be coming in during the course of the year.
The mayor’s review of those comments led into a discussion about the actual worth of the hospital and Watson’s comment that Mercy Health’s proposal was actually for a lease-purchase.
“We should sell up front and be done with it. That’s the way I feel,” Watson said.
Also in attendance at the meeting were two representatives of Mercy Health, St. Mary’s of Scott County CEO Alan Watson and Vice President in charge of Community Hospitals Jack Bryan.