Commission approves lease, with stipulation
HUNTSVILLE — By a 13-1 vote, County Commission Monday night went on record in favor of a 15-year lease agreement with Mercy Health Partners as operator of St. Mary’s of Scott County.
But the motion came with a stipulation; that is, it is “subject to agreement of other lease terms.”
The lone no vote was cast by Ron Blevins, calling it “too vague,” adding it “was not doing anything” and he felt that the two parties “need to get closer” in their negotiations before agreeing to a long-term lease.
The Commission’s action, however, keeps alive the possibility that the county and the Knoxville-based healthcare company can come to some kind of agreement.
The Commission’s vote came just a week after a “final offer” and ultimatum issued by Mercy Health’s President & CEO Debra London was made public, asking for a 15-year lease with no payments to Scott County and, if the offer was not accepted, “we will immediately seek to identify another Hospital Operator to assume the remaining portion of our lease which expires January 31, 2010.”
“My intent is to send a message,” said Commissioner Jeff Watson, in making the motion. “We are willing to work with them” if an agreement can be reached on “specific terms.”
Commissioner Paul Strunk said: “I hope this reopens negotiations and we can move forward.”
While not discussed in Monday’s regular monthly meeting, County Mayor Rick Keeton on Friday sent an email to Mercy Health stating that while the Commission had not voted on the 15-year lease proposal as had been requested, it “did express a desire to meet . . . one final time in an effort to reach an agreement.”
Included with that response to the ultimatum was a list of 10 questions “all premised on the proposition that the county was willing to grant to Mercy a 15 year lease.”
Those questions, and Ms. London’s answers (which were received in advance of Monday night’s meeting), were obtained from Mayor Keeton after the meeting and are published here in their entirety:
1. What is your position regarding Mercy’s right to withdraw from the lease and the time period required for notice?
A. We would be willing to provide a two-year notice if we felt we needed to terminate the lease.
2. Could you more specifically define “appropriate capital investments,” as stated in your letter?
A. Appropriate capital would consist of capital investments that improve the quality of the Hospital services, increased operational efficiencies, insures regulatory compliance or improves the financial performance of the Hospital.
3. Would you commit to a minimum amount of capital investments, and if so, how would those expenditures be applied to medical equipment versus facility improvements?
A. We anticipate needing to invest a minimum of Five Million dollars ($5,000,000) during the first five years of the lease. As far as how those dollars would be allocated, it would be difficult to predict.
4. Would Mercy agree to some form of rental payment obligation or future rent after a period of abatement?
A. It is our belief that the need for healthcare investments in Scott County will outpace any profitability realized.
5. Considering that we have moved into a new penal facility which has a capacity approximately 3 times greater than our old facility, would Mercy consider increasing the prisoner care commitment in the current lease and/or provide a part-time nurse at the new facility?
A. We would be willing to discuss this after hearing of your current needs and analyzing level of services currently being provided to prisoners on behalf of the County.
6. Would you agree to provide to the county annual financial reports pertaining to the hospital only, showing revenues, profits and losses, and expenditures made on medical equipment and facility improvements?
A. We would be willing to provide the County with an annual report reflecting profits or losses and breakdown of capital improvements.
7. Given the deteriorating financial performance of the hospital, what are your plans regarding current services within the hospital (i.e., departments), employees and employee benefits?
A. We realize we will need to leverage our system strength and consolidate limited services where it is deemed prudent.
8. What are your plans regarding recruitment/placement of new physicians and for new services provided in the hospital?
A. Our physician recruitment plans will include the addition of a full-time urologist, orthopedic surgeon and cardiologist. We already have a GYN specialist and a women’s health nurse practitioner scheduled to start in June 2009.
9. What are your plans regarding local physician support of the hospital?
A. We have already invested in hiring a nurse to function as liaison to each of the physicians’ offices and facilitate scheduling of admissions and ancillary testing.
10. What would St. Mary’s vision be regarding construction of a new hospital?
A. It would be premature to even consider the prospect of a new Hospital at this time.
After answering each of the above questions, London ended her response with the following statement:
“. . . St. Mary’s respectfully requests that the elimination of the lease payments become effective April 1, 2009, in order to assist in the stabilization of the financial performance of the Hospital.”