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HUNTSVILLE — Months of discussion and debate came to an end at the Scott County Office Building here Monday night as County Commission approved a 15-year extension of the lease of the local hospital to Mercy Health Partners.

And a packed house of Mercy Health supporters applauded the vote.

While no rent payments will be required during the term of the lease extension, Mercy Health has pledged to pump millions of dollars into the aging facility in the form of major renovations to the Emergency Room and Operating Room, as well as provide other vital equipment and infrastructure needs and step up its physician recruitment efforts.

Monday night’s meeting was a special session of the Commission, called by County Mayor Rick Keeton in response to Thursday’s announcement that Mercy Health would be assigning its lease to another operator if the Commission failed to act immediately on its repeated requests for an extension of the lease which is set to expire at the end of January 2010.

The motion to grant the lease extension, which includes two five-year extensions which can be exercised at the discretion of Mercy Health, was made by Commissioner Willie Boyatt, and seconded by Commissioner Odeva Byrd.

Voting aye, in addition to those two, were Clyde Zachary, Leonard Bertram, Ernest Phillips, Daniel Murley, Dennis Sexton, Rothel “Tub” Cross and Mike Slaven.

Casting no votes were Paul Strunk, Gerry Garrett, Ron Blevins, Alan Reed and Jeff Watson.

In the lengthy discussion which preceded the vote, Mercy Health President and CEO Debra London stood stoically at the podium facing the commissioners and answered questions and responded to comments posed by the county’s governing board.

At her side were Jack Bryan, Chief Operating Officer and CEO of Mercy Health’s Community Hospital Division, and David A. Nowiski, Senior Vice President and Chief Financial Officer of the company.

Commissioners Blevins and Garrett, both from the sixth district (Oneida), were the two most outspoken opponents of granting the lease extension. Both said that they could not vote for giving Mercy Health “a free ride.”

Garrett, who expressed concern about the loss of $1 million in annual lease payments that will have to be made up by increased property taxes, added that it was for that reason he could not support the motion.

Others, who favored awarding the rent-free lease extension, said they put their trust in Mercy Health and felt that it was an investment in health care for the people of Scott County and security for the employees of the hospital.

A major concern expressed by both sides of the issue was whether or not Mercy Health would assign its lease to another management firm without prior approval by the commission.

London said that was not her company’s intent, but refused to make it a part of the lease agreement for purely business reasons, saying at one point that she could not “sacrifice our system for one hospital” should efforts to turn around the quarterly million dollar losses in revenue prove unsuccessful.

The key to the future success of St. Mary’s of Scott County, she said, hinges on the whole hearted support of the community it serves.

“We want to stay, but it has to be sustainable,” London stated.

County Attorney John Beaty explained that the lease extension contains a provision that the no rent lease agreement is strictly with Mercy Health, and that should an attempt be made to reassign the lease to another provider it would: 1) have to come back to the commission for approval; and, 2) if reassigned, the no-rent provision would not apply to the new operator.

In response to a question posed by Commissioner Slaven, London admitted that Mercy Health had talked with representatives of Restoration Healthcare as a contingency in the event that the lease extension was not approved by the commission.

That question led to Stephen N. Clapp, CEO of Restoration Healthcare, coming forward to introduce himself and provide a brief overview of his company and its history.

Before another round-table discussion was launched, Commissioner Byrd called for a question on the motion. It carried by a 10-4 vote, which ended the discussion and prompted an immediate roll-call vote on Boyatt’s motion to extend Mercy Health’s lease.

Mercy Health has agreed to pay its final monthly rent payment ($83,333) in May, which will created a one-month budget shortfall for the county this fiscal year and, according to Commissioner Garrett, a 32¢ increase on the property tax rate commencing July 1.

FINAL ULTIMATUM

The issue actually came to a head Thursday evening at the Scott County Office Building when the Commission’s Hospital Committee met and learned that London had issued a final ultimatum concerning her repeated requests for action on the lease extension.

It came in the form of a brief letter dated March 26 which was read aloud by Mayor Keeton:

“Mercy Health Partners respectfully requests that you convene the County Commission on or before April 6, 2009 to consider and approve an amendment to create a 15 year lease between the parties or to approve our request to assign the lease to another Hospital Operator. Your understanding of the need to expedite this request is greatly appreciated and we would be glad to provide whatever information you need to satisfy this request.”

The meeting had been called to discuss Mercy Health’s response to 15 “discussion points” posed by commissioners (which was published in last week’s Independent Herald).

Mayor Keeton then announced that he had called a special commission meeting for Monday to deal with the request, and also passed out a copy of a March 25 letter from the hospital’s Board of Trustees urging a meeting to finalize an agreement between Mercy Health and Scott County.

Keeton reported that Mercy Health had losses of more than $300,000 per month in the first two months of 2009, and stressed that the company was prepared to assign its lease to Restoration Healthcare. He also provided the committee members with a copy of a letter from Restorations’s CEO, dated that day (April 2), which provided a history of the company.

The mayor then asked Mercy Health corporate officers Jack Bryan and David A. Nowiski to join them in a discussion of conditions at St. Mary’s of Scott County and the company’s plans for putting it on a sound financial footing.

While most of the commissioners present (including some who were not on the committee) expressed their willingness to continue its partnership with Mercy Health, many expressed concern about the loss in revenue (from lease payments) to the county.

Although sympathetic to the county’s loss of revenue, Bryan said that the current rate of revenue losses at the hospital far exceeded the amount it was paying to lease the facility, and without a long term lease, his company would be unable to make the investments to turn things around.

Bryan and Nowiski both stated that turning the 99-bed hospital into a 25-bed critical access facility would be the first step toward saving money, but other changes would also have to be made.

And at the top of their list is convincing the citizens of Scott County to stay home for their healthcare needs.

“Everybody seems to love us,” Nowiski said, “but not a lot of them are using us.”

But, it’s apparently Mercy Health’s intention upon obtaining a long term lease, to make sorely needed improvements in the form of renovations and new equipment combined with physician recruitment efforts, to change the public’s attitude about going elsewhere for their health care needs.

When asked by Commissioner Reed how long it would take to commence making improvements at the hospital, Nowiski said they might well begin within the next 12 months.

“E.R. is the most critical need, but also the largest from a financial standpoint,” Nowiski said.

Commissioner Strunk, although expressing his desire to avoid putting a bigger burden on local taxpayers by giving Mercy Health a rent-free lease, did compliment the company on its quality of service and admitted that this was “the most productive conversation we’ve had.”

After Bryan and Nowiski left the meeting, the discussion continued with Strunk and Reed wanting assurance that the 15-year lease extension was not tied to an assignment of the lease to a third party.

Later, persons in the audience were given an opportunity to speak out. Among those that appealed to the board to support Mercy Health were Mr. and Mrs. Don Stansberry, III, Wompie Sexton and Mike Swain.