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HOSPITAL DECISION - MONDAY DECEMBER 10, 2018

To My Constituents,

Since tonight’s commission meeting was so confusing, I want to let you know what was happening. First, we had not expected to vote on anything tonight, as we had received one proposal this afternoon and had no time to evaluate its merits. Tonight was planned to be a presentation night for the other two potential buyers to present their proposals. 


Prior to the Commission meeting, there was a meeting of the Hospital Board and Hospital Committee at the hospital where all three of these groups presented their proposals. The Mayor asked them to present again at the Commission meeting for the public to hear. (However, with our insanely antiquated sound system, I’m not sure you all actually heard as much as you should have been able to.)


I have spent the weekend researching these groups and the people involved, as we were not provided any information on a background check.  I will include my findings – or lack thereof – in the descriptions below:


POTENTIAL BUYERS WERE:


PRIME MEDICAL ASSOCIATES (PMA) - This is the group that received the most votes tonight and is now the new purchaser of our hospital. PMA is a brand new company that has not yet formed an LLC or corporation. It has been unclear as to who were the actual investors until tonight.  We were told that there are 4 investors: Mario Alvarez of Miami, FL; Dr. Stephen Averett of Linden; Glenn Mooney of Decatur Co.; and another gentleman whose name I did not get. Dr. Averett has presented a letter of assurance from his bank guaranteeing funding for the purchase price of $1M.


Their proposal focuses on ancillary revenue streams to bring in money to operate the hospital, such as drug detox and rehabilitation, eldercare/Alzheimer’s unit, lab contracts, etc.  They stated that their intent is to grow the patient census and maintain the ER facility. They bring in Dr. Averett as their main physician and hope to find other doctors that will join him. 


In researching the investors, I have found no previous professional experience for Mr. Alvarez; nor has he provided any specific information as to with whom he has worked. He does have a profile on Facebook which provides information about his high school, but does not list any secondary or graduate education. Dr. Averett is an internist who previously owned the Perry County hospital facility and sold it. I’m not clear as to the purchase details due to the fact that this was a private sale and not a government/county sale, thus not subject to approval by the Attorney General of TN. Dr. Averett has told us that he has a specialty in substance abuse treatment and hopes to create a treatment unit.  We were only notified of the other two gentlemen tonight and I have no further information. 


ARTHRON HEALTH / Alliance Financial / Encore Holdings / American Medical Capital – I have listed all of the names that have appeared on various documents regarding this “group” of potential buyers. The two gentlemen who brought the proposal tonight are with Legacy Marketing who were representing this group of investors. Their proposal, like Prime above, focuses on ancillary revenue streams; however, they had no physicians involved and did not have an immediate plan for staffing doctors or rotating specialists into the hospital. They proposed various partner companies setting up clinics/businesses within the hospital, such as a pharmacy, phlebotomy services, home healthcare, etc. 


My research on the companies and their principals returned no experience with hospital management, only affiliation with lab programs. The principals listed had varied backgrounds of real estate, sales, and several financial LLCs. One of the associate names I researched returned articles of indictment for insurance fraud. When I quizzed the gentlemen about this, they were unaware of any problematic backgrounds with the various investors. 


PROGRESSIVE MEDICAL CENTER – This group is from Atlanta, GA, and were represented by Dr. Victor Bouquette, M.D. and Greg Buckley, CEO.  They own and operate Progressive Medical Center with a staff of 11 doctors, several nurse practitioners, RNs, LPNs, and other specialists. They have a unique model for healthcare being both a “regular” medical facility as well as an Integrative Medical facility. Integrative medicine is using additional and alternative treatments in addition to, or in place of, therapies that push drugs/medications. An example of this type of medical approach is Cancer Centers of America and the Mayo Clinic. 


Their proposal was to maintain a traditional hospital and ER, while also offering Integrative Medicine. This approach is a fast-growing trend in medicine. Progressive would have attracted people from a wide area seeking this specialized treatment. This would have benefitted our county not only in medical services, but in increased traffic to our businesses. Because this is a new and trending approach, we could have been on the forefront of modern treatments, making Decatur County stand out from all of the other traditional hospital formats. 


Research revealed nothing negative about Progressive Medical Center or its principals.  CEO Buckley holds an MBA from Harvard and has held C-level positions for several organizations.  Dr. Bouquette is an ER doctor and has a specialty in Integrated Medicine. 


Because we were forced to vote immediately on these three, I felt that Progressive offered the best option for our people, with more doctors available and 20 years of experience in their facility in Atlanta. Additionally, their offer was more lucrative.  My vote was cast for Progressive.

__________


OUR HOSPITAL AND ITS DEBT


The Mayor has insisted that the hospital debt was $1.4 Million; however, this has been refuted by Lori Brasher, CPA and Hospital CFO Alan Messinger. I have had an extensive discussion with Mrs. Brasher about the financial health of our county, and it is sobering. 


The reason that I raised the issue of our hospital debt is two-fold: 1) To inform the Commission of the real debt figures; and 2) To explain why a purchase price of $1 Million will not address our debt problem. The Mayor has offered our hospital for sale at a purchase price that he has decided upon. During my term as commissioner, we have not been consulted on pricing or selling strategies. 


Over the weekend, I analyzed the one offer we had been given at the time from Prime Medical Associates.  The the letter of intent from Prime Medical Associates (PMA) included a preliminary agreement proposal.   I looked at the timeline of events and juxtaposed that with what expenses were covered by which party (County or PMA).  


Here is the timeline as it was presented last week: (Note that the buyers (PMA) have agreed to alter their offer as of tonight.)


1. LETTER OF INTENT to be executed by both parties

  • County responsible for financial /  operations

2. DEFINITE AGREEMENT executed by both parties (Pre-Purchase Agreement - outlining terms).

  • PMA takes over management - but not financial responsibility which is left to County.
  • County forfeits all incoming  payments (AR) to PMA for their use; Agreement does not specify that these monies must be used for hospital expenses. The AR includes estimated insurance reimbursements of $1.4-$1.5 Million.  
  • This period is also subject to PMA  being allowed to cancel or terminate contracts, yet County will be responsible for any costs associated with early termination, etc.  

3. DILIGENCE PROCESS - PMA will begin looking at hospital operations and costs and determines if they intend to move further with the purchase.

  • County is responsible for hospital  costs, specifically payroll for the first 60 days of this process. Payroll is estimated at $100K-$150K per two-week period. Estimated cost to county for payroll only during this period would be around $800,000 at the least. 

4. ATTORNEY GENERAL'S APPROVAL - Because the County is an arm of the State government, the AG must approve the sale of this important County asset. This could take quite a long time as we saw with the Impeli investigatory process which lasted from early March to October without a finalized finding from the AG at the point where the Commission terminated the process. Our attorney Tracy Powell says to expect 6 months.

  • The agreement is silent on who assumes financial responsibility during this time. Because the Perry County Hospital sale was not subject to investigation by the State, we cannot be certain of approval, nor can we anticipate the length of time that this will take.

5. CLOSING - This is the final step in the purchase agreement. The purchase price of $1,000,000 (one million) will be paid to the County during this meeting. 

  • Given the terms of this preliminary Letter of Intent, at Closing the County will not have gained any profit from the sale of the hospital, and instead will be further in debt having spent more than $1 Million over the course of these months.

___________________________________


THE COMMISSION DISCUSSION


Tonight, when asked what I thought was the best thing to do for the county, I answered, “To close the hospital.”  And there is a reason for this.  


Because the purchase price is listed at such a low rate, we stand to gain nothing financially from a sale. What we lose is our Certificate of Need, our Medicare and insurance billing numbers. This is critical because we would need these in negotiations with a large hospital corporation. Since only one of the potential buyers has a track record of being an operating hospital with success (Progressive), we could not guarantee that these ventures would be successful.  Given our track record with other unproven entities, it is reasonable to assume that long-term success with, yet another, is unlikely; thus, we would be looking at the same issue again. (Remember this is our 3rd attempt). 


The responsible and best answer for our county long-term is to bring in an established, large hospital system with ample staff to rotate into our county. These large corporations will only move forward when our hospital has closed – and yes, I have been told this specifically.  


I understand that from their perspective. For them to invest in research and development, which will be millions, they need to know that the host county is serious about wanting and needing their investment.  Corporations, especially those that are traded publicly, must make sound financial decisions that do not negatively affect their stock prices, i.e. their value. They do not take chances, they move on deliberate calculated planning. 


In looking at our county and its actions over the past several years, to an objective outside view, I’m certain that we appear to be grasping at any opportunity with no sincere plan for the future. As I have described in earlier letters, we must learn to plan strategically. 


On first impression, any discussion about closing the hospital may sound dire – a terrible thought. However, our county has never looked at a solid plan forward. Closing the hospital puts a tourniquet on our financial hemorrhaging. Several folks have commented that there will be large costs associated with closing – and when you are planning ahead, that doesn’t have to be the case. If we had committed to work with a large entity like Ascension/St. Thomas, we would not be going through the closing process alone. We would be working in conjunction with them on planning a new venture and would be able to shift or mitigate some of the closing components. For instance, staff may be temporarily reassigned until a new facility was prepared to open. Certain costs associated with records, billings, etc. could have been absorbed by the larger corporation. 


As I have written previously, any change comes with some sacrifice; switching to a new hospital corporation is a short-term sacrifice that would have been worth all of the hassle.  Emergency services would be the primary focus and we would have had options to partner with their contracted agencies to pick up the extra burden. But none of this will happen now, because we have again reacted without thinking through the options. 


I hope that this better explains my comments on closing the hospital. This hospital is so very important to me and my family, as well as to my constituents. This little hospital has saved the lives of my brother, my father and my mother. Without it, I would be without them. And I know that this is true for so many other families. My goal was to bring in a solid plan for our future that we could depend on, as well as enhance the convenience of having specialists right here in our own hometown. Unfortunately, that was not shared by the Mayor and many members of the Commission.


We all know that Decatur County MUST have a hospital facility in our county to grow. Our businesses depend on it, our retirees and families depend on it, and new industry requires it. I sincerely hope that Prime Medical Associates is able to make great strides in our county. We are all now depending on them.  

-awb

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