BRHS seeks comment on affiliation offers

Published 10:53 pm Friday, October 15, 2010

Staff Writer

The public will have a chance Oct. 27 to give opinions to the Board of Commissioners of the Beaufort Regional Health System on five affiliation offers now before the heath system’s governing body.
A public hearing has been set for 6 p.m. in the multipurpose room in Building 10 on the Beaufort County Community College campus for the board to receive comments on the offers.
The hearing was announced Thursday by Pam Shadle, BRHS director of marketing and public relations.
Copies of the offers will be available for review by the public at the Brown Library and the Beaufort-Hyde-Martin Regional Library, both in Washington, Shadle said.
The BRHS board will use the comments it receives from the public to help it identify issues of concern as its members begin to evaluate the offers, board Chairwoman Alice Mills Sadler said in an interview following a recent BRHS board meeting.
The board also will hear from members of the medical community in a meeting scheduled for Tuesday.
“We’re going to get input from the medical staff and input from the public,” Sadler said.
Four prospective partners have presented a total of five proposals for some type of affiliation with BRHS.
Greenville-based University Health Systems of Eastern Carolina, Community Health Systems Inc. of Brentwood, Tenn., and LHP Hospital Group of Plano, Texas, presented lease offers. LHP Hospital Group and Brim Healthcare of Brentwood, Tenn., presented alternative proposals that would either create some type of joint venture with BRHS or establish a management-services arrangement.
A summary of the proposals were presented to the board earlier this week by Daryl P. Johnson and James R. Hills of HealthCare Appraisers Inc., the Florida-based consultants who guided the local hospital’s search for suitors.
The Washington Daily News on Thursday obtained copies of those proposals.
University Health Systems, a private, nonprofit organization with a listed $607 million in assets, presented an offer for a 20-year lease. It offered a prepaid lease payment of $18.1 million and promised a minimum of $21 million in capital expenditures over the first five years of the lease. BRHS employees would become employees of the UHS subsidiary, East Carolina Health, under the proposed UHS lease. The offer also stipulates that a local directors council will be developed to help manage the hospital. Its proposal also says that at the end of the lease, UHS is entitled to full and complete ownership of all leased assets, according to the HAI executive summary of the UHS proposal.
Community Health Systems, a public, for-profit organization with a listed $2.16 billion in assets, presented an offer for a 30-year lease plus two 10-year renewals at fair-market value. It offered a prepaid lease payment of $30 million and promised $25 million in capital expenditures and $2 million in physician-recruitment expenditures during the first five years of the lease. The local health system would continue to have a local board comprised of up to 12 members. CHS indicated it would hire all active employees, provide a competitive benefits plan and, “subject to due diligence,” assume all physicians’ contracts. At the end of the end of the lease term, BRHS would retain ownership of its assets but would be required to reimburse CHS for the value of any capital expenditures made by CHS within five years of the end of the lease, according to the HAI summary and the offer.
Brim Healthcare, a private, for-profit organization, chose not to disclose its assets. It presented a proposal for a management-services arrangement for three years plus one two-year renewal. The chief operating and chief financial officers of the local health system would be Brim employees, and the health system would be directed by the local governing board as currently seated. The offer proposed a starting point for discussions of its management fee at 1 percent to 3 percent of net patient revenue, according to the HAI summary and the offer.
LHP Hospital Group, a private, for-profit organization, disclosed its assets confidentially to the BRHS board. It presented two options — a proposed 30-year lease plus two 10-year renewals at fair-market value and a proposed joint venture, with LHP investing $24 million in cash and having an 80-percent interest in a new joint venture with BRHS. Under its lease proposal, LHP agrees to retain all BRHS employees who are actively employed as of the closing date at their current salaries. BRHS would be governed by a 12-member board appointed by LHP and comprised 50 percent by doctors from the medical staff and 50 percent from members of the community. Under its joint-venture proposal, BRHS would choose LHP as a capital partner, according to the HAI summary and the offer.
In his presentation to the BRHS board earlier this week, Hills recommended that the BRHS board negotiate the details of any of the proposals with potential merger partners in live, on-site interviews.
Sadler said the BRHS board will rank the five offers based on each potential partner’s responses to a list of some 70 questions posed by the local health system in its request for proposals.
She said the board will then decide which potential merger partners to interview.