A rarity for UHS: second-chance bid

Published 9:20 pm Friday, January 28, 2011

Contributing Writer

The negotiations over the future of Beaufort Regional Health System have given University Health Systems of Eastern Carolina a rare opportunity, according to the Greenville-based system’s chief executive officer.
Dave C. McRae, CEO of University Health Systems of Eastern Carolina, said the second chance UHS had to submit an offer to the Beaufort Regional Health System’s Board of Commissioners is probably a first for the organization.
McRae said he can’t recall a time when the winning suitor has walked away from negotiations over the future lease of a hospital and UHS was given a second chance.
That rare opportunity was one of the issues discussed by McRae during a lengthy interview with members of the press following his meeting Wednesday with the Beaufort County Board of Commissioners.
McRae said that UHS has had to compete with for-profit companies “on several occasions,” and when the primary concern of the negotiating board is money, UHS doesn’t often win.
“We are not the highest bidder,” he said. “We rarely are because we want to make sure we have the money to invest in health care in the community.”
In October, UHS submitted a 20-year lease/purchase offer for a lease payment of $18.1 million with a guarantee of a minimum of $21 million capital expenditure commitment over the first five years.
In December, UHS upped its offer to $24 million for a 30-year lease/purchase agreement.
On Jan. 3, the BRHS board chose a $30 million offer from Community Heath Systems of Franklin, Tenn.
During discussions preceding that vote, BRHS Board Chairwoman Alice Mills Sadler described the UHS offer as “woefully short.”
About a week later, CHS withdrew its offer, citing public opposition and pending litigation, opening the door again for UHS.
UHS increased its offer to $30 million as part of a 30-year lease/purchase proposal.
The offer also gave UHS the option of buying the local health system for $10 million at the end of the lease.
That offer was accepted by the BRHS board and recommended to the county commissioners for their approval.
Ultimately, the county commissioners will decide whether to accept, amend or reject the BRHS board’s recommendation.
Because UHS was given a rare second chance, McRae said, he asked the UHS governing board to for permission to raise the offer to the BRHS board to match that of the CHS offer.
“We wanted to do the best we could to work with the community and the county to match the offer,” he said.
McRae characterized the questions posed to UHS officials in the public meeting and behind closed doors as “appropriate.”
“We understand the concern about health care in Beaufort County,” he said. “An assurance is needed to guarantee that we’ll continue providing health-care services and operate a hospital in Beaufort County.”
The discussions with county officials over the future of health care in the community have been “very friendly, very positive,” but he noted that there have been “understandable differences of opinions on some issues.”
When asked about plans UHS has concerning the BRHS staff, if the offer is approved by the county commissioners, McRae said that UHS does its “very best to use the talent that exists” at its hospitals at the time they join the UHS system.
But, he added, that UHS will “make independent decisions about the senior leadership” at BRHS, if the lease is approved.
And he predicted that under the UHS umbrella, the financially strapped local hospital will be profitable.
McRae, who talked with members of the public throughout the room before Wednesday’s meeting, said he appreciated the support from the public during the negotiations with the BRHS board and county commissioners.
“It was wonderful to look out in the audience and see friends and neighbors and people who support University Health Systems,” he said. “Community support is everything. We’re very appreciative of that and we understand the importance of it.”
When asked if UHS would be willing to intervene and help BRHS make a debt payment to Beaufort County that is due in February, McRae said there have been “discussions on several ways to step in.”
“None of those decisions have been made yet,” he said.
A decision by the county commissioners on the UHS offer remains three or four weeks away, according to County Manager Paul Spruill.
In addition to discussions between lawyers representing the county and UHS during the next few weeks, the public will have the chance to comment at a Feb. 9 public hearing to be conducted by the county commissioners at Beaufort County Community College, Spruill said.
The specific site and time of that public hearing will be announced later, he said.