UHS-BRHS lease released

Published 1:26 am Tuesday, August 16, 2011

Almost a year and a half after local hospital officials began their search for a merger partner and after nearly seven months of discussion behind closed doors, terms of a deal offered by University Health Systems of Eastern Carolina for the operation of Beaufort Regional Health System have been released to the public for review.

The UHS Board of Directors could approve the deal as early as today when it meets in Edenton.

The Beaufort County Board of Commissioners and the Beaufort Regional Health System Board of Commissioners are scheduled to meet Aug. 25 to vote on the proposed agreement.

The UHS offer for the lease/purchase of BRHS remains at $25 million for a 30-year lease for the hospital and affiliated medical practices operated by BRHS, under terms of the proposal released Monday.

UHS also continues its promise to make $21 million in capital expenditures — less any expenses for excluded liabilities — during the first five years of the lease, including a new electronic medical-records system, emergency-room expansion and renovation, renovation of patient rooms and expansion or renovation of the Marion L. Shepard Cancer Center, along with other routine capital expenditures.

UHS continues to have the option, at the end of the lease, to buy the hospital and clinic operations for $10 million, less any excluded liabilities.

There are 17 excluded liabilities in the agreement.

In the lease agreement, UHS promises to provide “at least the same or similar clinical hospital services” to its patients, such as medical and surgery services, obstetrics, pediatrics, outpatient and emergency treatment, including emergency services to those who cannot afford to pay, that BRHS has provided.

UHS also promises to continue to offer essential medical services to those patients without the immediate ability to pay for those services or treatment.

The lease agreement contains a provision for obstetrical services, stipulating that UHS will review the current agreements with the Beaufort County Health Department regarding those services and continue to treat obstetrical patients who arrive at the hospital’s emergency room, regardless of such patients’ abilities to pay.

Under the terms of the agreement, the lease payment will be divided as follows:

  • $5,597,715.58 to the county as prepayment on loans for hospital debt incurred by the county;
  • $6,073,686.46 to be held in escrow to cover any liabilities that arise after the lease is signed;
  • $13,324,243.40 to cover debts owed to Bank of America by BRHS;
  • $100,000 to pay for professional services such as accountants, lawyers and consultants incurred after the closing date.

The package also includes a proposed five-year lease for the Ray G. Silverthorne Crisis Center for $51,163.20 per year and a proposed five-year-lease for Tideland Mental Health for $58,834.29 per year. The proposal calls for each lease to be adjusted at the end of five years based on adjustments to the cost-of-living index.

In addition to rent, UHS will forgive $669,833 in debt for EastPointe Health, and, as requested by the BRHS Board of Commissioners, UHS will place $900,000 in an account to be used by BRHS to pay for financial obligations not covered by the lease agreement.

Once the lease is signed, the local health-care system will be operated as a new corporation, East Carolina Health-Beaufort Inc., under the UHS umbrella, according to the documents.

The new corporation will be governed by a board of directors elected by the UHS Board of Trustees.

An eight-member directors’ council will be appointed to advise East Carolina Health-Beaufort, with two of the eight members appointed by the Beaufort County Board of Commissioners.

Among its other duties, the directors’ council will advise the East Carolina Health-Beaufort Board of Directors on the quality of care at the hospital and new programs and services.

The lease agreement covers the hospital and 12 other pieces of property, including Washington Family Medicine Center, Washington Urological Associates, George Miller Orthopedics and Birdsong Orthopedic Group, Obstetrics & Gynecology of Washington, Pamlico Internal Medicine, Chocowinity Family Care, Tideland Mental Health, the Ray G. Silverthorne Crisis Center and office space in Williamston, Swan Quarter and Columbia.

Under terms of the lease, BRHS’s affiliated practices will be a part of UHS Physicians, LLC and the local health system’s home-health services will fall under the auspices of HealthAccess Inc.

Washington’s hospital will join eight others under the UHS umbrella, including Albemarle Health in Elizabeth City, Bertie Memorial Hospital in Windsor, Chowan Hospital in Edenton, Duplin General Hospital in Kenansville, Heritage Hospital in Tarboro, The Outer Banks Hospital in Greenville and Roanoke-Chowan Hospital in Ahoskie.

A package of transaction documents — which includes the lease agreement and some 150 pages of additional materials — that define the pending agreement among UHS, Beaufort County and Beaufort Regional Health System was released to the public Monday afternoon. It is available for inspection at the Beaufort County manager’s office and at Brown and BHM Regional libraries in Washington. The lease agreement and the assignment-and-assumption agreement have been posted to the Daily News’ website. Click on the “Special” tab above the navigation bar on the right side of the home page.