UHS board OKs deal

Published 1:15 am Wednesday, August 17, 2011

Dave McRae (standing), chief executive officer of University Health Systems of Eastern Carolina, makes a presentation to the UHS Board of Directors on Tuesday in Edenton. The UHS board unanimously approved the terms of the proposed deal to take over management of the hospital in Washington and its affiliated medical practices. Board Vice Chairman Art Keeney (right), called the action “a legacy vote” (WDN Photo/Betty Mitchell Gray)

EDENTON — The Board of Directors of University Health Systems of Eastern Carolina on Tuesday voted unanimously to approve an agreement for UHS’s lease/purchase of Beaufort Regional Health System.
Board Vice Chairman Art Keeney called the vote “a legacy vote” and “a guarantee of continued access to excellent health care” for Washington and other eastern North Carolina communities served by BRHS. Keeney, a retired bank executive from Engelhard, cited the commitment by UHS to BRHS employees and construction spending and UHS’s strong financial position as positives for Washington and the surrounding area.
“All this augers well for the quality of health care,” he said in an interview after the vote.
Although negotiations over the lease/purchase of BRHS have been under way since January, the vote to approve the agreement took the UHS board less than a minute.
It came at the end of a three-hour meeting of the board at Chowan Hospital and a day after terms of the deal governing the future operations of BRHS were released to the public
The board’s vote is one of the final steps in forging an agreement for the operation of the Washington hospital.
The BRHS Board of Commissioners is scheduled to meet at noon Aug. 25 to vote on the deal. That meeting will be followed at 5 p.m. by a vote by the Beaufort County Board of Commissioners.
The final say on the agreement is up to the county commissioners because the county owns the hospital buildings and buildings that comprise affiliated medical practices.
If all three boards approve the deal, UHS will take over management of BRHS on Sept. 1.
Dave McRae, UHS chief executive officer, said, in an interview after the meeting, the vote by the UHS board was “very important” to the health-care system’s future and the future of quality health care in Washington and the surrounding area.
“We are committed to keeping high-quality care in Beaufort County, and our board made a strong statement supporting that commitment today,” he said.
The offer by UHS 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 proposed lease agreement released Monday.
Most of the money paid by UHS to Beaufort County will be used to pay off loans and any other financial obligations related to the local health-care system, with some $6 million designated for an escrow account to cover any financial liabilities that arise after the lease is signed.
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 such liabilities listed in the agreement.
UHS continues making decisions about the leadership at BRHS after the lease goes into effect, but the first announcement that will be made after the agreement has been signed will be about the appointment of a president of the local hospital, McRae said.
The lease agreement stipulates that UHS or its affiliates will continue to employ all of BRHS’s existing employees who agree to continue their employment with UHS by the closing date.
He said UHS will “evaluate all the senior leadership” at BRHS to determine the roles those leaders will play with UHS.
In a statement released after the vote, McRae credited the residents of Beaufort County for their support of a BRHS-UHS affiliation, including the support shown at a January rally and a February public meeting when, the statement reads, “county residents made loud, spontaneous shows of support for UHS.”
“I am so grateful to the people of Beaufort County,” the statement quotes McRae as saying. “Their support is the biggest reason we are here today.”