Hospital district board hears comments on SBL offer to buy

Shall the Fayette County Hospital District sell the hospital and grounds to Sarah Bush Lincoln Health Center (SBLHC)? Many of its employees believe that is the best move, however the board has some reservations and would like to see guarantees in place before such a move is even considered.

More than 30 employees attended the Monday night meeting of the board to voice their support for Sarah Bush Lincoln’s offer to purchase the hospital and properties.

SBLHC’s CEO Jerry Esker was also present at the meeting, along with Dennis Pluard, Chief Financial Officer Monday night to address the board.

In a resolution presented to the board, SBLHC proposed purchasing the hospital, with the following agreements:

• the transfer of $12 million into a trust fund to be used for improvements at the hospital;

• the hospital district will transfer the remaining cash and all investments to the proposed trust fund, with appropriate monies kept to pay for closing and remaining costs;

• the trust fund would be managed by a qualified, third party, agreed to by the hospital board and SBLHC;

• the district assigns ownership and all property, including its provider number to SBLHC;

• the current management agreement with SBLHC will be terminated;

• SBLHC will assume all debts and obligations by the hospital board, and

• both parties will obtain a certificate of exemption to allow a change of ownership from appropriate authorities and obtaining a hospital license for SBLHC to operate the hospital.

Hospital staff members attending the meeting were very vocal in their support of the purchase of the hospital – citing better pay and benefits, more monies for hospital improvements and repairs, and overall better systems for operating the hospital.

Many who spoke at the meeting praised the board for the job it has done with the resources at its disposal, but in the same breath expressed the idea that SBLHC could do so much more.

Members of the board expressed concerns that SBLHC would remain in the community for years to come, and not walk away from the county.

“If you do the math, look at it. There is no way that we are doing this for the benefit of Sarah Bush Lincoln. We are doing this for the community,” Eskers told the board.

“In all actuality, during our first two years, we have invested $1.3 million (in the hospital) while only obligated to $500,000, well beyond our legal commitment,” Pluard said.

When asked how SBLHC arrived at the $12 million offer, Pluard explained the $8 million “book value” of the hospital was multiplied by 150 percent.

“We want to bring this facility up to the standards that Fayette County deserves,” he added.

Dr. Michael Darmadi, board member, explained the only reason he was hesitant to accept the offer because of the short-term relationship that the district has had with SBLHC. He said he did not want to see the same thing happen to Fayette County Hospital that happened to Greenville hospital, which was purchased by the HSHS hospital system, then have a large facility built just down the Interstate in Highland.

Board member Doug Knebel asked the SBLHC officers if the SBLHC would retain control, or if the hospital would revert to Heartland Health System, who formerly ran operations at the hospital, recently acquired by SBLHC. He also asked if profits from the hospital would remain in Fayette County, or revert back to SBLHC. He said he realized that no assurances could be made, but asked how SBLHC would address this concern.

Pluard said that administration of the profits was still to be determined, but added that any concerns by the hospital board could be outlined in the trust fund agreement, which would be “hashed out” by attorneys on both sides.

Eskers assured the board, “SBL is one of the most successful hospitals of our size in the United States. If we are in trouble, everyone is in trouble.”

Board chairman Nancy Pryor told the SBLHC officers that she did not feel comfortable “handing over $6 million” over to SBLHC. She said the board has not refused to do any project asked of it. “We may have had to borrow money, but we did them,” she explained.

The officers explained that monies could be earmarked for projects, and that with the district’s share, the combined amount in the trust fund would be nearly $18 million, to be invested in the hospital.

One of the main concerns with employees attending was the lack of hot water, and the shape of the plumbing at the hospital and other infrastructure at the hospital. Many reiterated the good management the board has done with dealing with limited resources, but added that SBLHC has the resources to address these concerns and others, including billing system and other technological systems, stating that solving these problems would help overall operations.

“(If SBLHC owned the hospital) these systems would be fixed tomorrow. At SBLHC, we fix these issues immediately and there is no waiting on a board decision,” Esker said.

Charlie Barenfanger, board member, told the employees that if the board does not know of problems, they cannot be repaired. He said a company has been hired to fix problems, and asked if it is not doing its job, which was met with silence.

If the board declined to accept the offer by SBLHC, Pluard assured those gathered that the Mattoon-based facility would not abandon Fayette County.

“If the board says “no,” we will back away from the offer,” Esker said. “We want you to understand this is a gift to the community.” He later explained that after five years, SBLHC has the opportunity to walk away from the agreement with the hospital, and that the board has the opportunity to terminate the agreement after 10 years.

In speaking about the trust agreement, Barenfanger said that “The devil is in the details,” referring to the fact that if the offer is accepted, the board would need to take care in the formation of the agreement.

According to Pluard, the steps to be taken, if the board accepts the offer, is to pass the resolution outlining the offer, have both legal teams work towards a trust document, approving the trust, then executing the deal.

This would be the first acquisition of a hospital by SBLHC, if the proposal is accepted.

The hospital district board adjourned to executive session to discuss the matter, after financial reports were received from Pluard.