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Memorial Health, Novant merger at standstill until hospital lease details finalized

  • Exterior of Memorial University Medical Center (Josh Galemore/Savannah Morning News)

Chatham County Hospital Authority officials plan to meet this week with their counterparts from Novant Health to discuss lease changes needed to complete a strategic partnership agreement for Memorial University Medical Center.

“We’re there to protect this safety net,” said Don Waters, chairman of the authority board. “The mission — that’s the heart of it.”

At issue is a strategic partnership agreement with the Winston Salem, N.C.-based, nonprofit health care system that Memorial Health officials say will provide financial stability in the face of growing debt in a rapidly changing industry.

Key to that agreement are specific amendments to the current lease between the authority and the hospital group that will protect Chatham County residents and their half-billion dollar asset at Memorial University Medical Center.

The board of Memorial Health, parent corporation for Memorial, on Tuesday night unanimously approved the partnership agreement they said will infuse $295 million in funding over the next 10 years and allow Memorial to continue its mission as the region’s safety net hospital.

Four of the authority members who also sit on the Memorial board recused themselves from that vote.

Waters, president/CEO of Brasseler USA, and Art Dana, a retired certified public accountant who is the hospital authority’s treasurer, said Friday that while they support what Memorial president/CEO Maggie Gill and board chair Harry Haslam Jr., also a CPA, have done, issues with the lease remain to be addressed.

And Waters said he and his board remain “very, very, very strong on the Novant transaction.”

Both bodies agree the proposed lease amendments must be finalized before the deal can go forward.

The lease remains the key to the agreement.

“The lease is what protects the citizens of Chatham County and its nearly half-billion dollars in asset we own,” Waters said.

He said that figure is before debt is considered, but the system’s revenues are $500 million a year.

“At this point there needs to be a very solid understanding about these proposed lease amendments,” Waters said. “We all recognize the need to move quickly.”

Waters said Memorial’s board did not disclose details of the proposal to the county until Jan. 22 and he urged Memorial board officials not to vote on the agreement on Tuesday.

“There’s nothing been written,” Waters said. “The amendment they are asking for is still an open question.”

Plenty of issues remain until the authority is satisfied that what Novant offered in a letter of intent and “what we were looking for” are consistent, he said.

“If we get what was discussed, it is the right thing to do.”

It’s best, Waters said, if a conclusion is reached directly between the authority and Novant and not through Memorial.

“Memorial Health appreciates the fact that the proposed amendments to the Chatham County Hospital Authority lease are not yet finalized,” Haslam Jr. said Friday. “We also appreciate the Hospital Authority’s support for this partnership, and we will do whatever necessary to help facilitate the negotiations in a timely manner.”

Chatham County Commission Chairman Al Scott has said he understands Memorial’s need for a deep-pockets partner, but he cannot support the partnership until he is satisfied in writing that certain concerns are met to protect Chatham County voters.

“This is not a personal thing,” Waters said. “This is a community thing. … The people of Chatham County are the owners. We’re their trustees.

“It’s very important that the community supports what we’re doing.”

Waters declined to discuss specifics of the lease during the negotiations.

Both Waters and Dana emphasized that the authority’s role is far more than simply providing the land on which Memorial sits for $1 per year.

Under that lease Memorial has significant financial obligations to the authority, including paying all principal and interest required by all debt obligations of Memorial and the authority, paying for maintenance and operation of the hospital and all related facilities and providing the authority with a voice in capital projects and setting the rate of charges to patients.

“The lease is a fundamental agreement as to the operations, management and maintenance of Chatham County’s primary source of public health care,” they said.

“If for any reason the lease were to terminate, all assets, licenses, permits and operations of Memorial “would be automatically transferred and conveyed back to the authority, which would continue the operation and management of the hospital.”

That means, they said, that the authority and Memorial are full partners in the mission of the hospital and must be fully informed and involved …in protecting the half billion asset of Chatham County.”

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