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Memorial: Novant Health remains our choice

Subheadline: 
Board gives Gill, leaders vote of confidence as partnership talks reach impasse

Memorial Health Inc. board members Wednesday night gave hospital President/CEO Maggie Gill, her management team and hospital staff a vote of confidence for “keeping their eyes on the ball” during ongoing partnership negotiations.

The board also reaffirmed its ongoing interest in a partnership with Novant Health Inc.

“We’re hopeful we can continue these partnership negotiations. We believe Novant is the right partner,” Gill said, in responding to the board support.

The motion from longtime board member and former chair J. Curtis Lewis III followed his endorsement of how Gill and her team have worked to protect “one of the most important assets in the community” and continued to provide top quality medical care.

His motion was seconded by Charles McMillan, also a veteran board member and member of the Chatham County Hospital Authority, who said afterward he “strongly supported” the resolution.

But accolades were not without detractors.

Dr. Frank Rossiter Jr., who sits on both boards, told the meeting the authority had “been marginalized to say the least” and announced he would abstain from the resolution vote. He was joined by authority board members Dr. Gerald Caplan and Rex Templeton. Authority board member and treasurer Art Dana, who attended the meeting by phone, did not vote or abstain.

Before abstaining, Templeton told the group he and his family had benefited from Memorial care, adding that, “The health care professionals at Memorial are the best in the region… The best we can have.”

The meeting was the board’s first since Novant walked away from the months-long partnership negotiations on May 9 because of what Novant President/CEO Carl S. Armato said was a lack of agreement between the Memorial board and the hospital authority board, which made a successful venture here unlikely.

In prepared comments, Dr. Dan DeLoach, who sits on the authority board, read a statement outlining the authority’s position in the matter, reiterating the position set out by authority board Chairman Don Waters that the authority was the trustee of Chatham County’s asset.

He concluded with, “The authority and Memorial are full partners in the mission of the hospital.”

Lewis responded that “I think all of these issues have been addressed and discussed in negotiations. … As I see it, this hospital is not for sale to the highest bidder.

“It’s my hope that we can get this back on track,” Lewis said, adding that he had spoken with Novant’s board chair, who did not rule out further discussions.

And Dana told the group that, “We need to get together on the same page,” adding that he felt members all wanted to deliver “what is best for Savannah. I can assure you we are anxious to get the same thing. We need to be of one voice on what is good for Chatham County. We need to get back on one page.”

 

The breakdown

Novant, a Winston-Salem, N.C.–based nonprofit, was prepared to infuse $295 million into Memorial over the first 10 years of the agreement and cover the $163 million in bonds secured by Chatham County.

Memorial board members saw the proposed partnership as a means to provide financial stability to the region’s only safety net hospital, which has suffered losses, particularly in the past two years.

The Memorial board last September agreed to pursue partnership negotiations with Novant on an “exclusive basis.” The board unanimously approved the deal on March 29 in what Haslam said was “another step toward our goal.” 

Three board members who also sit on the hospital authority — Dr. Frank Rossiter Jr., Dr. Gerald Caplan, Rex Templeton — abstained from the resolution vote. Dana, who was at the meeting by phone, did not participate in the vote.

The breakdown of the two-year-long negotiations involved back-and-forth talks surrounding the authority’s lease with Memorial and the authority’s insistence on a long-term commitment to key safety-net hospital services, including Level 1 Trauma care, Level 3 Neo-natal ICE, indigent care and medical education.

Gill said the partnership agreement was doomed after the county’s hospital authorityrepeatedly changed agreements intended to make the deal work.

Waters said he was surprised by the Novant move, adding “We trusted we were dealing in good faith to resolve the issues and move forward with the Novant deal and had no reason to think this was not progressing.”

Two days later, Dana, who is the hospital authority’s treasurer, said the Novant decision had “blindsided” authority members and vowed to revive the discussion whenever Novant was ready.

On Friday, Hospital Corporation of America, a Nashville-based for-profit, sent Waters a detailed proposal pledging a long-term lease, acquisition, or joint venture, which would include preservation of core services of Level 1 trauma care and Level 3 neo-natal ICU.

That proposal mirrored HCA’s Sept. 9, 2015, proposal to Gill, which placed the value of the hospital between $550 and $575 million with a payment at closing of 80 percent of the total value.

HCA was not included in the final selection by a negotiating group.

Haslam said Friday in response to the renewed HCA offer that the negotiating group, which included both he and Waters along with board members, developed a criteria for partnership that would best meet the needs of the organization and community and fulfill the mission.

Waters, who said he did not rule out re-opening discussions with Novant, called the HCA proposal “a very, very serious offer we should seriously consider.”

“We have to be open-minded and consider all alternative available to the community,” Waters said. “I will encourage a thorough review of HCA’s offer, but it does not foreclose further discussions with Novant.”

 

COMMENT FROM AUTHORITY MEMBERS REGARDING BOARD MEETING:

In comments prepared for Wednesday’s Memorial Health board meeting, the Chatham County Hospital Authority said:

While we are unable to comment on the legal issues discussed today, we can say we welcome continuing discussions with Novant or any other health care companies dedicated to the continued delivery of quality services to Chatham County residents.

We were notified last week that Novant had decided to cease all further discussions about a possible transaction with Memorial Health. As of today, we have not heard from Novant. Any conversation or discussion that does not include an interaction with Novant would be merely hypothetical – and not beneficial to the citizens of Chatham County.

As the Hospital and its leadership know, our primary issues with regard to the Novant transaction have been (and remain) that the lease must provide:

1. Any change to the service level designation for Trauma or NICU services at Memorial must not be decided based upon commercial standards that may conflict with the larger mission of the Hospital.

2. Novant must agree not to amend or revise the $295 million capital commitment or obligation to pay off Memorial’s bonds.

3. Novant must guarantee the Memorial bonds (so long as they remain outstanding) and establish a reserve account at Memorial equal to the amount of the outstanding debt.

4. If the lease terminates, the hospital’s assets would revert to the Authority and there must be sufficient cash (and an absence of liabilities) for the hospital to continue operations.  The County cannot be put into a position where the Hospital is laden with so much debt to Novant that a lease default is impractical.

These are reasonable positions that do not impact the operation of the Hospital and place a tremendous amount of trust and goodwill in the hands of the Hospital Board and Management.

Absent a renewed interested by Novant, we are aware (as is Memorial Health) of other interested third parties who have asked to engage with the Authority and Memorial Health to pursue other, strong relationships and commitments to Chatham County.

As trustee for all of Memorial assets, the Authority is eager to move forward with Memorial’s leadership for the long-term betterment of our community.

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