MSHA’s letter of intent addresses operations, debt of Unicoi County Memorial Hospital

Brad Hicks • Sep 28, 2012 at 10:54 AM

ERWIN — The construction of a new health care facility, financial assistance, retention of staff and access to resources are some of the items Mountain States Health Alliance has pledged to bring to the table should it assume ownership of Unicoi County Memorial Hospital, according to the 21-page MSHA letter of intent.

MSHA’s letter of intent was sent to the UCMH Board of Control in response to the board’s request from proposal submitted on July 30. The letter became available for public review Thursday, one day after MSHA and the UCMH Board of Control both announced a public meeting to be held next week for the UCMH board to discuss and vote on the letter of intent from MSHA to acquire UCMH.

“MSHA and UCMH have enjoyed a long history of working together to meet the health care needs of Unicoi County residents,” MSHA’s letter of intent states. “The affiliation of UCMH and MSHA is a natural progression of this relationship, which has been fostered and nurtured by the trust our organizations and our leadership teams have developed over the years. We look forward to the Board’s response to this proposal, and eagerly anticipate the opportunity to work together.”

According to the letter of intent, MSHA has committed to continue all current operations at UCMH to include its emergency room, as well as its long-term care and home health areas. MSHA will also assume UCMH’s current financial obligations and debt which, according to the letter of intent, was estimated to be approximately $6,349,262 as of July 30.

MSHA also stated in the letter of intent that it would commit to the construction of a new acute care hospital in the town of Erwin. This would follow a “comprehensive strategic planning effort” to be completed within the first three years of MSHA ownership.

“This timing ideally provides a more informed view of the implications of health reform and allows a better collaborative planning process with the parties involved,” the letter of intent states.

Development of this plan would also involve solicitation of input from local community and health care leaders. The letter of intent states the primary objective of the strategic plan would be to define the services necessary to support the community’s health care needs and identify the facility needs to support those services.

“MSHA is prepared to commit to the construction of a new, state-of-the-art inpatient acute facility in the town of Erwin to meet the needs of the Unicoi County residents consistent with the scope of services identified in the strategic plan,” the letter states. It further states that MSHA would agree to repurpose any outdated hospital facilities. MSHA would commission a team to determine the potential demand to support expansion of UCMH’s long-term care facility, and the definitive agreement between MSHA and UCMH would provide a procedure for repurposing outdated facilities consistent with desires expressed by Unicoi County or the town of Erwin.

The letter states, “At the point in time where an outdated hospital facility is ready for repurposing within the Unicoi community,” there will be consultation regarding possible options. “In previous community hospital transactions where MSHA has committed capital to facility improvements, MSHA has been able to find willing buyers of outdated facilities including the establishment of corporate headquarters for a regional grocery chain and establishment of a community college dedicated to the education of allied health professionals. MSHA will also evaluate the possibility of transferring it to the local school board.”

Following the transaction’s closing, MSHA is also set to provide a voluntary contribution of $1 million to be split evenly between the town of Erwin and Unicoi County and provide the capital to address critical facility and equipment needs and to install MSHA information technology system, integrating UCMH with other MSHA facilities and operations. MSHA has also committed to providing a $1.5 million secured line of credit to be utilized by UCMH for operational expenses between the execution of the letter of credit and closing of the acquisition transaction.

The letter of intent states the closing of the transaction is anticipated to occur on or before Jan. 31, but in no event later than Feb. 28. It further states that once the letter of intent is signed, interim management services will be provided to UCMH by MSHA and, subsequent to closing, MSHA corporate staff services will be made available to UCMH, with staff support offered to include managed care relations, physician recruitment and contracting, marketing, strategic planning, human resources, facility planning and finance.

The matter of hospital personnel is also addressed in MSHA’s letter of intent. It states following the closing, MSHA will make decisions regarding hiring and discharge of UCMH’s CEO and all active employees at UCMH will be employed at “substantially similar pay ranges and benefits as all MSHA team members.” Physicians employed by UCMH will continue to be employed pursuant to their current contracts.

MSHA will conduct due diligence between the time the letter of intent is executed and the closing. The areas to be reviewed during this period include UCMH’s financial performance, contracts, facility maintenance and development, infrastructure and equipment, according to the letter of intent.

The meeting the UCMH Board of Control to consider MSHA’s letter of intent will be held in the boardroom of UCMH this Thursday beginning at 5:20 p.m.

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