UC Memorial Hospital board to vote on takeover tonight

Brad Hicks • Oct 3, 2012 at 9:47 PM

ERWIN — The fate of Unicoi County Memorial Hospital could be decided this evening, as the hospital’s Board of Control is set to discuss and vote on a letter of intent from Mountain States Health Alliance to acquire the financially-struggling community hospital.

The UCMH Board of Control meeting will begin at 5:20 p.m. in the UCMH boardroom.

On Sept. 26, both MSHA and the UCMH Board of Control announced the public meeting. MSHA’s letter of intent was sent to the UCMH board on Sept. 7 in response to a request for proposal submitted by the board on July 30.

In the 21-page letter of intent, which became available for public review on Sept. 27, MSHA outlines commitments it will make once the letter is approved by the UCMH board and following the closing of UCMH’s acquisition.

According to the letter of intent, MSHA has committed to continue all current operations at UCMH, including its emergency room, as well as its long-term care and home health areas. Another commitment in the letter is MSHA’s commitment to construct a new acute care hospital in the town of Erwin. This care facility’s construction would follow a “comprehensive strategic planning effort” to be completed within the first three years of MSHA ownership and would include input from community and health care leaders, according to the letter. The letter of intent states the 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 these 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 of intent states.

MSHA would also look to repurpose any outdated hospital facilities and would commission a team to determine the demand to support expansion of UCMH’s long-term care facility.

According to the letter of intent, MSHA would also assume the more than $6 million that make up UCMH’s financial obligations and debt, would provide a voluntary contribution of $1 million to be split between the town of Erwin and Unicoi County after the transaction’s closing, and would issue a $1.5 million line of credit for UCMH operational expenses between the execution of the letter of intent and the closing of the acquisition. The letter states the closing would be anticipated to occur on or before Jan. 31, but in no event later than Feb. 28.

Like MSHA and just as it did a little more than four years ago, Wellmont Health System also expressed an interest in acquiring UCMH. Wellmont President/CEO Denny DeNarvaez said Wednesday that Wellmont also received the one-page request for proposal from the UCMH Board of Control, in which the board asked that proposals from the healthcare systems address assumption of all current UCMH operations, assumption of UCMH financial obligations, debt and contractual commitments, and the construction of a new facility.

DeNarvaez said Wellmont responded to the board’s request, providing some preliminary information to continue a line of communications with the board. However, she said Wellmont did not outline the specifics of its proposal, including offering to extend a line of credit, as such proposals were not spelled out in the board’s request for proposal.

“Had we known, we were more than willing to match the offer from Mountain States,” she said.

DeNarvaez also discussed items that Wellmont would have brought to the table if its proposal had been up for consideration. She said Wellmont would immediately assume management of UCMH and quickly bring in services, such as a nuclear camera, as well as cardiology and pulmonary services. She also said any revenues between UCMH and Wellmont would have been split down the middle until the closing of the acquisition.

In the longer-term, DeNarvaez said Wellmont would also commit to the construction of a new hospital in Unicoi County to be located in the “best possible location in the county to recruit physicians,” as she said said Unicoi County lacks physicians and 82 percent of the county seeks healthcare in Johnson City. She said Wellmont officials would continue with Johnson City-based physicians who were seeking an alternative to MSHA in the area to aid in the facility’s development and would work with the community on the plan.

DeNarvaez said the new Wellmont hospital in Unicoi County would have been in place within two to three years of its acquisition of UCMH.

“We would get it up and running rather quickly so that physicians would continue to have a tremendous interest in it,” DeNarvaez said.

Following its acquisition of MSHA, DeNarvaez said Wellmont would have quickly worked to develop an outpatient setting in the area, including the addition of services. She also said the current UCMH building would have been refurbished to expand outpatient services, which account for the majority of healthcare business.

“So we were not abandoning the resources there, but wanted to expand rather immediately to stop some of that financially bleeding,” she said.

DeNarvaez also said UCMH’s acquisition by Wellmont would make better sense from a business perspective, as Wellmont would not be competing with a facility under its umbrella in Johnson City and would be in a better position to recruit physicians. Denarvaez said because Wellmont would have “more to gain” from acquiring UCMH, a deal with Wellmont would create new opportunities and energy, and would aid in bringing new doctors into the county.

“We would want to do what’s best for Unicoi County,” she said. “It makes good sense from a business perspective because we would pick up business we don’t currently have.”

DeNarvaez said she is hopeful that the UCMH Board of Control does not push through a decision at tonight’s meeting, not only to view a full proposal from Wellmont, but also to allow more time for input from the Unicoi County community.

“Our suggestion would be that the board would need to give enough time for people to express their opinions,” she said.

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