Decision delayed on MSHA proposal to acquire Unicoi County Memorial Hospital

Brad Hicks • Oct 4, 2012 at 10:29 PM

ERWIN — After more than an hour of discussion, including input from Unicoi County residents and officials, the Unicoi County Memorial Hospital Board of Control opted to table its consideration to sign a letter of intent from Mountain States Health Alliance to acquire the financially-struggling community hospital at a meeting held Thursday.

Instead, the board will meet again on Oct. 18 in a larger venue that the UCMH boardroom to further discuss the MSHA proposal. The board will also accept proposals from other health care entities interested in acquiring UCMH until Oct. 11.

UCMH Board of Control Chair Glenn Tilson opened the meeting by stating to the crowd of more than 50 gathered in the UCMH boardroom that the nearly 60-year-old hospital had developed financial problems several months ago, leading the board of control to send requests for proposal to Mountain States Heath Alliance and Wellmont Health System on July 30 in regards to possible acquisition of UCMH.

He said the letter of intent from MSHA, which was received by the board in early September and included commitments such as assumption of UCMH’s more than $6 million in financial obligations, the construction of a new acute care facility, voluntary contribution of $1 million to be split between Erwin and Unicoi County, and issuance of a $1.5 million line of credit, met and exceeded the requests the UCMH board had spelled out in its RFP.

Developer Brian Dunbar asked Tilson if the public was going to be allowed to speak at the meeting.

“We are not renegotiating,” Tilson said. “We have already looked at both proposals and the board feels the one that was submitted by Mountain States is more adequate and is the one that we’re considering here tonight.”

While board member Jimmy Erwin said the 20-page proposal submitted by MSHA trumped the five-page proposal submitted by Wellmont, he made a motion that those in attendance be allowed to speak and ask questions, a motion that was seconded by board member Sue Jean Wilson and approved by the board.

“The citizens and employees deserve the right to voice to this board what they want to say,” Erwin said.

One of the first in attendance to speak was Steve Hopland, CEO of Johnson City-based Medical Care and representative for Qualuable. Hopland said his company had expressed prior and recent interest in acquiring UCMH, but it was not provided with the RFP information sent out by the board in July. He urged the board not to rush into making a quick decision due to a cash crunch and take the time to explore other options besides MSHA.

“This is a huge change to health care in this community and this whole region,” he said. “This isn’t just about Unicoi, this isn’t just about Washington County, Carter County, the surrounding areas. This is the whole region, so I just think you should be very careful about the decision you’re making. Don’t make it quickly.”

Unicoi County resident Star Meigs asked that the board not make what she called a “hasty decision” and take the time to consider what is best for the county’s residents.

“You’re putting their health care on the line,” she said.

Also in attendance was Wellmont President/CEO Denny DeNarvaez, who said the UCMH board’s one-page RFP and information provided by the board did not provide enough information for Wellmont to do its “due diligence” in submitting a proposal. She said UCMH has had a long-standing relationship with MSHA and called this relationship, coupled with limited information provided in the board’s RFP, “sketchy.”

“And so one of the things, quite frankly, for us to even get information was very, very difficult,” she said. “So our proposal, quite frankly, reflects exactly the information we received as well. We have a total of four pieces of paper, no relationship previously, so I apologize if it was not as robust as it might have been, but we fully expected you to call us in to discuss this proposal so we could have more insight into what it is that you’re trying to accomplish.

“Quite frankly, the fact that you’ve had a relationship with Mountain States as many years as you have and they let you get in this position, I can’t imagine why they are considered a credible partner.”

Wilson made the motion the meeting be tabled and moved to a larger venue. She said when discussions about a possible acquisition from Mountain States first began, she commented that most Unicoi Countians did not favor the health system. She also said the board must consider what’s in the best interest of the county as a whole.

“I understand (the hospital has) always been in the town of Erwin from the time it was up next to the stadium until here, but it’s not called Erwin Memorial Hospital,” she said. “And I think we need to take a step back and regroup.”

While Wilson’s motion was seconded by Erwin, Tilson said the board already had a solid proposal in hand and was set to vote on it Thursday.

“I personally don’t think that would be fair, really, because we have a proposal that was submitted that exceeds our request, that would meet our needs, that would keep us open, and that’s the best proposal we have,” he said.

Town of Unicoi Alderman Mark Ramsey said he would caution the board against moving forward with the Mountain States proposal Thursday because other health care entities had expressed interest in the hospital and said Hopland was not allowed the opportunity to submit a proposal.

“Mountain States has clearly, based on what the board has divulged here tonight, bought your vote with $1.5 million,” Ramsey said.

Like Ramsey, Unicoi County Mayor Greg Lynch voiced concern and asked that the board consider tabling its consideration of MSHA’s letter of intent.

“I think you have legal issues here,” Lynch said. “I think there wasn’t an RFP put out for everybody to bid on and, believe me, I’ve been through this before. I had to learn this the hard way.”

“I don’t think those of use who are speaking up are anti-Mountain States,” Dunbar said. “We just want a fair process, and I haven’t seen that.”

MSHA Corporate Director of Communications and Marketing Shane O’Hare said MSHA’s integrity is solid.

“To hear some of the comments that are made about Mountain States hurts me as an individual, as well as an employee, because I believe in this organization,” O’Hare said. “Mountain States has stayed out of Unicoi County because, frankly, we were not asked to come in and help until help was wanted. We’ve never forced ourselves on this community, and it was only at the opportunity when we were asked to come in did we.”

UCMH board member Russell Brackins voiced concern that tabling a decision may lead to MSHA withdrawing its offer. While fellow board member Dr. Frank Wegman agreed that it is a risk and said the board’s primary goal is to keep UCMH from closing, he favored delaying the decision.

“I know the risk we’re taking,” he said. “This may be our one shot. It may not.”

While a motion to delay a decision until another meeting can be held on Oct. 18 was approved, a motion to allow the board to receive other proposals was split between the six board members present, with Tilson, Brackins and Roland Bailey voting against. Board member Todd Love was not present at Thursday’s meeting.

After some further discussion, Brackins changed his vote, which will allow UCMH interim CEO Jete Edmisson to receive acquisition proposals from other health care entities until Oct. 11. The venue at which the Oct. 18 meeting will be held was not specified in the motion approved.

Following the meeting, DeNarvaez said she is glad Wellmont will have the opportunity to submit a full proposal to the board, one that she feels could provide a long-term solution to the county’s hospital quandary. She also said she was concerned that only two health care systems were given the opportunity to submit proposal information to the UCMH board.

“I think, being a public hospital, everyone should have an equal opportunity to put in an offer and a proposal and, apparently, that didn’t happen,” she said.

O’Hare said after the meeting that Wellmont received the same RFP as MSHA, and it was expected that the board would approved MSHA’s proposal. He said a member of the board had advised MSHA President/CEO Dennis Vonderfecht that he need not be present at Thursday’s meeting, as the board could pursue the initiative on its own.

“It was disappointing to hear the board identify that we had submitted a very robust proposal and that Wellmont had submitted a five-page proposal with the anticipation of further information being generated,” he said.

O’Hare also said MSHA senior leadership will likely meet some time this morning to discuss what impact the UCMH board’s decision will have on its proposal.

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