UC Memorial Hospital board to meet tonight to cover legal bases on sale

Brad Hicks • Oct 10, 2012 at 12:15 PM

ERWIN — The deadline for health care entities interested in acquiring Unicoi County Memorial Hospital is approaching, and the UCMH Board of Control is slated to take action tonight that the board has its legal bases covered when the transaction occurs.

The UCMH Board of Control will meet in a called session at 5 p.m. in the UCMH boardroom. The purpose of this meeting is to discuss and approve giving board Chairman Glenn Tilson authority to engage legal counsel in the transaction of the hospital.

UCMH Board of Control Secretary/Treasurer Russell Brackins said this move is being considered by the board to ensure that it has legal representation when it executes an acquisition contract with whatever health care organization the board decides to go with.

“We’re getting someone who has had experience in acquisitions,” Brackins said.

According to a notice announcing tonight’s called meeting, following adjournment of the called meeting, the board will go into a closed strategic planning session.

This meeting will be held on the eve of the deadline for health care entities interested in acquiring UCMH to submit their proposal to UCMH interim CEO Jete Edmisson. Edmisson said as of Tuesday afternoon, no proposals had been turned in to his office. He also said the board hopes to have proposals submitted by the close of business today.

Last Thursday, the UCMH Board of Control met for the purpose of discussing and voting on a letter of intent from Mountain States Health Alliance to acquire UCMH. This followed a request for proposal sent by the board to both MSHA and Wellmont Health System in late July seeking what each entity would bring to the table if it were to acquire UCMH.

MSHA President/CEO Dennis Vonderfecht said Friday that MSHA’s letter of intent was submitted to the UCMH board on Sept. 7, and the board’s executive committee opted to move forward with MSHA’s proposal in a subsequent strategic planning session. Vonderfecht said the proposal was then informally accepted by the full board, and Thursday’s meeting was held for the board to formally accept the proposal.

In its letter of intent, MSHA committed to assume more than $6 million in UCHM financial obligations and debt, construct a new acute care facility within the Town of Erwin, offer a voluntary contribution of $1 million to be split between the Town of Erwin and Unicoi County, and issue a $1.5 million line of credit for UCMH operational expenses after execution of the letter of intent.

However, after Thursday’s meeting was opened to public comment, both Steve Hopland, CEO of Medical Care and a representative for Qualuable, and Wellmont President/CEO Denny DeNarvaez spoke about the interest their respective entities have in acquiring UCMH.

Hopland said his organization had expressed previous and recent interest in acquiring the hospital, but it was not provided with the RFP information sent out by the UCMH board in late July.

DeNarvaez said the one-page RFP lacked detail and the board did not provide enough information for Wellmont to do its “due diligence” in submitting a proposal. She also said that the proposal submitted by Wellmont reflected the information with which it was provided.

After further public comment and discussion, the board voted to table consideration of MSHA’s letter of intent and hold an Oct. 18 meeting in a larger venue than the UCMH boardroom. The board also eventually voted to allow Edmisson to accept proposals from other health care entities interested in acquiring UCMH until Oct. 11.

Vonderfecht said Friday that MSHA officials were “disappointed” by the board’s move to delay action, but he called on the board to stick to its original process and approve the MSHA proposal. He also said if Wellmont is permitted to submit another proposal, MSHA should have the chance to also do so.

MSHA spokesman Ed Herbert said Tuesday that MSHA’s stance has not changed since Friday. He said Qualuable is not a viable option. Vonderfecht said Qualuable is made up on a group of physicians and, under federal law, it is illegal for physicians to own hospitals. Herbert also said Wellmont has now had two weeks to review MSHA’s letter of intent, which became available for public review on Sept. 27.

Herbert said physicians in the area have expressed support of MSHA acquiring UCMH and said the two entities have a long-standing relationship.

“They know us, they know our doctors, they know our hospitals,” he said. “They do not know Wellmont.”

DeNarvaez said Tuesday that the proposal initially submitted by Wellmont in September was submitted to outline Wellmont’s immediate assumption of management of UCMH and allow time for the submission of a full proposal. She said Wellmont now has a better understanding of what the UCMH board is seeking and said Wellmont fully intends to submit a “compelling” proposal to the board.

“So we’re excited we’re going to have the opportunity to submit this proposal,” she said.

Like Herbert, DeNarvaez said Wellmont has received support from area physicians regarding its possible acquisition of UCMH. She also said Wellmont would work with its physicians and officials with the town of Erwin and Unicoi County to determine the best location for the construction of a new Wellmont hospital, with use of UCMH continuing after the acquisition.

DeNarvaez also questioned the process that led up to the board’s consideration of MSHA’s proposal last Thursday. She said MSHA’s letter of intent was dated Sept. 26, though the board had stated the letter was submitted on Sept. 7. She also said only the UCMH board’s executive committee, and not the full board, was allowed to view this proposal prior to it being provided to the full board. UCMH Board of Control member Sue Jean Wilson made reference to this at Thursday’s meeting.

“It was given to us cold,” Wilson said Thursday of the proposal. “We had not had time to go through it.”

“I am highly suspicious of the process used,” DeNarvaez said Tuesday. “That said, I don’t care as long as we have an opportunity and it’s a fair opportunity.”

Tilson could not be reached Tuesday for comment.

Between this Thursday’s proposal submission deadline and the board’s Oct. 18 meeting, the UCMH Board of Control will meet in a regular session this Monday at 4 p.m. in the UCMH boardroom. According to the meeting notice, the board will immediately move into a strategic planning session for the purpose of discussing Spectrum Health Partners’ business assessment of UCMH. The meeting will be reopened for regular business discussion at 5:20 p.m., which will be following by a second strategic planning session.

Tennessee Press Association Public Policy Director Frank Gibson said state laws passed several years ago allow public hospitals to meet in closed sessions. Gibson said these planning sessions must coincide with open public meetings at which the board must vote to hold the planning session and divulge its purpose.

Gibson said action cannot be taken during these strategic planning sessions and the board cannot make a decision until seven days after information to be considered has been made public.

Tennessee Code Annotated 68-11-238 states that action by the board of the hospital “adopting a specific strategy or plan shall be subject to the open meetings laws and the adopted strategy or plan, and the studies that were considered in the adoption of the specific strategy or plan, shall then be subject to the public records laws. The records shall be available for public inspection at least seven days before any vote to adopt such strategy.”

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