NEEDLES–The Needles City Council last week rejected the hospital board of trustees’ request to have the city guarantee a $1 million loan for Colorado River Medical Center.
The hospital board of trustees, at the behest of former interim chief executive officer Jon Freeberg, voted on January 25 to ask the city to make the loan to tide the hospital over until the medical center’s sale to the non-profit Needles Hospital Inc. is completed.
The city council in January voted to sell the Colorado River Medical Center and the 5.71 acres it sits upon to Needles Hospital Inc. for $3,587,002. For that amount, Needles Hospital Inc. will purchase most assets and liabilities of the hospital, including accounts receivable, operating inventory in place, outstanding bills and unemployment obligations. Unassumed debts will be deducted from the purchase price but the city is to keep any cash in the hospital’s coffers at the time of sale.
On January 27, the city, represented by Mayor Ed Paget, and the board of hospital trustees, represented by chairman Jeff Williams, and Needles Hospital, Inc, represented by Rebecca Valentine,  signed a purchase agreement, opening escrow. Needles Hospital Inc. has until April 26 to show proof of funding for the purchase of the hospital and until May 26 to close escrow.
Interim hospital chief executive officer Jon Freeberg’ wanted the city to seek the loan through United Health Care to guarantee that the hospital remains open until Needles Hospital Inc. can take over operations and so that the hospital can come into compliance with federal requirements related to record keeping, billing and patient management at the hospital.
The city took on ownership of the Colorado River Medical Center in April 2008 after Brentwood, Tennessee-based Lifepoint Hospitals, a for-profit corporation, embarked on an effort to move the institution’s equipment and personnel to another hospital it owned in Arizona, roughly 12 miles from Needles.
Because of long-running inadequate billing practices, including failures to invoice Medicare and Medi-Cal as well as insurance companies and patients in a timely fashion, the hospital has lost money, representing a financial liability to the city. The city created a board of trustees to oversee the hospital, and that panel, together with the city council, came to a consensus that spinning the facility off to an independent operator is the best solution for ensuring that the community has adequate medical care without soaking the taxpayers.
In June 2010, Needles voters passed Measure Q, which was  intended to keep the hospital’s doors open and absolve the city of the financial burden of subsidizing the facility. Measure Q mandated that a non-profit entity be selected to run the hospital.
Freeberg was pressing for the loan to be taken out at this point because, he said, by obtaining the loan and acquiring computerized record keeping, billing and patient management systems, the hospital could qualify for reimbursement of up to $750,000 for that equipment and software. He said the hospital must be compliant with federal standards in record keeping and billing by 2014. The council members, however, were reluctant to encumber the city any further with regard to the hospital’s operations. Councilman Jim Lopez pointed out that the hospital will no longer be owned by the city in 2014 and that the city had agreed to sell the Colorado River Medical Center to Needles Hospital Inc. to wash its hands of the financial liability the hospital represents.
Upon councilman Tony Frazier’s motion, the council at its February 14 meeting voted unanimously to not seek or sign for the loan.