Deal For Colorado River Medical Center Transfer Falls Through

NEEDLES—The arrangement to have Needles Hospital, Inc. purchase and operate the Colorado River Medical Center has fallen through and the city is now seeking to sell the facility to a non-profit division of AM Pharmacy, Inc., a for-profit enterprise.
The non-profit Needles Hospital, Inc. lost its opportunity after it failed to meet an April 26 deadline to prove it had the funding to make the purchase.
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. was to take possession of most assets and liabilities of the hospital, including accounts receivable, operating inventory in place, outstanding bills and unemployment obligations. Unassumed debts were to  be deducted from the purchase price, but the city was 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. was given until April 26 to show proof of funding for the purchase of the hospital and until May 25 to close escrow.
“The principal of Needles HospitaI, Inc.did not produce proof of financing by the stipulated deadline,” Needles city manager  David Brownlee told the Sentinel.
Needles Hospital, Inc., headed by Valentine, a former Needles councilwoman, has been seeking to arrange an $8.46 million  loan through the U.S. Department of Agriculture that would allow the non-profit to purchase the hospital and make necessary repairs, including reroofing the building, and upgrades, including putting in new boilers and wiring, to keep it operational.
On April 23, Valentine learned that the Department of Agriculture had not finalized approval of the loan and would not be able to provide  documentation of  the financing by the deadline.
Needles Hospital, Inc. sought to have the deadline for proving it had the financing extended until May 25 and the closing of escrow. In a specially-called meeting on April 27, the hospital board refused to grant that extension, effectively ending Needles Hospital, Inc.’s chance of acquiring the institution. Hospital board chairman Jeff Williams, who formerly served as Needles mayor when Valentine was on the city council, was the lone vote in support of granting the extension.
The city immediately moved to find another buyer for the hospital.
“The hospital board will now enter into negotiations with Mr. Bing Lum, principal of AM Pharmacy,” Brownlee said.
Along with other entities, Needles Hospital, Inc. and AM Pharmacy last year submitted competing proposals for the takeover of Colorado River Medical Center. After the other proposals were rejected, the hospital board on January 5 considered both Needles Hospital, Inc.’s and AM Pharmacy’s offers. The board seriously entertained AM’s overture, by which it proposed to buy the hospital and 5.71 acres of surrounding property without the accounts receivable for $3 million, with any debts deducted from the sale price. AM, which is a for-profit entity, had agreed to create a non-profit arm with which to operate Colorado River Medical Center, and have one of its employees, Bing Lum, who was raised in Needles, oversee the hospital operation. The board, however, rejected AM’s offer by a vote of 2-4 before ultimately accepting Needles Hospital, Inc.’s offer on a 3-2 vote. On January 10, the city council followed the hospital board’s recommendation, and voted to approve the sale to Needles Hospital, Inc.
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 the board of trustees to oversee the hospital, and that panel, together with the city council, has come 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 called for keeping the hospital open and absolving the city of the financial burden of subsidizing the facility by having a non-profit entity selected to run the hospital.

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