Lum Says He Will Buy Colorado Rriver Medical Center As Is

(July 20)  NEEDLES — Community Healthcare Partners, the newly formed non-profit that is seeking to buy the Colorado River Medical Center, will not insist on over a million dollars worth of repairs being made to the facility before the purchase, that company’s founder said.
Bing Lum, a doctor of pharmacology who grew up in Needles and is the principal of AM Pharmacy, which earlier this year was the runner-up in competition to take over the hospital, is also the principal and founder of Community Healthcare Partners.
Lum this week in an exclusive interview with the Sentinel said an earlier report that AM owns Community Healthcare Partners was in error and he further disputed previous representations that Community Healthcare Partners was insisting on the city undertaking what could run to more than a million dollars worth of repairs to the hospital before his group purchases it.
“Structurally, Community Healthcarer Partners is not related to AM Pharmacy at all,” Lum said. “It is a brand new company, its own company. It is a stand-alone non-profit. Basically, I formed it to be the entity that would own and operate Needles Hospital.
“We will purchase the hospital ‘as is,’” Lum continued. “We have done our due diligence with respect to the land, the building and the equipment. What we are set up to do as a company is operate hospitals. We are in the business of making sure they work and are providing a service and are able to continue as a business entity, make money, so they have long term stability. We know the Needles Hospital has a lot of deferred maintenance issues. It has been challenged operationally and therefore  financially for years. What it needs going forward is capital investments and to provide for the health needs of the community.”
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 Valley View Hospital, another facility 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.
In accordance with Measure Q, Needles Hospital, Inc. and AM Pharmacy, owned by Lum, along with other entities 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 Lum, who was raised in Needles and graduated from Needles High School in 1979, 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 of 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. Non-assumed 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. Needles Hospital, Inc. was formed and headed by former Needles Councilwoman Rebecca Valentine.
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 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.
Needles Hospital, Inc. sought 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 to keep it operational, including reroofing the building, structural upgrades,  and putting in new boilers and wiring. The non-profit was not able to produce proof of financing by the April 26 deadline, effectively ending Needles Hospital, Inc.’s chance of acquiring the institution. The city then entered into negotiations with Lum.
Lum’s offer through Community Healthcare Partners for the hospital came in at $500,000 less than the $3 million bid AM made last year. While the city had hoped Community Healthcare Partners, Inc. would offer something close to the $3.6 million figure featured in an appraisal of the hospital and the property it sits on obtained by the city last year, Lum said the $3.6 million figure is unrealistic and inflated, being applicable in a large urban area but not appropriate in an underpopulated rural setting.
Though Community Healthcare Partners is an entity legally distinct from AM Pharmacy, Lum said his experience with AM Pharmacy as a provider of  “outsourced” pharmacy services to existing for-profit hospitals gives him and his non-profit an advantage over Valentine and Needles Hospital, Inc.
“We have been operating for years as a successful company,” Lum said. “We have access to resources as a start up because of our access to our existing company’s capital. We can do that. That was a challenge for Mrs. Valentine. Her non-profit had never done business. It is very challenging to get financing or do something of that nature when you have not had any history.”
The city council is scheduled next week, on July 24, to consider entering into the purchase agreement with Community Healthcare Partners. If the hospital board, which has already approved the purchase agreement then acts quickly to ratify the management agreement for the hospital, Lum said he believes “We could conceivably be in there and working in one week.”
At present, the hospital has one doctor on staff, Ed Paget, who is also Needles mayor. Lum said he will enlarge the hospital staff.
“I am going to bring in doctors,” he said. “That is one of the big pieces of the operation that is missing. There is no specific number, but I will bring in whatever we need, whether it is one or ten specialists. Specialists are what the hospital has lacked for years and years. We are not looking to get rid of anybody. We will continue to employ the existing people and will be hiring new people.”
There will be capital investments as well, Lum said.
“There certainly are some stories about how Lifepoint took all the equipment to its new facility in Arizona,” Lum said. “The hospital was able to get some pieces back. For sure, they lost some stuff but did get some stuff back. One of the big things to replace is the CT scanner. Most likely, I would be taking on that project as soon as I walk through the door. Once we get into place and are up and running, we will start on making repairs to the HVAC [heating, ventilation and air conditioning] system, the boilers and the roof. We will need to apply to the Office of Statewide Health Planning and Development, which is the regulatory body that has 100 percent authority on anything a hospital does. We will need their approval, so I anticipate you will measure our progress in months rather than days.”

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