Needles Officials Sign Off On Lum’s Financing Plan For Hospital Purchase

(October 12)  NEEDLES—A combined panel of Needles Hospital Trustees and Needles City Council members late last month accepted Community Healthcare Partner Inc.’s proof of funding for the purchase of the  Colorado River Medical Center.
Immediately after that split vote, Community Health Care Partner principal Bing Lum, Needles Mayor Ed Paget and hospital board president Terri Anderson affixed their signatures to the purchase agreement.
While hospital board members Jeff Williams, Pam Blake and Norma Jean Williams and Anderson voted to recognize Lum’s financial arrangements as adequate, Adela Owensby voting against doing so and Lana Shaw abstained. City council members Shawn Gudmundson, Terry Campbell, Pat Murch and Tony Frazier voted to accept the proof of funding.
Lum did not present a letter from a financial institution documenting the funding. Rather, he provided an uncertified roster of anticipated funding from a multiplicity of sources. He did have two of those funding sources, his brother Larry Lum and Dr. Bertha Gonzales, present to speak to the availability of the financing they would provide. Lary Lum and Gonzales provided bank statements related to accounts they controlled.
Shaw said she did not believe that the presentation of the statements sufficed as proof that the money in them would be committed to completing the project. A brief display of the statements, totaling $4.4 million, was made to the public present at the September 25 meeting.
Another issue that had some city residents requesting that the certification be held up is Bing Lum’s tardiness in qualifying Community Healthcare Partner, Inc. as a nonprofit entity. A  portion of the property upon which the Colorado River Medical Center sits in owned by the Bureau of Land Management. A federal requirement is that the purchaser of that property have full nonprofit status.
Former Needles councilwoman Rebecca Valentine, who led an effort by a qualified nonprofit, Needles Hospital, Inc, to purchase and operate the hospital  only to have that effort fail when financing could not be lined up, insisted that an application with BLM for the land purchase would have to be processed and no waiver on the tax-exempt status could be made.
Valentine said it appeared the city was bending over to accommodate Lum in a way the city had not accommodated Needles Hospital, Inc. The city entered into a previous arrangement with Needles Hospital, Inc., headed by Valentine, to sell the hospital for $3,587,002. Ultimately, that deal fell apart when Needles Hospital, Inc. was unable to close escrow by a stipulated April 26 deadline.
Another entity controlled by Lum, A.M. Pharmacy, which operates contract pharmacies within existing hospitals, had made a competing $3 million bid for the Colorado River Medical Center last year before losing out in that go-round to Needles Hospital, Inc. Lum, a doctor of pharmacology, grew up in Needles and graduated from Needles High School with the Class of 1979.
A.M. Pharmacy is a for-profit company and as such, was at a disadvantage with regard to the takeover protocol for the hospital because Needles voters in June 2010 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.
The city of Needles 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 while under city ownership, representing a financial liability to taxpayers.  The city created the 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.
Lum undertook to form Community Healthcare Partner as a non-profit entity to be able to make a bid in compliance with conditions of Measure Q. Lum said Community Health Care Partner is an entity entirely distinct from AM Pharmacy, although he said he would be able to call upon the resources of AM Pharmacy and the experience he has in having run that company in operating Colorado River Medical Center. 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.
The hospital, together with the 5.71 acres upon which it is located, was covered under the $2.5 million purchase agreement.
While some elements of the community were sympathetic to Valentine and Needles Hospital, Inc., others were looking forward to the city facilitating Lum’s takeover of the hospital. Needles City Manager David Brownlee, who earlier sought from Lum a letter of intent from a financial institution to cover Lum’s purchase, said he now understands that the money Lum will be putting up will come from private investors.
Lum told the Sentinel he believes Community Healthcare Partner will be able to “close escrow by the first of the year.

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