The purchase arrangement for Colorado River Medical Center between the city of Needles and Community Healthcare Partners, Inc. will likely go forward, despite  further delays, including the Bureau of Land Management’s suspension of the transfer of  2.34 acres of the hospital’s grounds to the purchaser, Needles City Manager David Brownlee told the Sentinel this week.
Community Healthcare Partners, Inc. entered into a $2.577 million purchase agreement for the hospital on August 22, 2012 after a previous sale arrangement to non-profit Needles Hospital, Inc. fell through in April.
The city took back ownership of the Colorado River Medical Center in April 2008 after Brentwood, Tennessee-based Lifepoint Hospitals, a for-profit corporation which had obtained the hospital after the dissolution of the public hospital district that previously operated the facility, embarked on an effort to move the institution’s equipment and personnel to Valley View Hospital, another operation 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.
The purchase agreement with Community Healthcare Partners, Inc., which was founded by Bing Lum, called for an escrow closing deadline of January 3. The full application process for the land transfer has not been completed because of complications besetting the property upon which the hospital is located. The city holds title to the land as well as the hospital itself. However, the hospital was built on what had been Bureau of Land Management Property that had been transferred to the city of Needles under a proviso that the Bureau of Land Management retained a reversionary interest in the property allowing it to reclaim the land if the property is not used for what is deemed “a charitable purpose.”
Indications are that the full land transfer to Community Healthcare Partners will not take place for perhaps as long as another 12 to 18 months. A special joint meeting was held on December 20 involving both the hospital board and city council to determine the advisability of having city attorney John Pinkney modify the original purchase agreement to eliminate the January 3 escrow closing requirement. The hospital board at that point did not sign off on making that extension. Pinkney told both the city council and the board that the agreement includes a provision allowing for possible extensions if there were government-related delays, such as waiting for the BLM approval.
To facilitate the process, Pinkney formulated a plan to augment the original agreement with a future amendment while forging a bridge lease, an interim management agreement and an interim sublease. In this way, Community Healthcare Partners, Inc. was to have purchased as of January 3 (i.e., yesterday)  the hospital itself, but not the actual property it occupies, and was to then  serve as the interim management team for the hospital until such time as the full purchase of the land is accomplished.
When the hospital board balked at that arrangement on December 20, the council took no immediate action. The council did, however, schedule a special meeting for December 27, at which the removal of some of the hospital board members was agendized. Ultimately, on December 27, the city council did not make any removals from the board. A motion to move forward with crafting the documents necessary to address disposition of the hospital building without the underlying land died for lack of a second.
Brownlee this week told the Sentinel that as of yesterday, January 3, a twenty day extension of the deadline to close escrow on the hospital was granted. Brownlee said that prior to January 23, it is anticipated that the hospital board will accept Pinkney’s formula as presented last month or a similar one.
“We certainly hope they can pass such a measure,” Brownlee said. “It will most likely take a year to 18 months for the land patent to be transferred to the new owner. I think what will be done is we will classify the arrangement with Community Healthcare Partners as a land lease until the full transfer takes place.”
While serving as the interim manager of the hospital, Community Healthcare Partners, Inc. would not charge the city for its services, but would be eligible to realize revenue from the hospital’s operation just as if it owned it in full.
The Bureau of Land Management is insisting an appraisal of the property be done at its behest but at Community Healthcare Partners, Inc.’s expense.
Lum indicated his company will carry out whatever needs to be done to effectuate the transfer and that Community Healthcare Partners, Inc. will proceed with each of the tenets of the August agreement, adjusting to whatever further requests are made by the Bureau of Land Management or any other parties.
Among some city officials there was concern that further obstructions would dampen Lum’s resolve, leaving the city with the responsibility of continuing to run the hospital. There was some degree of impatience with the hospital board over its unwillingness to act with alacrity as events unfolded.
To some extent, the board members were reacting to the protests of former city councilwoman Rebecca Valentine, the founder and president of Needles Hospital, Incorporated, the non-profit group that in January 2012 had entered into a previous arrangement to purchase the hospital for $3,587,002 but which saw that deal elapse when it was unable to close escrow by a stipulated April 26 deadline.
On December 20, Valentine said she thought it unfair that the board and the city council were contemplating allowing Community Healthcare Partners, Inc.’s escrow deadline to be extended since the board and the council in April had denied her group’s request for a similar extension. She suggested that Needles Hospital Inc. is prepared at this time to swoop in and complete the purchase of the hospital.