NEEDLES—As determined as ever to unburden the city of the financial liability of operating the Colorado River Medical Center, the Needles City Council in recent weeks has taken several steps to ensure the proposed buyer will be able to complete the deal.
On January 8, the city council extended Community Healthcare Partners Inc.’s escrow closing deadline for the hospital purchase. The council also removed two of the members of the hospital board of trustees.
The escrow extension provides Community Healthcare Partners with a further incentive to create  interim lease and management agreements for the operation of the hospital to further facilitate the transfer of responsibility over the institution. It was previously intended that Community Healthcare Partners would come into full possession of the hospital by now, but complications with regard to the transfer of the land upon which the hospital is located have delayed that.
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. 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 until later this year.  Thus, January 3 came and went without Community Healthcare Partners closing escrow. However, according to city attorney John Pinkney, language in the original purchase agreement allows the January 3 escrow closing requirement to be eliminated based upon any government-related delays. That provision of the agreement was invoked and the council extended the escrow closing deadline to February 22.
The Bureau of Land Management is insisting an appraisal of the property be done 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. On the fly, Pinkney has crafted an arrangement by which Community Healthcare Partners is to acquire the hospital property as a land lease until the full transfer takes place. During the gap between the city’s reassignment of the hospital property to Community Healtcare Partners, Lum’s company will serve as the interim manager of the hospital. Community Healthcare Partners will not charge the city for its services in this regard and will instead realize revenue from the hospital’s operation just as if it owned it in full.
Pinkney is to streamline the process and draft the documents for the interim lease and management arrangement in such a way that it does not compromise the original sale agreement or the prospects of the Bureau of Land Management consenting to the land transfer. Community Healthcare Partners will hand over the lion’s share of the $2.577 million to the city to effectuate the hospital purchase to close escrow with the city, though a portion of the purchase price – pertaining to the land purchase – will be withheld. When BLM ratifies the land transfer, the additional money to equal the full $2.577 million will be paid to the city.
The hospital board of trustees joined with the council in the vote to undertake the arrangement and extend escrow to February 22.
The council at the same January 8 meeting on its own voted to remove hospital board members Jeff Williams and Dr. Robert Strecker, effective as of January 11. Williams, a former Needles mayor, and Strecker, a physician whose expertise in medical matters is valued but whose professional standing at times created financial conflicts that prevented him from participating in some votes, were replaced by Georgia Breault and Bob McKeever
The council has also instructed Jon Freeberg, the interim chief executive officer for the hospital, to look into fashioning a “fiduciary and accounting firewall” between the city and Colorado River Medical Center that would prevent financial liabilities at the hospital from having a deleterious impact upon the city’s economic circumstance. This so-called firewall is likely to consist of the city chartering a public corporation or hospital district to oversee the medical center.