NEEDLES— (January 29) The city and National Healthcare Partners, Incorporated are facing a February 22 deadline for the final closing of escrow on the purchase of the Colorado River Medical Center.
The agreed-upon sale has been beset with complications, which included the Bureau of Land Management’s approval of the appraisal and purchase of the property. The Bureau of Land Management is involved because a portion of the property upon which the hospital was originally built was federal land and covenants on the use of the property contained restrictions if the hospital is to function in any other role than a community non-profit medical center.
The Bureau of Land Management signing off on the deal in a timely fashion is of critical importance because the sale agreement stipulated that if the closing deadline of February 22, 2015 is not met, the sale of the property will not be effectuated and what will exist in its place is a long term lease.
While it now appears that the local office of the Bureau of Land Management has accepted an appraisal of the property and is amenable to National Healthcare Partners, Incorporated’s purchase, the local office’s recommendation must be passed along to the state Bureau of Land Management office, which must confirm the local recommendation before forwarding its recommendation to the national office, which must ultimately okay the sale. Already more than 22 months have passed as the local office has carried out its due diligence with regard to the matter. It was originally anticipated that the Bureau of Land Management would grant its approval of the pro forma for National Healthcare Partners’ takeover of the hospital by March 26 2013 and in no case later than June 30, 2013. The interminable delay and the fast approaching deadline has many observers believing that it is unlikely National Healthcare Partners will be able to take on ownership of the hospital without some amendment to the sales agreement.
After a competitive process, the city in 2012 agreed to Community Healthcare Partners, Incorporated buying the hospital for a total of $2.577 million.  Under that agreement, Community Healthcare Partners, Incorporated was to pay $2.2 million at a so-called first closing to cover the value of the hospital itself and $377,000 at a second closing to cover the cost of the real property.
The initial $2.2 million payment was made in June 2012 and there was progress toward making the second payment to the city, which owns the totality of the property the hospital is situated on. Nevertheless, the Bureau of Land Management held reversionary rights, which created the need for the two-step closing process, as it was anticipated there would be a slight delay in the clearance for the sale being gotten.
The two-part closing was undertaken because the city was running up considerable expense as a consequence of its ownership and continuing management responsibility at the medical center and there was a priority on stanching the hemorrhaging of red ink as soon as was practical.
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 under the city’s guidance had lost money, representing a financial liability to the city. The city created a  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 was 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 2011, a nonprofit group, Needles Hospital, Inc., led by former Needles councilwoman Rebecca Valentine formed. Needles Hospital, Inc. offered to purchase the Colorado River Medical Center and the 5.71 acres it sits upon 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.
Needles Hospital, Inc. lost its opportunity after it failed to meet an April 26, 2012 deadline to prove it had the funding to make the purchase.  AM Pharmacy, headed by Bing Lum, had put together a competing proposal to purchase the hospital and run it as a for-profit entity.  The city council turned down that proposal in January 2012 in favor of Needles Hospital, Inc.’s offer. After the Needles Hospital, Inc. bid fell through, however, the city council agreed to accept a revamped proposal by Lum which entailed AM Pharmacy creating a non-profit wing, National Healthcare Partners, Incorporated, to run the hospital.
Multiple efforts by the Sentinel to reach Lum this week were unsuccessful.
While AM Pharmacy/National Healthcare Partners, Incorporated were fully amenable to paying the $377,000 for the real property, an element of the second closing entailed an appraisal of the land. The city and National Healthcare Partners, Incorporated split the cost of doing that appraisal.  The appraisal stated the fair market value of the property is $155,000.
Other costs related to the property have been bundled into the sum Community Healthcare Partners, Incorporated will put to complete the second closing. That figure is now calculated at $287,000.