NEEDLES—(March 9) The Needles City Council has extended until August 31 Community Healthcare Partners, Inc.’s deadline for closing the final element of the sale of Colorado River Medical Center.
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. To redress the financial liability to the city, the city council 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 $2.577 million purchase proposal by Lum which entailed AM Pharmacy creating a non-profit wing, National Healthcare Partners, Incorporated, to run the hospital.
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 a portion 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 to a portion of the hospital grounds, including that portion upon which the emergency room is located. This created the need for the two-step closing process, as it was anticipated there would be a slight delay in the clearance for the total sale being completed.
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.
Currently, the hospital is under a lease while Community Healthcare Partners. Inc. addresses some outstanding items that are required by the Bureau of Land Management for the purchase.
According to city attorney John Pinkney, the original agreement between the city and Community Healthcare Partners, Inc. was to be fully closed by February 28, 2015. If the second closing couldn’t be completed by February 28, 2015, a long term lease of 28 years with Community Health Care Partner, Inc. at a rate of $1 rent per year was to be effectuated.
At the city council’s February 24 meeting, an extension of that deadline until August 31 was agreed to.
Bing Lum, the first principal of Community Healthcare Partners, Inc. and the executive vice-president of the Colorado River Medical Center, said Community Healthcare Partners, Inc. has proven a good steward of the hospital and that the company had fulfilled all of the elements of the arrangement to take over the hospital. He said Community Health Care Partners will be better able to guarantee that it can meet the long term needs of the community once it is in full possession of the medical center.
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 has been 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. Because of the delay and the approaching deadline, city council agreed to an amendment of the sales agreement with National Healthcare Partners.