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Hospital sale of home health license finalized

Thursday, January 19, 2012

County Attorney Dwayne Plumlee looks on as County Judge Charles Willett signs an emergency ordinance into law, approving the Fulton County Hospital Board decision to sell its home health license for $1.7 million. Quorum Court approved the ordinance on Jan. 11, allowing the sale proceeds to be placed in escrow. The funds should become available for hospital use by mid-March. Photo by Richard Irby [Order this photo]
After 14 long weeks of back and forth negotiations, a written agreement has been finalized and approved, allowing the Fulton County Hospital to sell its home health license to a Louisiana company for $1.7 million dollars.

Fulton County Judge Charles Willett breathed a sigh of relief as a special Quorum Court meeting began on Wednesday, Jan. 11.

"I call this special meeting to order to approve an emergency ordinance, which is Ordinance 2012-2. This is for the sale of the home health license for Fulton County Hospital," Willett said, with eight of nine Justices of the Peace present.

The ordinance outlined the agreement, which will give the hospital a much needed infusion of cash to deal with mounting debt which has threatened the hospital's future.

The ordinance states that the Fulton County Hospital Board of Governors has the authority to sell the state-issued home health license it owns, and "the Board has determined it is in the best interest of the Hospital to sell the home health license...to Arkansas HomeCare of Fulton, LLC...for a purchase price of $1,700,000."

The ordinance states that "the County claims no ownership interest in such license. The proceeds from such sale shall be delivered to the Hospital."

The measure authorizes the County Judge to execute the Agreement and other documents related to the purchase and, with the County Clerk, take action to publish the Ordinance in The News, as required by law.

Finally, an emergency clause explains, "There is an immediate need for the Hospital and the County to effect the sale of the home health license and home health care business...to apply the proceeds of such sale to the use and benefit of the operation of the Hospital."

At the conclusion of the short meeting, Judge Willett said the $1.7 million would go immediately into an escrow account.

The ordinance will be published in the newspaper for two weeks, and citizens or others will have a 60 day referendum period in which to challenge the license sale.

At the end of the 60 day period, the funds will go from escrow to the hospital, if no challenges are made.

"The hospital should have the money by mid-March," Willett said. "I'm just glad we finally got all the documents done and the ordinance voted on, because the hospital really needs the money."

"We will soon be paying off a lot of debt and starting off with a clean slate," is how interim hospital administrator Kim Thompson sees the future, after Quorum Court's vote.

The idea of selling the home health license came up unexpectedly, after the board rejected an offer from the Baxter Regional Medical Center to manage the hospital.

Baxter Regional's offer was declined on Sept. 29, on board member Danny Perryman's motion that, "...we remain independent, and that any and all proposals be declared null and void."

Shortly after that meeting, Perryman and Judge Willett disclosed that the LHC Group, which was leasing the hospital's home health license for $5,000 a month, had expressed an interest in buying the license.

At an Oct. 3 special meeting, the board accepted a Letter of Intent from the Louisiana company to buy the license for $1.7 million, and close the sale by Dec. 1.

As hospital and corporation attorneys began work to complete sale details, the Ozarks Medical Center entered the picture.

After being contacted by Judge Willett, OMC offered, on Oct. 12, to manage the hospital without charge - for a 60 day period, while a long term management agreement could be worked out.

OMC, which had earlier declined to make a management offer, sees the home health license sale as a way for the hospital to pay off its debts, and give time for OMC to work with the board to reduce expenses and increase patient volume.

The license sale was not concluded by the hoped-for Dec. 1 date, raising fears there were complications that could cause the deal to fall through.

OMC sought a clause in its three year management agreement that would allow it to terminate the agreement if the license sale was not completed, and the funds from the transaction were not available within three months of approval of the management agreement.

The management agreement requires the hospital to put $150,000 from the license sale in escrow to create a fund to pay OMC's $10,000 a month management fee.

The hospital board approved the management agreement, and authorized OMC to make contact with the LHC Group, to try to iron out problems holding up completion of the license sale.

Those conversations appeared to get the process moving and, on Dec. 29, a special Quorum Court meeting was scheduled to finally approve the sale.

That meeting was cancelled at the last minute, however, as LHC's attorneys continued to raise questions about the sale process.

According to Judge Willett, LHC wanted county government to be listed as the seller, and to be responsible for any claims that arose after the sale.

The county insisted it was the hospital board's responsibility to sell the home health license, and the county, as owner of the property, would only approve the board's action.

While the needed ordinance was not ready when Quorum Court met on Monday, Jan. 9, all documents were finally agreed upon for the special meeting called two days later.

Besides putting $150,000 in escrow for OMC's management fee, the board has discussed paying off the $175,000 balance owed on a Bank of Salem line of credit, a $90,000 reimbursement overpayment owed Medicare, and about $400,000 owed to various creditors.

Other expenses the license sale may cover are $150,000 (maximum) for salary and benefits of a new administrator, yet to be hired, and repayment of a $250,000 loan from White River Planning and Development, to help with cash flow while the hospital awaited license sale revenue.

Those items total around $1.2 million.

OMC has proposed a number of changes to generate additional revenue and reduce expenditures. Interim administrator Kim Thompson indicated at the December board meeting that money was very tight and the revenue from the home health license will be a short-term fix.

"Once we pay these notes down, and once we pay our accounts payable of almost $400,000, that $1.7 million is getting eaten into very rapidly," Thompson told the board.

Judge Willett said the license sale revenue goal should be to pay off the hospital's bills, with hopes of keeping up with debt in the future.

That is also OMC's goal.

"We will start to do more advertising to get the word out that this is a good hospital, and you can get very good care here," Thompson told The News. "Once we catch up on our debts, we will work to break even, if not make a profit."

The hospital board's next meeting is scheduled for Monday, Jan. 30 at 6 p.m., in the hospital conference room.

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What was the name of the Co. that was going to take over 10 or 12 years ago. Was it Amerus?

-- Posted by dabic on Thu, Jan 19, 2012, at 1:21 PM

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