Natchez Regional using settlement funds to address pressing needs

Published 12:13am Thursday, September 5, 2013

NATCHEZ — Even as Adams County officials are trying to sell Natchez Regional Medical Center in an effort to bolster the hospital’s long-term health, an NRMC official said the hospital has had to use some of its 2012 settlement funds to address pressing needs.

The undisclosed settlement was reached with NRMC’s former management company, Quorum Health Resources, in November 2012. The county-owned hospital had sued QHR for $42 million, alleging mismanagement on the part of the company forced NRMC into bankruptcy in 2008.

Terms of the settlement were sealed, and how much the hospital netted has not been publicly disclosed, including to the county board of supervisors. At the time of the settlement, hospital officials said they would use the funds for infrastructure improvements.

NRMC Board of Trustees President the Rev. Leroy White said some of the funds have been used to fix an air chiller and to meet payroll.

The cost of payroll in addition to the contributions the hospital has to make to the Public Employee Retirement System forced the hospital to reach into the settlement funds.

“We have to pay the people,” White said. “You can’t say, ‘We didn’t have enough people in the hospital this month, so we can’t pay you.’”

White said he did not know the exact amount that had been expended from the settlement. An NRMC spokesperson was not able to specify the amount by Wednesday evening.

Board of Supervisors President Darryl Grennell said the county board had not been apprised of how the settlement was being spent, and that the board members wanted to know more.

“If (the hospital) is spending this money for this fiscal year, was this part of the budget that we approved, were these numbers a part of that budget?” he said. “We were hoping that the money would be there after the sale of the hospital.”

The supervisors’ attorney, Scott Slover, said his understanding of the law is that the hospital can spend whatever it needs as long as it does not exceed the budget approved by the board of supervisors. The budget did not limit the use of the settlement funds, he said.

However, if the hospital’s expenses are to exceed the approved budget, the hospital will have to bring an amended budget to the supervisors for approval, Slover said.

The hospital board’s attorney, Walter Brown, said the hospital is required to file an annual financial statement in September.

“At the time that we file it, if the supervisors ask to talk about (how the settlement is spent), I am sure we will do that,” he said.

Once the hospital is sold, the remainder of the settlement will be directed to the county as the owner-seller, White said.

But even before the hospital files its financial statement, the county will host a public hearing at 9 a.m. Friday in the boardroom at the supervisors’ offices on State Street to discuss the county’s rationale for putting the hospital up for sale.

Acting on the hospital trustees’ advice, the supervisors have announced the county’s intention to sell the hospital, citing concerns about the costs and logistics of implementing coming changes in health care law. The trustees have also said that the only way NRMC can effectively attract the necessary pool of doctors to the area is if it belongs to a larger health system.

The county received approval from the state of Mississippi to use a stalking horse bidding process to sell hospital, a process that allows the county to negotiate a minimum bid with a potential buyer before the sales process actually opens. If no one outbids the initial offer, the bid will automatically go to the stalking horse bidder.

The county must have a public hearing before it can officially put the hospital up for sale, and Brown said the sale resolution would be adopted after stalking horse negotiations are complete.

Once the resolution is completed, the sale will be advertised for a month, and other interested parties will be allowed to do due diligence into whether they want to bid.

The county has limited stalking horse negotiations to non-profit hospital systems that regularly treat patients from the Miss-Lou area. Health systems that might qualify for the stalking horse process include Oschner Health System, Baptist Health Systems and the CHRISTUS Health System.

Brown said the stalking horse bid would ideally be negotiated before Oct. 1, and the auction would then be able to take place by early November.