Officials explain selling as only option
Published 12:37 am Thursday, August 28, 2008
NATCHEZ — The answer is obvious for Natchez Regional Medical Center, officials say, but that doesn’t mean there aren’t more questions on the table.
It’s time to sell, NRMC CEO Scott Phillips said at a public hearing Wednesday night.
The Adams County Board of Supervisors had to host the hearing before they can vote to sell the county-owned hospital. Approximately 50 people attended the hearing, including citizens and county officials.
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Due to mismanagement, a legal structure that prevents the hospital from the ability to borrow money, the competitive nature of multi-hospital systems and overstaffing, the hospital found itself in a financial rut.
Phillips said because the hospital is a stand alone hospital — not part of a large medical system — it has a hard time attracting physicians.
As a result, the hospital is understaffed with physicians and has wasted exorbitant amounts of money trying to recruit and retain doctors.
In the four months since Phillips came on board, the hospital has been trying to dig itself out of a massive hole.
“A lot of progress has been made,” Phillips said.
Physician and vendor contracts have been either renegotiated or canceled, the deficit has been brought down and facility improvements have begun.
“We’re not in crisis at this moment,” he said.
Now that the hospital has stopped its downward spiral, the board of supervisors had four choices on what to do with it — self-manage it, hire a management company, lease it or sell it.
Phillips said there were many benefits to sale.
A qualified buyer who purchased NRMC would invest millions of dollars in the facility inevitably causing growth, Phillips said.
The Rev. John Larson could attest to that, he said at Wednesday’s hearing.
Prior to moving to Natchez, he lived in Columbus, where a two-hospital system was in the exact same crisis as Regional.
The system was sold to a Baptist multi-hospital system and what happened next was amazing.
“It was a dramatic change,” he said. “The hospital came alive. It blossomed and is one of the best things that happened in (that) county.”
With growth comes more jobs and expansion of medical services, Phillips said.
Phillips estimated the hospital would sell for between $25 and $35 million.
Phillips said if the hospital hypothetically sold for $30 million, after paying off its debt, between $10 and $11 million would go into the county’s general fund.
“I don’t see any downside to Adams County to sell the hospital,” he said.
Hunter Fordice, president of Fordice Construction Company — one of the hospital’s vendors — was worried that he would not get his money owed to him.
He began construction work for the hospital in November but ceased work in February because he hadn’t been paid.
He said he is owed approximately $400,000.
“This will break me,” he said. “That’s hard to stomach right there.”
Phillips assured Fordice he will be paid. But first, a buyer for the hospital must be identified.
To sell the hospital supervisors must pass a resolution, then bidding and soliciting of buyers will begin.
Once buyers show interest, they’ll enter into a confidentiality agreement, which will allow them to review NRMC’s financials.
The hospital board and the supervisors will select the buyer and enter into a purchase contract with the company.
Only then, can the hospital go to bankruptcy court with purchase contract in hand, and file for bankruptcy.
Phillips said its key to have to contract because it proves to the court that the hospital will and can pay its debt.
After they file for bankruptcy, they will have an auction among the qualified buyers.
Phillips said if no one bids higher than the buyer they’re in a purchase contract with, the sale will be closed.
If another company bids higher and is accepted, the hospital will reimburse the first contracted buyer.
Phillips said he hopes to conclude bankruptcy proceedings by the end of October.
Fordice was still concerned about getting paid.
Phillips said that usually under normal bankruptcy standards, it allows a business to be debt-free, but not in this case.
“We’re pretty confident we’re going to pay back vendors 100 cents on the dollar,” Phillips said. “We intend to honor all our debts.”