Monday’s bids mark step into future for hospital

Published 12:18 am Sunday, November 16, 2008

NATCHEZ — The future for Natchez Regional Medical Center begins Monday.

By 5 p.m. any potential buyers will have submitted bids, and the process of selling the county-owned hospital to a private or non-profit organization will move forward.

Hospital and county officials first began talking publicly of NRMC’s financial troubles in February.

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A management change was made and an expert in rebuilding was brought in.

And Monday evening, hospital CEO Scott Phillips should have a pretty good idea of what groups are interested in buying the hospital, and how much they’ll be willing to pay.

In a small meeting with hospital employees Thursday, Phillips told the group he felt confident the hospital would have promising bids by Monday.

“I have every reason to be confident,” Phillips said.

Phillips whose company, Healthcare Management Partners, specializes in hospital turnarounds said the sale of NRMC has generated a great deal of excitement and buzz in the buying community.

As of Thursday, eight parties had contacted the hospital and requested the preliminary information that could ultimately lead to their bidding on the facility, Phillips said.

While there are eight interested parties that does not mean all eight parties will submit a bid.

Phillips said from the group of eight, he expects three to five bids will be submitted.

Of those eight parties four are from what Phillips calls “sophisticated buyers,” meaning they are part of large hospital systems.

The remaining three are non- sophisticated, meaning they are likely non-profit groups with little hospital experience.

Once the bids are received they’ll be reviewed to determine which bidder will best suit the needs of the county.

But the bidder who submits the highest purchase won’t necessarily be selected as the buyer.

Phillips said the hospital will look for the “highest and best bidder.”

When advertising the hospital, Phillips outlined criteria — such as future development in the facility — that will be weighed along with the purchase price to get the best bidder.

On Wednesday, Phillips said the president of the supervisors, president of the hospital board of trustees and each board’s attorneys would sit down, likely on Tuesday, to review the bids.

But just reviewing the bids isn’t all that goes into the process.

Phillips said it’s common to call tentative buyers back and negotiate terms of the sale.

After that, possibly this week, Phillips will meet with the supervisors and hospital board to make his recommendation on which buyer has made the best offer.

Once that’s done, it’s up to the supervisors.

President of the Adams County Board of Supervisors Henry Watts said he felt it was important to seek the input of the hospital board before the supervisors took a vote on Phillips’ recommendation.

However, the supervisors are not legally bound by any decisions made by the hospital board.

Once the board selects a buyer the speed at which the sale process progresses depends on that buyer.

If the buyer is sophisticated, and a part of a large hospital system, then they’ll likely be versed in the sale process.

In that scenario Phillips said entering a sales agreement could take as little as four weeks.

If the buyer is non-sophisticated the process will likely take longer.

Phillips said the non-sophisticated buyer would likely be a non-profit group and would not know the sale process.

“We’ll have to walk them through the process,” he said. “And that’s what we’ll do.”

Walking a non-sophisticated buyer through that process would likely take eight to 12 weeks.

Once the buyer is identified they will enter a purchase agreement with the hospital.

This step includes millions of dollars and thousands of pages documentation.

Phillips said when signing the purchase agreement the buyer will give a multi-million dollar non-refundable deposit and will be locked into the purchase.

And the actual document is a big one.

The actual purchase agreement is approximately 10,000 pages.

“It’s enormous,” Phillips said marking the spot on his hip where the document would reach.

Following the signing of the purchase agreement the hospital will declare bankruptcy.

Since the hospital began discussing its financial woes the declaration of Chapter 9 bankruptcy has been part of the plan.

Phillips said the hospital will be using the bankruptcy court as a way to settle with the hospital’s creditors and allow the buyer to renegotiate any undesirable contracts the hospital is currently in.

“It’s a major benefit to the buyer,” Phillips said of the bankruptcy.

Since the sale takes place in bankruptcy, once it’s done there’s nothing left to do.

Phillips said the entire process could be done by the end of February — unless Monday comes and no one bids on the facility.

While Phillips said he doesn’t think that scenario is likely, it’s possible.

In the event no one bids, Phillips said the hospital will “tighten up,” and be taken off the market for six months.

“After that we’ll try again,” he said.