Natchez Regional officials to make counter offer

Published 12:01 am Thursday, January 23, 2014

Brittney Lohmiller / The Natchez Democrat — Healthcare Management Partners CEO Scott Phillips, left, and Natchez Regional Medical Center CEO Donny Rentfro discuss the bidding process for the sale of the hospital Wednesday.

Brittney Lohmiller / The Natchez Democrat — Healthcare Management Partners CEO Scott Phillips, left, and Natchez Regional Medical Center CEO Donny Rentfro discuss the bidding process for the sale of the hospital Wednesday.

NATCHEZ — County and hospital officials told their negotiator Wednesday to take a counter-offer to the bidder for Natchez Regional Medical Center.

The charge came after a closed-door meeting between the hospital’s board of trustees, the Adams County Board of Supervisors and Healthcare Management Partners Chief Executive Officer Scott Phillips.

Phillips, who the supervisors hired to help sell the hospital, said he could not discuss the specifics of the offer or counter-offer because of the nature of negotiations.

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“We have an offer on the table,” Phillips said. “The board authorized me to make a counter offer. We remain hopeful the deal will close to take care of the liabilities of the hospital and provide for the continuation of viable medical services for Adams County.”

Phillips said giving information about the array of bidders would not help the hospital’s ability to negotiate.

“It is not helpful to do this publicly when you are in a negotiation,” he said. “It doesn’t facilitate the process to arm your negotiators with your strategy.”

Though a source close to the sale said earlier this week the offer might not be able to cover the hospital’s liabilities, Phillips said that wasn’t the case.

“We think (the offer) is a sufficient offer to pay the liabilities, but it does not reflect the value of the assets being purchased, and so we are countering to reflect the value of the assets being purchased,” Phillips said.

“This is a pretty normal process. They want to pay less, we want them to pay more, but we are not very far apart.”

The goals of the negotiations are to find a buyer who has the capital to build a new hospital facility, pay off the bond on the county-owned facility and ensure the buyer has a commitment to develop the medical community to guarantee the long-term viability of health care in Adams County, Phillips said.

“If this was just about money, it would probably be concluded,” he said.

“(The hospital board and the Adams County board of supervisors) are not looking for a five-year solution. They are looking for a 50-year solution.

“What NRMC needs is to be acquired by a buyer who can afford to replace the hospital — and possibly both hospitals —in the community.”

That replacement will need to happen in the next five to eight years, he said.

Phillips said he took exception with former NRMC CEO Bill Heburn’s September comments that the hospital would close in two years if no sale happened and nothing changed.

“I think Bill spoke out of turn, and I think the fact he said those words and they were printed in the press has been detrimental to the sale process,” Phillips said.

Current NRMC CEO Donny Rentfro said the hospital administration has plans for the future even as the effort to sell it is ongoing.

“The quote, I think, was out of context and inappropriate, because part of that was if we do nothing, and we are certainly doing everything to ensure appropriate operations,” he said.

Supervisors’ President Darryl Grennell was not able to be at Wednesday’s meeting, and supervisors’ attorney Scott Slover said the county board would be meeting some time Friday to discuss the matter.

The effort to sell the hospital began in July, when — at the county’s behest — The Horne Group released a feasibility study recommending the hospital be sold, based in part on studies of patient outmigration to other, regional health care systems outside the Miss-Lou.

Since then, hospital trustees and administrators have argued that an independent, rural hospital will not likely be able to continue operations as the costs and logistics of implementing the Affordable Care Act come into play.

Selling the hospital will also help recruit needed physicians to the area if the hospital is part of a wider health care network, administrators have said. A commitment to bring more doctors to Natchez is one of the negotiating points of the sale.

The initial stages of the sale have been limited to a so-called stalking horse process, in which a limited pool of bidders make an offer for the hospital.

When the stalking horse bid is awarded, the hospital will then be placed on the open market with the stalking horse’s bid considered the base price. If no one else bids on the hospital, the stalking horse will become the ultimate buyer.

Before the hospital is placed on the market, the board will have to advertise its sale for a month, and during that period residents have the ability to petition for a referendum on the matter. The petition would require 1,500 signatures.

Phillips led NRMC in 2008 when the hospital was in bankruptcy, and a move to sell the facility at that time was unsuccessful.

NRMC opened in 1960 as Jefferson Davis Memorial Hospital. Its $2.4 million construction was underwritten by an $800,000 local contribution and state and federal funds.

It has been financially independent since 1974 and does not receive tax support, but is backed by a 5-mill standby tax that the Mississippi Development Bank required the hospital to get in 2006 when it asked for the MDB to reissue its revenue bond.