Prospective buyer inspects Natchez Regional

Published 12:06 am Wednesday, February 19, 2014

NATCHEZ — A team meant to inspect Natchez Regional Medical Center for a potential buyer has been to the hospital and looked at its operations and facilities.

Healthcare Management Partners Chief Executive Officer Scott Phillips said Tuesday he has spoken to the lead negotiator from the buyer’s acquisitions and development department, and company representatives told him they would be presenting a proposed purchase structure to the president-chief operating officer for inspection.

“They sent in engineers to look at the hospital and senior operating managers to meet with the management team here,” Phillips said. “That is what serious buyers do.”

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HMP has been hired to help market the county-owned hospital for sale, an effort that has been ongoing since June. The company is also helping NRMC in the process of filing for Chapter 9 bankruptcy.

Phillips said it is “a little ambitious” to think the hospital will have a finalized purchase agreement in place in two weeks, but if that is the case, the purchase agreement will be filed along with the bankruptcy in federal court.

“Buyers usually view the bankruptcy process as positive as opposed to negative,” Phillips said. “Assuming we have a buyer, and that looks pretty good, I wouldn’t anticipate us being in bankruptcy very long, perhaps just as short as 90-120 days.”

The bankruptcy would not ultimately change the structure of the proposed sale process, which involves having a negotiated bidder — known as a stalking horse — commit to paying a baseline price before putting the hospital up for auction, Phillips said. If no one outbids the stalking horse, the sale automatically goes to that buyer.

The ongoing sale negotiations are with a potential stalking horse.

Though Phillips said he could not say for certain, he believed the President-COO of the company could be the one to give the final approval to move forward with the acquisition.

“The operating people who were here really seemed to want to do this, but they are not the ones who decide,” he said. “The president will have to listen to them, but also to the acquisitions department and hear their side of things.”

If the proposal gets the OK from the potential buyer, the company will make a firm offer to the county for the purchase.

“If the firm offer meets all the requirements of the county, we then recommend it to the (hospital and county) boards,” Phillips said. “I am not empowered to make the final decision.”

The agreement would then likely go through another couple of rounds of discussions about legal definitions, he said, but “as soon as we get a purchase agreement that looks good, we will have a meeting of the board of supervisors to approve the buyer as the stalking horse and start the clock on the auction, and at that point, the only thing the bidders can do is change the price because the terms have already been negotiated.”

Phillips’ comments were made after he met with the hospital’s board of trustees and the county supervisors.

Tuesday’s meeting was conducted in executive session on the grounds it dealt with the sale of real property and legal strategy, though Supervisors David Carter and Mike Lazarus voted to keep the meeting open.

Prior to the determination to keep the meeting closed, Carter said he had some questions about finances he did not think would impact the sale of the hospital.

After the meeting, Lazarus said he did not get all of the answers he wanted about certain operational and billing decisions made at the hospital.

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.

The decision to declare bankruptcy — the second time since 2008 — was announced earlier this month, when hospital officials said NRMC had $3 million more in financial liabilities than assets.

The hospital 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.

The supervisors appoint the hospital’s board of trustees. The seven volunteer trustees serve three-year terms.