Natchez Regional transferred to Community Health Systems
Published 12:04 am Wednesday, October 1, 2014
NATCHEZ — It’s a new era for Natchez Regional Medical Center.
At the stroke of midnight, ownership of the formerly county-owned hospital was transferred to Community Health Systems, a national company whose affiliates own, operate or lease more than 200 hospitals in 29 states.
The ownership transition was a key component in keeping the doors of the financially beleaguered Natchez Regional open, and the approval of the federal bankruptcy court Monday was the final stamp of approval needed to end a 15-month attempt to sell the hospital that only netted one buyer.
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CHS already owned Natchez Community Hospital, but what the sale means for the future of health care in the Miss-Lou hasn’t been clarified by the company.
Many involved in the process have suggested the new owners will consolidate the two hospitals. CHS officials said Tuesday as a publicly traded company they could not disclose plans until the sale closed.
Company officials have said they plan to retain all but five employees at NRMC at the close of the sale, presumably top-level managers.
“We don’t know what the plan is (today),” said the Rev. LeRoy White, the chairman of NRMC’s board of trustees. “I am going to go out there (this morning) because I want to know. They haven’t even told us what they will name it.”
While official announcements have not been made, employees said Tuesday they spent the last day at the facility as NRMC conducting business as usual but also preparing for the ownership change at midnight.
“The main things we are doing is getting the (patient) charts ready, because everything has to be switched over,” said Whitney Dollar, a five-year labor and delivery nursing veteran at NRMC who also works at NCH. “Everything has to be put in the CHS system and taken out of NRMC — the patients have to be discharged from us and admitted into CHS.”
Dollar said those on the ground were ready for the change.
“It is a sad day a little bit because (NRMC) has been here forever — I was born here — but everybody is, for the most part, excited,” she said.
J.J. Rabb, a 13-year employee in medical imaging, echoed Dollar’s sentiments, saying she has high hopes for the change.
“There really wasn’t any way for us not to do this or close our doors, and I am looking forward to CHS taking over and hope it is the best for the community,” she said.
Dollar and Rabb both stressed that they felt the hospital staff was able to provide quality care throughout the sometimes-tumultuous sale and bankruptcy process.
While the new owners will be responsible for all forward facing operations, the former board of trustees will continue to exist until the bankruptcy estate is closed.
“We still will be having meetings, but they will be phone call meetings,” White said. “We won’t have any lawyer or any money, but we will continue to represent the former NRMC.”
Kenneth Lefoldt, a Jackson certified public accountant, will manage the bankruptcy estate.
For Adams County’s taxpayers, the sale will have some lingering potentials for several years.
The more than $13 million in taxpayer-backed in bonds were defeased in the sale, but the sale is also backed by a $3 million exit loan Adams County’s government had to take out to cover the costs of finishing the process.
A 5-mill standby tax, which previously served as collateral for the bonds, will serve as collateral for the loan until it is paid off. The tax was never activated when backing the bonds.
“The defeasance of the bonds means we buy securities to place in escrow until July 2016, at which time they pay them off,” said Walter Brown, NRMC’s long-time attorney. “But from a county and hospital standpoint, they are considered to be paid off.”
The hospital is being purchased at a price of $10 million. Some estimates prior to its March 2014 bankruptcy placed its value at more than twice that cost.
To cover the gap between the sale price, what is needed to pay the bonds and other costs associated with the sale and bankruptcy, CHS has also agreed to pre-pay $8 million in ad valorem taxes.
NRMC is licensed for 179 beds.
At the request of community members, the county supervisors passed a resolution in 1955 calling for the construction of a county-owned hospital, and through the Hill-Burton Act the hospital’s $2.4 million construction was financed with local, state and federal money.
It opened in 1960 as Jefferson Davis Memorial Hospital, its name at the time chosen through a contest. It was renamed in 1993.
NRMC became financially independent in the 1970s and did not receive taxpayer backing.
An attempt to sell the hospital in 2008 failed and was followed by a bankruptcy the next year. All of the creditors in that action were paid in full.
The hospital board sued its former management company and settled out of court for approximately $9.8 million in late 2012. Those funds were spent by late 2013.
A second attempt to sell the hospital was initiated in July 2013, but the hospital was losing money at a rapid rate and had declared bankruptcy in late March before a sale agreement was reached with CHS.
The hospital continued to lose money even in bankruptcy, and when Judge Neil Olack approved the sale Monday. He said it was the only option to address the bankruptcy.