Hospital buy-in

Last Tuesday, the CEO of Brooksville Regional Hospital conducted a meeting at Silverthorn Country Club with approximately fifty local physicians. The topic of this meeting was to offer these doctors the opportunity to purchase ownership interest in Brooksville and Spring Hill Regional Hospitals.

These facilities are currently under a long term lease agreement with Hernando County government. Below is an email I sent to the county administrator to ask several questions about this proposed agreement:

From: A.L. Covell

Sent: Monday, December 22, 2008 4:47 PM

To: David Hamilton

Cc: Dave Russell; John Druzbick; Jeff Stabins; Larry Jennings; Kent Weissinger; Garth Coller

Subject: Question, please

Mr. Hamilton,
Last Tuesday, the CEO of Brooksville Regional Hospital Kathy Burke had a meeting with approximately 50 local physicians. From what I understand this meeting was to propose a future buy-in of interested doctors into the Brooksville Regional/Spring Hill Regional facilities through HMA. At this meeting, it was indicated that the lease for these facilities, with the county, was worth approximately $214 million.

The questions that I have pertain to their lease agreement with Hernando County:

1. Is there an option to add doctors to this lease with HMA, in the event this agreement moves forward?

2. Would this lease agreement with HMA have to be completely re-written to include new tenants? If so, would this lease be constructed like the existing one? The existing contract has the lease payment, with a not to exceed number, that does not even come close to covering the lost Ad Valorem revenue on the property, for the term of the lease, which is a substantial loss to the taxpayers.

3. How would this affect the taxpayers in the event HMA defaults on this lease to Hernando County?

With the current state of the economy, this proposed buy-in at Brooksville Regional/HMA will open up many questions from the public on this lease agreement. HMA stock has slipped from over $25.00 a share to just $1.00 a share in the past year. HMA has laid off over 40 people and is currently working with a limited staff.

Apparently this proposed buy-in is moving forward because a number of confidentiality agreements have been signed by local physicians and the principals will begin to determine the net worth of this deal.

This was a hot button issue in the county when the original lease was written and I don't assume that the future deal will be any less controversial to the public in this slow economy.

Anna Liisa Covell