OCH Administrator/CEO Weighs in on Supervisors’ Press Release on Hospital Bids

The press release regarding the bids for OCH, to me, does not give enough information to meet the expectations of Oktibbeha County citizens. It appears Supervisor Miller has misled the county by stating the bidders “will be announced at a special meeting of the BOS Tuesday, September 26, at 3 p.m.” The board refuses to even state the number of bidders due to confidentiality reasons; however, I do not see where the number of bidders breaches the confidentiality matter.

The bids announced include net proceeds of at least $25 million above the $35 million hospital related bonds. The hospital currently has land, buildings and equipment with a total cost value of $132 million. Without reviewing the bids, it appears that this announced bid falls very short of what the replacement value is for the facility.

The bids also include paying approximately $35 million in hospital related bond principal with OCH and the county.  I’ve been asked how that would work. In the past year, I’ve spoken with the director of the Mississippi Development Bank regarding the hospital’s approximately $11.8 million left on the principal portion of these bonds. As annual debt payments come due, you have to pay the principal plus interest on those bonds. I was told that if the hospital sells, bonds may not be able to be paid off until the 10 year call date has been met. That 10 year call date for OCH bonds will be met in 2023 and 2024. Until the call date, the remaining bond principal and required interest would have to be set aside in an escrow account. In addition, there could be a premium assessment on those bonds to be escrowed, as well. The county has approximately $23 million in bonds that would have to be treated the same way. Do the bidders understand they may be required to put up much more than $35 million for paying off the bonds upon the call date?  And how much would that be? Is this something that the board of supervisors understand? Has this been discussed by the bond attorneys as to what has to take place if those bonds cannot be called until the 10 year call date is up? I think this is something the public needs to thoroughly understand before they vote.

One of the objectives listed calls for ending the tax levy of approximately $1.9 million per year. To my knowledge this is the first time the board of supervisors has made a public statement about what will happen with the tax levy. By doing this, are the supervisors making a commitment to lower the taxes?

The expanded services listed on the bids includes cardiology. It’s been said over and over again by Supervisor Trainer that a new owner will be able to bring open heart and cardiovascular surgery to OCH. I have repeatedly stressed that OCH cannot get a certificate of need (CON) for open heart surgery unless the hospital can demonstrate performing 150 open heart and 450 heart catheterizations a year. In addition, before OCH can show meeting this requirement, the competing hospitals in the planning area must demonstrate that they are doing at least 150 heart surgeries and 450 heart catheterizations a year. Baptist Memorial Hospital Golden Triangle, based upon recent communication, is performing approximately 100 heart surgeries per year. This information indicates there is no way that the Mississippi State Board of Health will issue a CON until the numbers with Baptist Memorial have risen and is consistently showing at least 150 cases per year. Also, the hospital’s service area must have a population base of approximately 100,000, and at the present time, the primary and secondary service area of OCH is around 85,000. Assuming at least two of the bidders are the hospital’s current competition of North Mississippi Medical Center and Baptist Memorial, I cannot see why they would be willing to invest the amount of money required for setting up open heart surgery and heart catheterization units when that same service is being provided 23 miles to the east and 60 miles to the north. The essential equipment needed and the staffing requirements to support these services are very costly.

The supervisors have indicated that the bidder is a not-for-profit company. It’s important to note, a not-for-profit would not pay ad valorem taxes to the county on the buildings and equipment. The county will be able to receive ad valorem taxes if a new owner continues to lease physician office buildings to non-hospital employed physicians and providers just as those taxes are currently being paid by those providers not employed by OCH.

 

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