Hospital Authority members delivered their highly anticipated decision Tuesday on who they are going to pursue as their No. 1 choice as Midwest Regional Medical Center’s next lessee.
By a vote of 7-0, members named Mercy as their top choice and elected to pass on OU Health and Sciences Center and Community Health Systems, both of which had also responded to the Authority’s Request for Proposal notice to lease the hospital.
The Authority’s decision came after an hour long executive session. First up was the vote on whether or not the Authority was going to exercise their "Right of First Refusal." If passed, this would allow the Authority to terminate the hospital’s lease and reacquire possession of all the leased assets, the lease agreement between the Authority and Health Management Associates states.
The Authority voted 7-0 in favor of the "Right of First Refusal.”
In the second vote, members named Mercy their top preferred lessee option. Ward 4 Councilmember James Ray read the motion but with a change from what was originally listed on the meeting’s agenda. The Authority opted out of naming a second preferred candidate in the event the first candidate fails or refuses to enter into a lease.
After both votes, Mayor Jack Fry was the only member to address the matter.
"I'm recommending exercising the right as outlined in the 1996 agreement. Our objective of this effort is to change the culture and performance of the hospital. Our discussion with CHS, and the data, convinced us that CHS was not the best partner."
On Monday, Jan. 27, CHS became MRMC’s operator on Monday, Jan. 27, replacing HMA, after paying $7.6 billion for the hospital corporation.
Fry cited CHS’s unwillingness to commit to performance standards and pointed out that among the Oklahoma City metro hospital community, Deaconess, which CHS currently operates, was a weak performer.
"All other hospitals in the metropolitan area outperformed Midwest Regional," the mayor said.
Mayor Fry also explained the criteria city staff and the Authority considered identifying a new hospital partner. He said the evaluation was based on 1) quality care, 2) patient satisfaction, 3) investment in staff as measured by the percentage of revenue going to personnel, 4) revenue growth and 5) other financial measures.
Refusal details
To exercise the "First Right of Refusal," the lease agreement states that the Authority must put 5 percent of the purchase price of the hospital in an escrow account by Saturday, Feb. 8, Mayor Fry said.
As of presstime, city officials did not know what the 5 percent dollar amount would be as the final purchase still needs to be decided. City Attorney Kathy Bolles attributed this to the fact that another appraisal, in addition to the city's and HMA/CHS, was needed because the first two were "significantly different."
In the lease agreement, the group of three appraisers will determine by majority vote, the “Disposition Fair Market Value” of the hospital. The Authority and HMA/CHS will bear the costs and expenses of their own appraisers and will split the cost of the third.
The deadline has been set for this Monday, Feb. 3 for the third appraisal to be completed, Bolles told EastWord.
City officials also have set the closing date for the sale of the hospital for March 7, which is when the hospital’s operations will transfer to its new operator.
Look for more information in upcoming EastWord editions as it is available.
