The county is one giant step closer to handing over the management reins of the Claiborne County Hospital (CCH) to Covenant Health Systems.
By a vote of 20 to one, a resolution was adopted last week by the Claiborne Commission to accept the management lease agreement.
Commissioner Jerry Arnwine opposed the resolution.
Prior to the commission meeting, the CCH board of directors met to review the final draft.
During the 30 minute meeting, Decosimo representative Ken Conner, who has been the go-between for Covenant and the hospital during the leasing process, assured the board all concerns raised during a previous review had been corrected in the final draft.
During the public hearing, held just prior to the commission meeting, Conner outlined the terms of the lease agreement and what the county could expect from Covenant.
Conner said in exchange for the $10 million management lease payout, Covenant expects to lease the hospital and nursing home for a minimum ten years with an option for three, five year renewals.
At the end of the leasing term, the hospital will be returned to the county “in good operating condition,” he said.
The final draft includes one item bandied back and forth during previous reviews of the lease. It appears Covenant has agreed that the hospital will not be converted to a critical access facility without the consent of the county.
None of the services offered at the hospital can be discontinued during the first three years of the lease term without approval of the new Advisory Board, which will be formed once Covenant takes over operation.
Another sticking point during negotiations was whether Covenant would pick up the Claiborne Ambulance Service. Conner said during the public hearing the EMS would receive a subsidy in the same amount currently received from the hospital. However, Covenant may choose to discontinue the ambulance service and return it to the county after the three year period is up, Conner said.
Jail inmate treatment and charity care will continue at the same rate as prior to Covenant’s takeover, he said.
Covenant has agreed to offer positions to hospital personnel, subject to satisfactory drug screens and background checks. Employees will be given prior service credit and will receive the same or similar employee benefits as others employed through the Health System.
Conner said the $10 million prepaid to the county for the management lease will include the hospital’s real estate, working capital, equipment, supplies and other minor properties.
Unless included in the working capital, the county will be responsible for liabilities that occur before the effective lease date, and will receive any income that is received prior to that date.
Proceeds will go to outstanding bonds, capital leases on equipment, notes payable and professional liability insurances.
Any capital expenditures used to bring the facility into compliance will be credited back to the county at the time of closing.
Some of the capital expenditures include replacing the water heater, installing a “clean room” for the hospital pharmacy, replacing the beds and furniture in 12 patient rooms and the purchase of new computer hardware.
Any proceeds left over will be placed in an escrow account to cover any unknown liabilities, post-closing expenses and the annual ambulance subsidies, said Conner.
The escrow funds will transfer in increments into the new Healthcare Fund through the ten year lease period. The proceeds from the lease cannot be transferred into the county’s general fund.
The Healthcare Fund will be administered by a five member committee including the current chairmen of the Claiborne Commission and Finance Committee and three citizens appointed by the commissioners. One of those three must be an active hospital physician.
The Claiborne County Trustee will be responsible for holding the funds.
Conner said his best guess for the Covenant management takeover is now set at March 1.
The agreement must be examined and approved by the state’s Attorney General (AG) before closing, and the AG has a minimum of 45 days to review the lease agreement before Covenant and the CCH can close on the deal.
Reach Jan Runions at email@example.com or 423-626-3222.