Extension Denied; Commission Opens Hospital Proposals

Huntsville, TN (2011-06-30) A month of speculation on whether the Scott County Commission would extend the deadline for receiving proposals on the Scott County Hospital, came to an end Thursday night, with the decision to open the two proposals received by the deadline.

Meeting in an emergency session Thursday night, the Scott County Board of County Commissioners took up the issue of extending the deadline for receiving responses to the RFP on the Scott County Hospital. “There is one company that has asked for more time, but I do not think that would be fair to those that have met the deadline,” stated County Mayor Jeff Tibbals. In addition, County Attorney John Beaty noted that even without extending the deadline, the County was not out of options. “As long as you have not signed a letter of intent with one company, you can still negotiate with others,” Beaty said. In the end, Commissioners voted 11-0 with Commissioners Ron Blevins, Gerry Garrett and Mike Slaven absent, to deny the extension and move forward with opening the proposals.

Last Friday (the deadline for receiving proposals), the County received offers from Downey Enterprises, LLC and Pioneer Health Services.

Downey Enterprises, a Cookeville, Tennessee based company, proposal included provisions to either take over the current lease the County holds with Mercy Health, or to negotiate new terms, and proposed a $1 lease payment per year. In the proposal, Downey notes their intention to return the Hospital to a Community Hospital status. “The Hospital is presently losing money as a Critical Access Hospital. I believe that the volume can be increased and that the Hospital should be converted to a Community Hospital,” said Donald E. Downey, author of the proposal. In addition, the proposal states Downey’s intent to retain all present employees, with equivalent benefits and accrued vacation time.

Pioneer Health Services, a Magee, Mississippi-based company, is a Critical Access Hospital provider with an emphasis on rural communities. Pioneer operates eight CAH facilities in four states. Pioneer proposes a lease consisting of two, 15-year terms, with Pioneer holding an option for a third term, with lease payments on $60,000 per month, or $720,000 per year. However, the proposal also includes a provision for the County to pay Pioneer $177,000 per quarter, or $708,000 per year, for emergency services, which would result in a net income of $12,000 for the County annually. Pioneer also will not be liable for any accrued benefits, and will evaluate current employee and physician contracts to determine if they are assumable. Pioneer would be responsible for capital upgrades to the facility, excluding any HVAC or roof replacement, and excluding any repair over $5,000. The county would be responsible for any work to bring the building up to code.

Sunlink Health Systems, Inc of Atlanta, GA expressed interest in the facility; but was unable to meet the deadline. The company, which is currently going through an acquisitions merger, had requested a two month extension. The County had proposed a one-month extension, but the company felt it wouldn’t have sufficient time to complete its due diligence.

The Commission took no action on the proposals, and will be meeting with representatives from both companies at the regularly scheduled work sessions on July 5, 2011.