Duplin considers leasing hospital
By Catharin Shepard
Published in News on November 22, 2009 1:50 AM
KENANSVILLE -- The Duplin County commissioners met Thursday with the Duplin General Hospital board to discuss the hospital lease process and what such a lease would mean for the citizens of Duplin County.
"It is extremely important to the people of Duplin County right now and in years and years and years to come," board member Thomasine Kennedy said.
Tom Stukes spoke to the assembled board members about the history of the relationship between the hospital and the county. The hospital was built in 1955 and is unique in that most county hospital boards are selected in part or whole by the county commissioners. In Duplin County, there has been a greater degree of freedom since 1983, Stukes said.
"The bylaws changed to have the hospital board self-appointed," though the commissioners could veto the choices, he said.
The hospital is also somewhat unusual in its contract structure. The brick and mortar of the facility is owned by the county, while the business assets are owned by the hospital corporation itself and a third party maintains a contract to manage the hospital's operations.
"It's a little bit of a hybrid," Stukes said.
The current county lease agreement with the hospital was signed in October of 2004 and runs through October of 2014, although there are three five-year extensions attached. The management agreement was signed in December 2006 and ends in 2012, but can be terminated with prior notice at any time in 2010.
"All those are pieces that need to be dealt with as we look at this," Stukes said.
Nothing is wrong with the arrangement, it's just unique, he said.
"Some counties distance themselves, others don't. In essence both of you have your hands on the wheel," Stukes said.
However, the public bid process for the hospital must be treated differently than most public bids for other county property. The county is not obligated to choose the lowest bidder, because the ideal hospital system for the people of Duplin County might not be the one with the most competitive bid, Stukes explained.
"At the end of the day, the county can determine who is the successful bidder," he said.
The first step in the process will involve filing a notice of intent, including the names of potential bidders, and giving notice of a public meeting on the topic. The notice must also include a special notice to any entity of state-supported programs that has invested money in the hospital.
Secondly, the county board must adopt and solicit a minimum of five bids.
"Once word gets out across the country, there will be plenty of interest," Stukes said.
At that point, the hospital must provide access to hospital audit information to the bidders, a "tremendous step," he said.
Any bidders submitting proposals in response to the request would be required under state statute to fulfill certain obligations to the hospital. The corporation would be legally required to provide the same or similar clinical hospital services to patients, including indigent care, and would not be allowed to deny essential medical services or treatment based on a patient's inability to pay for care.
"We need a commitment from any potential bidder they will not seek to stop services," Stukes said.
The basic guidelines are state law, but commissioners can expand on those if they wish, he said.
The situation is not without potential snags. If the entity leasing the hospital decides to build new facilities onto the hospital, if the commissioners later sought to retake the hospital, the county would be responsible for paying the entity for the depreciated value of the new buildings, Stukes said.
"It's not just you get the keys back," he said.
The third step in the process would be to hold a public hearing on the resolution of intent. Such a public meeting can "go on for days," Stukes said.
"Everybody has to be heard at this, nobody can be turned down. It's quite a show when it's done," he said.
Another public hearing must be made on the proposals after they arrive, and finally, a third public hearing is held prior to the approval of one of the proposals.
After a lease is signed, the Duplin General Hospital board will no longer be responsible for running the hospital, but may have a new role in community health, Stukes said.
But there are several hurdles to attracting bidders and leasing the hospital. Duplin General Hospital does not have a federal designation as a critical access, regional referral or sole Medicare hospital, meaning it does not receive federal money for one of those designations.
"Duplin fell through the cracks," Stukes said.
Hospital president Harvey Case said this problem could be a big one for the lease process.
"This situation makes our hospital much more difficult than some. It's a very, very difficult situation," he said.
However, the hospital is not in a place where it could become a federally designated hospital. It is not the sole Medicaid provider in the area and critical access hospitals must have 25 or fewer beds, Case said.
"It is one of the underlying reasons we really must make a change," he said.
Other issues the county will face in leasing the hospital is the geographic layout of the county itself. Duplin is the ninth largest county in the state, but there is not a single population center, Case said.
"We're really challenged because of how the county is set up. It's not going to be what some are," he said.
The lease is an important step because tying into a larger health care system with more resources could improve the quality of medical care, the extent of services offered at the hospital and help recruit more doctors and staff to the facility, chief of hospital staff Dr. Danny Pate said.
"You've got to be part of a system big enough to attract these people," he said.
But the ultimate goal in pursing the lease is tied directly into the hospital's mission, board member Glen Jernigan said.
"What we're looking for is our mission statement, we're looking for the best medical services for our citizens," he said.
Stukes emphasized that providing service to residents must be the top priority, and money should be a secondary issue.
"The goal of both boards should be to keep a hospital in Duplin County. We should not get caught up in the sweet deal," he said.
Commissioner David Fussell commented on the issue, saying he would like to see the boards at least consider leasing the hospital to for-profit systems as well as to non-profit systems.
"I think we all have the same good in mind, but we could limit the perception if we limit it to non-profits. Profit is not a dirty word. We shouldn't just limit it to non-profits," he said.
While that is something that could be considered, Ms. Kennedy warned the board members against looking strictly at the bottom line.
"We need to make sure we're looking for the best health care deal, not the best dollar deal," she said.
Commissioner Zettie Williams said she was ready to move forward in the process.
"At this point I think the two lawyers need to get together and come up with a workable RFP and bring it before the board," she said.
"Our board is ready to do whatever we need to do," Jernigan responded.
Moving forward with the lease is vital to the hospital's future, Ms. Kennedy said.
"We are at the stage where we feel like it's in the best interest of the county before we get to the point we can't pay the bills," she said.