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Trainer: Time to talk about OCH’s future

June 3, 2012

By CARL SMITH
sdnnews@bellsouth.net

Amidst weeks of rumors and speculation, District 2 Supervisor Orlando Trainer said county supervisors need to begin formal discussions on a possible sale of OCH Regional Medical Center.

Supervisors have slated Trainer’s discussion for 11 a.m. Monday at the county courthouse. The meeting is scheduled to begin at 9 a.m., but agenda items’ scheduled times are flexible to fit the flow of the session.

Although the board has not taken any formal action toward selling the hospital, supervisors say they have received calls, texts, emails and standard mail in regard to rumors about the situation. Trainer is the only supervisor who has gone on record with intentions toward investigating a possible sale.

While Trainer says selling the hospital could provide longterm benefits to the county which would impact health care, education, economic development and infrastructure, OCH administrators say taking away local control could cause a domino effect of negative impact to area health care quality and the number of jobs provided to citizens through salary and its employees spending.

“I’ve received a considerable amount of inquires, especially from those who are employed (at OCH Regional Medical Center) or have some kind of connection. I think there are a lot of people out there that are going to probably have interest in weighing in on the issue,” Trainer said. “I guess it’s time to make a decision as far as what direction the county can take, whether we move forward or not move at all. (Rumors and speculation) in my opinion have created a lot of concern, more so leaning toward the creation of fear in regard to the whole situation. It’s time for us, as a board, to discuss the situation with clear eyes and get a feel for a sense of direction.”

Trainer said he’s been in touch with five outside groups who have interest in taking over OCH.

In 2008, county voters approved a $27.5 million bond issue for construction and improvements at the hospital. OCH administrator Richard Hilton said those funds constructed the West Tower and a four-level, 200-plus space parking deck; expanded existing patient rooms from 100-square-feet to over 200-square-feet; and moved its intensive care unit to a new floor, allowing construction of a modern women’s care unit that provides pregnancy and delivery services. The hospital does not directly service the bond citizens passed in 2008, but it does service revenue bonds issued in 2002.

Hilton said 15 years and a little over $12 million remain on a previous MAHEFA bond, but a GE Public Financing bond should be paid off by hospital revenues in February 2014.

“The bond projects have positioned us, as a hospital, for many, many years without the need for any major capital improvement projects,” Hilton said.

Trainer said the bond issue only provided voters with two options: grow with passage or don’t without it. Supervisors could use monies secured from selling the hospital to service the remaining note.

“One of the things resting in the back of my mind is when the hospital was set up, it was to be self-sustaining where it could take revenue and put that back for future opportunities. Somewhere down the line, that changed,” Trainer said. “They came to the citizens for an investment. I thought that was somewhat unusual because you don’t see many counties that do that or are asked to do that. (The bond’s passage) showed our citizens’ progressiveness, but I’d like the people of this county to see there’s another side of this coin.

“One great advantage to selling the hospital would be any kind of future improvements would not be the responsibility of the tax payer. Those improve can be done without asking the public with any additional tax support,” Trainer added. “Another thing people don’t consider is when you look at opportunities in health care — if we decide to stay in that business — there are people willing to make even more investments to keep the hospital competitive and maintain the services we’ve come to expect. I’ll be the first to say we have a good community hospital; I’ll also be the first to say it can be better.”

Selling the hospital to the right suitor could be the maneuver which positions it to dominate regional health care in the future, Trainer said, but Hilton said giving local control to a for- or non-profit organization could reduce the community-oriented services hospital trustees aim to preserve.

“There are seven trustees appointed by the supervisors to run this hospital from the standpoint of what they think is best for the community serves. They’ve gone on the record as totally opposed to any potential sale or lease of OCH Regional Medical Center,” Hilton said. “It is the best interest of this community to remain under local control with local ownership that has full input in terms of delivered health care services for this community. Once it’s sold, all local input goes out the door.”

According to a study conducted by the Mississippi Hospital Association, OCH Regional Hospital provides over $106 million in economic impact for the area. Out of that figure, payroll provides $63 million. Hilton estimates 140 to over 200 jobs could be cut depending on the nature of the purchasing company.

“We have roughly 600 employees. Hospitals are typically in the top three when considering the largest employment providers in most communities. Our total economic impact allows for another 390 jobs in the community,” Hilton said. “When you look at for-profit hospitals, you’re talking investor-owned businesses that are bottom-line oriented. Each system has a line of return they’re looking for to get from that hospital. If they come in and don’t see that, they look at making policy decisions they say is what has to happen to get there. Payroll is roughly 60 percent of a hospital’s budget — it’s the big ticket item. Corporate could call up and say, ‘Cut X number of jobs.’ What happens is as the employment base of hospital downsizes, it eats into the money going back into the community.”

To guarantee current job levels at OCH, Trainer said formal covenants could be developed in writing with a potential suitor.

“One of the things the administration is concerned about is a for-profit coming in and slashing jobs. Why would anyone make the investment and then undercut and undermine (the hospital) and not make health care grow to make it profitable?” Trainer said. “The great thing is we’re in the driver’s seat. If you have 600 jobs now, you can say in a covenant that it never drops below that number.”

The same measure could be applied to preserve the hospital’s ambulance service, another measure Hilton said could be on the chopping block depending on who picks up the hospital. Hilton said OCH’s ambulance service operates on an estimated $1.6-$1.8 million budget. If a future owner cuts ambulance services, it would be up to the board of supervisors to find a replacement emergency transportation manager.

“(Starkville), Oktibbeha County and Mississippi State contribute to our ambulance services, but even then there’s still a loss that is subsidized by this hospital through its patients to run it so we can have a high-quality service available to those in need,” Hilton said.

Should the board decide to investigate a possible sale, Trainer said the county would formally seek outside analysts to examine the hospital’s financials and evaluate its current services and how they project for the future. An analysis of this type could take 45 days, he said, much like a similar arrangement in Grenada County.

“With this, an analysis could tell us we’ve got the best fit for the situation right now, or it could tell us there are better outside opportunities to help grow the hospital,” Trainer said. “You’ve got to look at its outlook, stresses, weakness and all of the outlying opportunities. We’ve got to make sure we do our due diligence.”

Trainer estimates an analysis could cost approximately $35,000.

“Some people will ask, ‘Why would the board come behind and do this now?’ but you’ve got to look at the political lay of the land,” Trainer said. “You’ve got a completely different board than the one during the hospital bond.”

The board is not required to take any formal action on a possible hospital-sale inquiry unless a motion is presented by a supervisor and passed with a majority. Trainer said he is open to discussion with his fellow board members.

“I think people have to stand up and recognize if they’re satisfied (with the hospital’s current status and its future outlook),” Trainer said. “If you think it can’t be improved, then that’s your opinion. If you think it can be improved (with different ownership), then that’s your opinion, too.”

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