Capella's OCH lease offer includes $45M in cash

August 6, 2013 9:41:04 AM

Carl Smith - [email protected]


Capella Healthcare offered $45 million upfront for a 50-year OCH Regional Medical Center lease and pledged to keep all active employees, documents show. 


The Dispatch obtained a portion of the Franklin, Tenn.-based company's April offer Monday, which pledged Capella's commitment "to provide necessary capital for strategic initiatives, physician recruitment and equipment, technology and facility enhancements." The offer also said Capella would "commit to employ all active employees at current or improved salary levels," offer extensive benefits and honor accrued vacation time. 


No other payments were indicated in the proposal obtained by the Dispatch. 


County supervisors met Monday but did not disclose the lease's specifics during public session. Previously, Board President Orlando Trainer asked supervisors to review the Capella offer and use Monday's board meeting as a time to acknowledge the offer and discuss ways to move forward on the issue. 


The board took no formal action on the deal, but supervisors agreed that dialogue between the county and hospital boards needs to begin as the two entities approach future health care and financial challenges. A meeting between the two boards was not scheduled. 


Trainer called Capella's offer a moot point Monday since the board has not approved a financial analysis of OCH's financials, a study required by law before any transaction can occur. 


Under the proposed agreement, the county would retain its cash and board-designated funds. A previous 2012 financial audit shows $28 million in retained assets. 


The county would be responsible for paying off the hospital's long-term debts, capital lease obligations and capital leases. Those total $21 million, the previous audit shows. 


Capella's offer lists $52 million as net proceeds to the county, a figure which was totaled by adding the upfront lease payment and county-retained assets, then subtracting the $28 million in liabilities. 


The letter also states Capella would provide all necessary medical care to patients, regardless of their ability to pay for services; fund capital improvement projects for state-of-the-art technology and physical building needs; serve as a valued corporate partner in Oktibbeha County; adopt existing medical staff bylaws and privileges; maintain all core hospital services currently provided that are properly supported by the community; and launch an aggressive physician-recruitment campaign. 


"As a tax-paying organization, we will significantly enhance the revenue tax base through the payment of property and sales taxes, which will serve to strengthen the overall economic vitality of the community," documents state. 


Capella would also form an all-local board of trustees tasked with reviewing and approving OCH strategic plans, monitoring its quality of services; and developing operating and capital budgets. 


The offer does not state how many people would serve on the board, but it does say the group would be arranged into halves: 50 percent of participants would represent the medical staff, while the remainder would represent the community. 


A call to Trainer after the Dispatch obtained the offer was not immediately returned.

Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch