October 11, 2013 10:29:46 AM
This might be an excellent time to sell a hospital, if you happen to have one.
This week, Oktibbeha County Hospital Regional Medical Center acknowledged it will cut pay for most employees in an effort offset a loss of almost $900,000 during the past fiscal year.
While this is no knock on the administration of the hospital -- 90 percent of the state's hospitals finished the year in the red -- it does suggest that the county would be wise to take a serious look at Capella Healthcare's offer to lease OCH for $45 million in cash.
This is especially tempting, given the uncertainty that accompanies the roll-out of the Affordable Care Act, also known as Obamacare. As part of the implementation of the ACA, federal reimbursements to hospitals will be dropping. As of now, hospitals in Mississippi receive 33 cents in reimbursement on each dollar. No one is certain how much of a drop from that 33-cent rate the ACA will create. That loss in revenue was supposed to have been made up from the expansion of Medicare and the creation of state-run health insurance exchanges. Gov. Phil Bryant and the state legislature have refused to do either. Because of the state government's "cut-off-our-nose-to-spite-our-face" obstinance, hospitals will bear a far greater portion of the expenses in Mississippi than in states where Medicare was expanded and state-run health insurance exchanges have been implemented.
Given those grim prospects, the controversial idea of Oktibbeha County getting out of the hospital business certainly looks more and more appealing.
The OCH debate has been raging for more than a year now. Without question, there are many in the community who take great pride in OCH and want to preserve the hospital. But selling or leasing the hospital is not the disaster some hospital supporters seem to suggest. As with any sale or lease, the particulars of the deal can be negotiated. Many hospital supporters are fearful that staff, doctors and administrators they like will be forced out should a sale or lease go through. But that, too, is a point that could be negotiated.
For those pondering the wisdom of a sale, the best example to be found is a half-hour east at Baptist Memorial Hospital-Golden Triangle, which was among the 10 percent of Mississippi hospitals that operated at a profit last year.
Lowndes County sold the hospital to the Baptist chain a dozen years ago and now has $30 million in a trust fund. County officials say the trust could grow to $60 million or more over the next decade. Lowndes supervisors have been good stewards of the proceeds from that sale, preserving the principal and using gains to -- among other things -- acquire land and build-out infrastructure to lure industry.
Due to the cut in expenses, OCH is projecting a $1.5 million profit next year, but given the uncertainty that confronts the hospital industry and the potential that a sale/lease could hold, Oktibbeha County residents should put emotions aside and make a decision based on a practical assessment of the risks and rewards.
More and more, a sale or lease makes sense for the citizens of Oktibbeha County.