Independent operation of the Mark Twain Medical Center and other assets would cost $69 million just to start off, while another agreement with Dignity Health would cost the district $12 million in the interim, health care district staff announced Monday.
Mark Twain Health Care District Executive Director Dr. Randy Smart said it would cost $30 million to purchase assets from Dignity, $12 million to upgrade software and business operations, another $12 million to address seismic upgrades and an additional $15 million worth of operational cash if the district opted to take control.
Meanwhile, it would only cost $12 million to enter another lease agreement with Dignity Health. The district would purchase all assets, then lease everything needed for operation to the provider.
The two pictures were painted Monday during a district-led study session, while the health care district continues to ponder the future of the hospital in San Andreas and other local clinics once the current lease agreement with Dignity Health expires at the end of 2019.
A third option was killed last week when Adventist Health withdrew from affiliate consideration. In a prepared statement, Joshua Cowan, vice president of strategy and communication with Adventist Health, said it became clear early on that an agreement with the health care district regarding the Mark Twain Medical Center was not the right fit.
“Because of that, we did not submit a response to the district’s (Request for Proposal),” said Cowan. “We remain committed to continuing to work with all the health care providers in the region to ensure that there is access to great care in our communities.”
For much of the past year, health care board representatives knew it would be risky if the district were to take independent control of the hospital, as it did from 1951-89.
The district would have to use the $34 million it has in its money account and take out a highly unfavorable loan with a monthly payment worth an amount of revenue the hospital has only ever made once, said Smart.
Hypothetically, If the economy were to take a dip, the district would only be able to make its bills until about midway through 2018 before they would have to entertain radical payroll adjustments in order to continue operation of the hospital. The hospital currently pays $35 million in salaries per year.
Under another 30-year lease agreement with Dignity Health, the health care district would not command any gains from a successful month, but it would also be free of covering any losses, Smart said.
It could mean improved services, as a number of Dignity Health representatives hinted to Monday. Awaiting an affirmative lease agreement, Karl Silberstein, senior vice president of financial operations, said they would invest more into the hospital if locked in.
Until then, complaints about three month wait times to visit some of the five health clinics throughout the county or requests to upgrade to electronic health recording from sitting health care district members remain.
The lease proposal, with a number of terms that could not be assessed Monday from Smart, was the result of “a lot,” per Silberstein, of meetings where the district demanded concessions. When proposal terms became public during the study session, it had been modified by 40 percent from the original version, Smart said.
“We said ‘there are things we want.’ And we did not budge. We wanted to have our own permanent CEO. We didn’t want to share a CEO,” Smart said. “We negotiated as hard as we could to get as much on the table to represent the county.”
Last month, 24 physicians and 130 staffers signed a petition in support of re-upping with Dignity Health.
Also discussed Monday was the effect Dignity Health's merger with Catholic Health Initiatives, of Denver, would have on health care locally.
Known for their expertise in Critical Access, rural, Hospitals, CHI has experience with 30 rural hospitals in their system. The Mark Twain Medical Center earned the designation in 2010. Dignity Health only has approximately three rural hospitals in their system.
A formal recommendation from the health care district could be expected before the end of the year.
A public vote is required to finalize an agreement with Dignity Health.