PENNINGTON GAP — The Lee County Hospital Authority and key people from Americore Health met with citizens Thursday night in Pennington Gap to discuss their plans for Lee County’s hospital. Americore’s CEO, Grant White, presented an overview of his vision for the hospital, Hospital Authority attorney Jeff Mitchell provided an overview of the progress so far, and citizens asked a number of important questions.
Americore’s Model — A “Medical Mall”
White described his model as a “medical mall” that “has nothing to do with the local population.” “We can’t have a business model that’s dependent on Lee County”, White said. His model calls for a medical center made up of smaller, modular business units within the larger hospital building. Such units would share staff and facility costs to make the hospital more profitable. Of these, he described veterans care (especially substance abuse, PTSD and other behavioral health problems), an addiction treatment center, and a “superlab”. White said, “When you look at our model, that VA business has nothing to do with the local population, the laboratory business has nothing to do with the local population, the de– treatment center…” White also said that there are “four or five other things” that he did not mention in the overview.
In addition, the hospital would start out with a six-bed ER and 18 acute care beds, for a total of 25, and then grow from there.
White said, “Veterans care is going to be at the forefront of a lot of what we do”, and he indicated that partnership between Americore Health and the Department of Veterans Affairs (VA) will be an essential part of Lee County’s reopened hospital. “We’re going to have a very specific plan designed for veterans, written by veterans, programs for veterans, and they want us to roll it out nationally.” White said on Thursday.
White said, “Right now, if you needed to get taken care of, you’d probably have to drive five… hundred to a thousand miles” to get care for PTSD and behavioral health problems.
In a recent conversation with The Lee Daily Register, the VA reported three intensive inpatient residential PTSD programs within 200 miles of Pennington Gap: Lexington VA Medical Center in Lexington, Kentucky, W. G. Hefner VA Medical Center in Salisbury, North Carolina, and Cincinnati VA Medical Center in Ohio. Outpatient PTSD treatment is available at Mountain Home VA Medical Center in Johnson City.
When pressed for details about Americore’s VA contact, White responded, “I have contacts with senior government officials that talk to the VA, yes… We are talking to incredibly senior people with a lot of relationships in that area and developing a program that will actually work for them.”
White advised that these senior officials will be flying into Lee County this week to tour the facility, and that we will get to know them once they arrive. For now, though, “in protection of them”, White did not divulge any identities.
Drug Abuse & Addiction Treatment Center
White also described a drug abuse and addiction treatment center that Americore would operate within the Lee County hospital. White said he is committed to solving the drug overdose epidemic: “We will be solving that problem in the United States.”
White mentioned an Americore partner that has 4,000 patients a day for drug detox programs, but nowhere to put them currently. Americore plans to house some of these patients at the Lee County hospital for 3-5 day stays to help insure that beds are not empty. White also mentioned that a group will be in Lee County next week to begin designing a plan for the treatment center, and that a lot of infrastructure for it already exists at the hospital.
White said that part of Americore’s strategy involves putting the “best lab in the state of Virginia in the hospital” at Lee County. “We will absolutely be putting a superlab into this hospital”, White said as he indicated that lab testing is an important part of healthcare that is also a steady revenue source. Americore has a team dedicated to setting up laboratory services, and they plan to become a regional hub for laboratory testing.
Concerns at Pineville
White tackled recent concerns arising from Pineville Community Hospital’s (PCH) payroll and layoffs, saying, “I think we’re getting pounded in Pineville, where we took over a mess… we’re transitioning it, but it takes time.” He said that paychecks were distributed the following Monday after they were supposed to have been ready the Friday before. White denied that Americore missed the payroll two weeks ago, saying instead that a mix-up at the bank, coupled with a week of no billing, and a surgeon breaking his hip were to blame for paychecks being late. (Payroll was made on-time the day after this meeting.)
Of PCH, White also said, “I’ve personally guaranteed a significant amount of lending to that hospital to get it to this point so that it can be allowed to survive and move forward.” White went on to say that “right sizing” staff and re-purposing the nursing home into a drug addiction treatment ward, which will be filled with 50 patients, necessitates hiring “50-100 more people”.
Purchase Agreements & Promissory Notes
White said he hopes that the purchase agreement for PCH will close in two to three weeks. The agreement, which is subject to consents and approvals both from insurers and the government, was originally expected to close by the end of May 2017. However, that deadline is now hoped for sometime in July.
Mr. White said that Americore Health has signed purchase agreements with four hospitals at this time, but none of the deals have yet closed. White mentioned Pineville, Ellwood City, and a hospital in Arkansas as being among those four facilities. Of Americore’s current agreement with Lee County, White said, “We have no contract, really, no guarantees of anything other than spending money and our commitment to doing that.”
Earlier in his presentation, however, White said, “From an Americore point of view–you were the first that ever signed anything with us, Ronnie [Montgomery, Hospital Authority vice chair], I think, last year.” Both the Letter of Intent and the promissory note between the Hospital Authority and Americore constitute contracts and agreements, and after White back-pedaled a bit, Hospital Authority attorney, Jeff Mitchell, stepped in to clarify the issue, saying that the Letter of Intent and the promissory note are the only signed agreements at this time, and that portions of them are public record and had been filed at the courthouse. Mr. White mentioned a lease that was in the works for Lee County, and Mr. Mitchell advised that the lease agreement is still under negotiation.
Bill Wireman asked about the nature of Americore’s security interest in the Lee County hospital building. Mr. Mitchell explained that there is a promissory note issued by the Hospital Authority to Americore for $100k, but that “The Board of Supervisors and Lee County have the primary security interest on the building for the mortgage that was put on the building when the County loaned the Authority the money to buy the building from Wellmont.” Mr. Mitchell explained that the Supervisors allowed the Hospital Authority to carve out a portion of the County’s security interest in the building for Americore to provide funds to keep the building operational until it can be reopened.
Mr. White admitted, “I’ll be the first to tell you that I’m not a healthcare person; I’m a business person. That’s why I’ve hired people who know how to run hospitals.” White said several times that the Lee County hospital project is not about making money, yet he repeatedly described profitability among his metrics for success at Pineville.
Eddie Watson asked White whether the funding was in place to support Americore’s vision for Lee County. White responded, “The transaction has never been ‘Americore do all the funding’ of the transaction. I mean, it’s completely uneconomical for us.” After White then stumbled for words for a few moments, attorney Jeff Mitchell cut him off, saying, “That’s about as far as you can go.”
The news of a civil suit for unpaid rent and the criminal charge against White of writing a worthless check in the amount of $11k has caused concern among officials and citizens alike. The lawsuit was settled for an unknown amount, and the criminal charges were dropped, but only after they made headlines. Hospital Authority vice chair Ronnie Montgomery brushed those concerns aside, while simultaneously dismissing the news as social media hype and confirming that the Hospital Authority knew about the lawsuit all along.
Of the vetting process for Americore, Montgomery said, “We checked them out, and one of the things that made us feel a lot better was that the Virginia Community Capital Corp. had vetted and checked them out; we felt more secure because it was a Virginia matter.” The prior vetting Montgomery mentioned, by Virginia Community Capital Corp., was for Americore’s attempts to acquire Pioneer Community Hospital in Patrick County. However, unlike the deal for Lee County’s hospital, Americore hopes to acquire Pioneer Community Hospital through a bankruptcy court auction.
The question of transparency hung over the meeting like a wet blanket, and one citizen, Joe Orr, suggested that Americore and the Hospital Authority might have an easier time garnering broad public support for the deal if the public knew more about what they were up to.
Mr. Orr said that both Americore’s and the Hospital Authority’s websites had information that was vague, incomplete, and/or out of date. In fact, the Hospital Authority’s website has a “press” page that has never had information on it in its three plus years of existence.
Jeff Mitchell, said that there have been three particular instances where Mr. Cridlin, and others on the Hospital Authority board, brought up the idea of how best to stop and hold a public meeting to relay new information. “In the three instances where we’ve stopped and asked, ‘should we have a public meeting about this’”, Mitchell said, “in each of those three instances, they would have been announcing a plan that ultimately ended up not working.”
That being said, Mr Mitchell went on to say that the Hospital Authority would become more transparent moving forward, saying the Hospital Authority “has had discussions about being a lot more open and more public; I suspect moving forward you will see a lot more”.
Mr. White also embraced greater transparency, saying, “I think [better] communication is good advice.”
Regarding information on Americore’s website, Travis Roderick advised that the website had been recently updated.
The $1.7M Loan
The Hospital Authority borrowed $1.7 million at 0.4% interest from the Board of Supervisors in April 2015 to purchase the hospital building from Wellmont. The loan was originally due the following April, but the Hospital Authority has since requested two extensions in the due date to give them time to obtain funding to repay it. The due date is now April 2018.
The Hospital Authority has never presented a feasibility study to the public for reopening the Lee County hospital, and additional funding of several millions of dollars originally expected from USDA and other groups never materialized.
Americore is now the Hospital Authority’s only shot. Together, they must show “significant progress” in reopening the hospital by mid-November 2017, or else the Certificate of Need, which is required to reopen the hospital, will expire.
Obtaining a new Certificate of Need is unlikely, largely due to the slowing of momentum and various other twists and turns along the way, including the pending merger of Wellmont and Mountain States Health Alliance.
Mr. Mitchell said that the Hospital Authority wants to have everything in hand to show that significant progress in September rather than November to reduce the probability and impact of any last-minute surprises.
Still, five months pass quickly, and the question looms of finding a solution to the $1.7 million debt still owed to Lee County taxpayers. In a phone call, Mr. Mitchell advised that structuring that payback was a primary topic during Thursday night’s closed session. He said, “The Hospital Authority wants to pay back the County as quickly as possible, while at the same time balancing what needs to be done to best reopen the hospital.” Mr. Mitchell also said that further discussion on that payback and other financial terms is ongoing and will be discussed again when the Authority reconvenes in a couple of weeks.
In the end, Mitchell said, “You [the Hospital Authority] are about to take a risk: probably. You are about to take a risk and one in which you are going to have assess your original goal of opening a hospital against the risk of going with a young startup company that has bright ideas and big ambitions, and to do it in such a way as to mitigate your risks and get that hospital open.” When the lease and financial terms are ironed out, Mitchell said, “You all will be comfortable that the risk is measurable. At the end of the day, you’re going to stand in the batter’s box and take a swing.”