Commission Chooses Attentus

October 14, 2004

HUNTSVILLE - Although not official, County Commission has gone on record with a 13-0 vote in favor of Attentus Healthcare assuming management duties at the Scott County Hospital when Community Health System's lease agreement expires.

That vote came Monday night during a special called work session of the commissioners at the Scott County Office Building.

And while the agreement won't come to a formal vote of the commissioners until Monday night, it paves the way for:

*Drafting a termination agreement with CHS;

*Accepting a "letter of intent" from Attentus Healthcare;

*Drafting a management agreement with CHS to continue operations 60 days beyond the expiration of the lease (Oct. 31); and,

*Gives Attentus an opportunity to choose an affiliate tertiary hospital (in the Knoxville area).

The preliminary acceptance of Attentus by the commission follows a similar (13-1) vote by the hospital Transition Team.

The choises had been narrowed to two proposals (submitted by Attentus and St. Mary's), and money-wise, Attentus was far and away the better choice.

Attentus has proposed to pay Scott County $3.3 million dollars up front for a three- 12-year lease of the hospital, and to begin work toward building a new hospital within three to four years. Other provisions of Attentus's proposal include: putting up $1.4 million to acquire CHS equipment; assuming responsibility for $152,000 in prepaid rental fees, and another $40,000 in prepaid expenses; pay CHS $600,000 for inventory; set aside 2 percent of the profits for renovations of the existing facility; and pay $225,000 in lieu of taxes payments to the county each year.

Attentus officials also say that if they have not built a new hospital within their alloted time frame, they will pledge $9,700,000 in lease payments for years four through 12 of their lease agreement.

St. Mary's proposal, the final version of which was reviewed by the Transition Team last Wednesday (Oct. 6), proposes a 10-year lease, with a $3 million prepayment to the county, but no up front money for acquiring CHS's equipment, prepaid rents, expenses or inventory. St. Mary's did, however, pledge to provide $3 million over an 18-month period for renovations to the existing facility.

Both Attentus and St. Mary's agreed to provide up to $75,000 a year in treatment costs for prisoners housed in the Scott County Jail and/or detainees at the Scott County Juvenile Center.

It was explained that by choosing Attentus, Scott County will receive money which can be escrowed to insure long-term health care for the citizens of the county. Apparently, the county's only out-of-pocket expenses by its choice of Attentus will be approximately $175,000 for a two-month transition fee, a figure which County Mayor Dwight Murphy says "is still negotiable."

Also, while Attentus must make the final decision, commissioners will have a say in the company's choice of a Knoxville-area hospital with which they must affiliate.

Murphy told the commissioners Monday night that the hospital Transition Team had taken a vote of which hospital they felt Attentus should affiliate with; those being, in descending order: UT Medical Center, Covenant Health care, St. Mary's and Baptist.

Another choice the commissioners will have will be on whether or not to acquire the property for a new hospital and lease it to Attentus, or allow the company to choose and purchase its own property. By acquiring the land in the name of the county, the commission would still have a hand in the healthcare business, but would not receive property taxes. On the other hand, by allowing Attentus to purchase its own property, the tax income would go up appreciably.

While the vote was 13-0 (with one commissioner, Leonard Bertram, absent), several expressed reservations about choosing Attentus (which has no hospitals) over St. Mary's (which has several plus a proven record going back some 70 years).

At least two of the commissioners stated that Attentus's offer sounded "too good to be true," while others said that Attentus "would make it work" because it would be their first venture.

It should be pointed out that the two top officials of the Franklin, Tennessee based hospital management firm both have long, successful records in the healthcare field, including hospital management.

Murphy stressed that once money changes hands, the county needs to escrow the money at least until a new hospital is built "to insure health care continues in Scott County."

After Murphy had reviewed the proposals submitted by the two firms, he turned the chairmanship duties over to Chairman Pro Tem Mike Slaven (Seventh District commissioner), who conducted a prolonged question and answer session.

Commissioner Jeff Watson (First District) questioned whether or not Attentus would be putting up a bond in addition to its letter of intent, just to insure that they didn't pull their proposal at the last minute. While he didn't get a yes or no answer to his question, it appears that the letter of intent will serve as a document for legal recourse in the event that the deal falls through.

Commissioner Rick Keeton (Fourth District) questioned whether or not CHS and Attentus officials have been meeting and discussing the transition period and financial arrangements to be made between the two parties. Murphy said that they had been meeting and that the process was ongoing.

Commissioner Rick Russ (Fourth District) stated that "anyone can walk away from a deal by filing bankruptcy." He was one of the commissioners who said that Attentus's proposal sounded "too good."

County Attorney John Beaty told the commissioners that while St. Mary's had the track record, it would not be ready to build a new facility in the short term, adding that one of the main concerns (by the medical staff and the commission) has been the need for a new facility.

Murphy said that "the doctors say we have a short window for getting a new hospital" as this country moves toward socialized medicine.

Commissioner Russ said his biggest concern is that the hospital "needs immediate attention" and he did not feel that the two percent figure proposed by Attentus will be enough to keep the hospital in good shape until a new facility is built.

Commissioner Ron Blevins (Sixth District) had no reservations about choosing Attentus. He said the company is coming in with the money, the pledge of a new hospital and "good credentials."

Commissioner Ernest Phillips (Third District) said, "I don't believe they can fail here," adding that he felt the commissioner was better off going with this group.

Chairman Pro Tem Slaven said that much of the commission's decision making has "had to rely on employees and medical staff," adding, "this is their choice."

He went on to say that Attentus has agreed to keep all current hospital employees at their present salaries and "not to outsource anything." news@ihoneida.com

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