After listening to staff recommendations and public comments addressing both sides of the issue, Lee County commissioners voted Aug. 6 to take the next step in considering the conversion of Lee Health from a public to private nonprofit.
Commissioners voted to place a draft mission agreement with Lee Health on the agenda for the next regular meeting Aug. 20, which would then start a 45-day period for public review and comment before a final vote in October.
According to the timeline set forth in the legislative enabling act that made the conversion exploration possible, the vote must be completed by then or the entire process would start over.
Still at issue for the commissioners are several items, including oversight and monitoring, enforceability and a complete schedule of assets and liabilities that would be transferred to the new entity created in a conversion.
Monitoring and oversight structure
During the Aug. 6 meeting, Lee County Assistant County Manager Glen Salyer reviewed the outstanding items and noted the revised draft mission agreement now includes language commissioners asked for in last week’s workshop, calling for an independent auditor to manage the oversight and enforceability function.
In the event of a conversion, Lee Health’s 10-member board would no longer be elected by Lee County citizens. Current elected board members would have the option to remain on the new board and a new three-year term of service would start for them, Lee Health officials said. As originally proposed, Lee Health considered also forming a third-party monitoring entity that would be a separate nonprofit consisting of a three-person board that would largely be self-governing, Salyer told the commission.
“And it would have, at least for an initial period, exclusive enforcement authority for the agreement,” Salyer said. “That third party would have to be joined to the agreement sometime post-closing, presumably. And when I say closing, I’m talking about the transaction that would convert the health district into a nonprofit entity.
“In the meantime, county attorney’s office staff and outside counsel have worked with the Lee Health team to craft a potential option for you to consider. In the alternative, if you’re not comfortable with the third-party concept, and that is a little more in keeping with how the county monitors a lot of other programs: The county would retain its own independent auditor to review annual certifications made by the health system that they are in compliance with the agreement. That auditor would, of course, investigate as needed. And if they had any findings, they would refer those to you as the county commission to potentially pursue enforcement action.”
Salyer noted after questions from the commission that Lee Health would be responsible for all costs for the outside auditor and for legal fees, regardless of the outcome of any potential litigation.
Commitment to current service areas and safety net mission
Dr. Larry Antonucci
Lee Health President and CEO Dr. Larry Antonucci reviewed the 14 programs and service areas he said would continue to be provided to residents of Lee County “in perpetuity”: behavioral health, cancer, cardiovascular, general medicine, general surgery, inpatient care, medical education, neonatology, neurosciences, orthopedics, pediatrics, primary care, trauma services and women’s health (including OB-GYN, cancer care and heart care).
“As a physician and a health care executive, my team and I have thoroughly considered the impacts that this conversion may have on our health system,” Antonucci said. “Acting now to advance the mission agreement that will enshrine these commitments is a tremendous opportunity for the county. We now have the opportunity to preserve in perpetuity the Lee Health safety net mission and provide the ability for us to be more and do more for Lee County.”
Transfer assets and liabilities to new entity
Michael Nachef, Lee Health vice president of government relations, provided the commission with information about the assets and liabilities that would be transferred to the new entity, based on the system’s most recent audited financial statement.
Kevin Ruane
“All debts will be resolved at the closing as it relates specifically to Lee Health,” Nachef said. “The total liabilities to be assumed by the succeeding nonprofit entity, the answer to that is $1.412 billion as of today. Based on our current financial statement, the estimated total value of the assets that will be transferred to the succeeding nonprofit entity is $4.14 billion as of today, which is our current asset listing encompassing all of the acute care facilities and outpatient facilities, and every MRI and every stethoscope and every pen. And a description of all liabilities that will be assumed by the succeeding nonprofit entity is included in the 95-page audited financial statement, and also a description of all the assets that will be transferred to the succeeding nonprofit entity.”
District 1 Commissioner and Vice Chairman Kevin Ruane asked Nachef to provide interim financials since the last fiscal year’s audited financial statement would be “obviously 10 months old.”
“Audited financial statements are great, but they’re 10 months old,” Ruane said. “I’d like a full set of internal audited statements for me to get comfortable, because at the end of the day, the concern out in the community is that we’re going to tax them for anything. What is your financial situation? And unfortunately, it was only just last Tuesday that we as a group came together [in the July 30 workshop] and actually had our first conversation as a board of county commissioners… I also want to make sure that your situation as you reflected through today or yesterday–and what was confusing to me is you made reference to audited statements and then you gave me balances as of yesterday.”
Public comments of support and concern
After the presentations, Commission Chair Mike Greenwell opened the floor to public comments. In addition to three Lee Health employees, including Antonucci, who spoke of the benefits of the conversion, local pastor Rev. William Glover spoke of his support for it.
Glover, senior pastor of Mount Herman Church and president of the Greater Community Interdenominational Ministerial Alliance, said he had many opportunities to meet with Antonucci and his senior leadership team to discuss what the conversion would mean for the Dunbar community and congregations.
“I’m here today because Dr. Antonucci and his leadership team have acted in good faith with me, the Ministerial Alliance and the communities we represent,” Glover told the commission. “They have confirmed that Lee Health is committed to providing charity care and providing the safety net mission for caring for the most vulnerable in our communities, regardless of their ability to pay. I’m here because I agree that it is important for our health system to have local control to assure its success and that it is not sold to an outside organization. In short, I believe the conversion will enhance Lee Health’s ability to have a productive partnership with Lee County and its residents and continue its nonprofit mission in the community by working with schools, housing departments, veterans’ services and more.”
Several county residents took to the podium to express their concerns about the conversion, including longtime area physician Dr. Edward Drass.
Drass said he has practiced medicine in Lee County since 1979 and sees the need for “a great deal of disclosure that needs to be done before this privatization unfolds.”
“Who is the accountability going to be to?” he asked trhe commissioners. “Please place the decision to accept this privatization on hold until much more accurate, truthful information is offered by Lee Health to the satisfaction of both you, the county commissioners and the citizens of Lee County, who will be tremendously affected by this privatization.”
Tara Jenner, who referred to herself as a “recovering lawyer” who had worked in health care law, said she was “not necessarily in favor or against whether there’s going to be a conversion” but does have some concerns.
“I don’t see a firm contract yet, and I don’t understand how we can go forward pushing this when we haven’t got definitive ‘what’s going to happen?’ in front of us. What exactly is going to be this oversight and monitoring? It’s this nebulous thing that’s being talked about now without any specificity that does concern me. I do know that we have a timeline that we’re working with, but if this timeline comes and goes, that timeline can be reset, and we can proceed.”
Jenner also expressed concern about the “in perpetuity” language throughout the draft mission agreement.
“I’ve seen many a contract that have drafted and included in it the language in perpetuity, and it never ever stays in perpetuity,” Jenner said. “I would like to see, at a bare minimum, a formal contract, an actual discussion on how this transfer is going to take place with specificity, including if it were to come to pass, a language that says that the properties would return to Lee County, should that in perpetuity clause disappear and vanish into thin air.”
Regarding the “in perpetuity” language, County Attorney Richard Wesch said the term the county is proposing is actually 99 years.
“I just want to point out that that covenant [regarding litigation], as well as the balance of the agreement does have a 99-year term,” Wesch said. “We talked about perpetuity a little bit, but we have now made a recommendation to you all that the term of the agreement would be for 99 years and would automatically renew. Either party could request early termination, but it would have to be by mutual consent. So, there’s no easy way out for one party.”
Several commissioners said they would have more questions at the Aug. 20 meeting before any draft mission agreement was voted upon. If the commissioners vote to proceed at that meeting, the agreement would be posted for public review for 45 days.
