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Health & Hospitals

Why is Memorial Hospital Being Sold? Details on the deal Memorial Health, Inc. Board has Negotiated with Novant Health, Inc.

Category: Health & Hospitals


PHOTO:  Exhibit in Certificate of Need deal by Memorial board to explain the Organization Chart when Novant Health, Inc. acquires Memorial Health, Inc, and Memorial University Medical Center. 

By Lou Phelps, Savannah Business Journal

January 26, 2016 – Details of the closed-door deal that the Board of Directors of Memorial Health, Inc. has negotiated with Novant Health, Inc. to sell them Memorial hospital are outlined in a three-inch-thick book entitled “CON (Certificate of Need) Novant Health, Inc./Memorial Health, Inc. 

It was officially filed with the Georgia Dept. of Community Services on Dec. 7, 2015, providing the public with a 60-day period to comment, and is available for view at the Chatham County Administrative Offices on Bull Street.

County Commission Chairman Al Scott received a cover letter and the document Dec. 4, 2015.

But the Chatham County Commissioners were not informed of its existence, based on interviews with three Commissioners this week, even though it sitting just a few feet away in the County Manager’s offices. 

And, the public, physicians and employees of Memorial who may oppose the deal – or a County Commissioner – are not aware that any comments in opposition to the plan must be submitted by Feb. 7, just 12 days from now.

The County Commissioners have cancelled their meeting for this Friday, January 29. They’ll all be returning from Savannah-Chatham Day at the Statehouse.  Their next meeting is not scheduled until Friday, Feb. 12, according to Commissioner Helen Stone, Vice Chairman. 

The transaction has not been discussed publicly by the hospital’s board or the Chatham County Commissioners.  Physicians and employees of Memorial University Medical Center - the entity that is the “Operator” of the hospital that is owned by Memorial Health University Medical Center, Inc. which is owned by Memorial Health, Inc.- are also unaware of its details and their future, except for a handful of physicians that sit on the MHI board. 

The MHI Board and the Board of the MUMC are set for their first meeting since November at 5:00 p.m. today.  The Chatham County Hospital Authority has announced a meeting for tomorrow morning at 9:00 a.m. They normally meet only quarterly or semi-annually. 

But the Agendas for all of the meetings call for the convening their meetings and then going into Executive Session.  There are no items regarding an update on the sale of Memorial Hospital.  

Because there has been no public discussion by the County Commissioners or the Memorial Health, Inc. Board, there is no information available on other options that the Board considered, such as employing a management company to run Memorial – and removing the current leadership team – or other possible deals that were considered.  No Request for Qualifications or Requests for Proposals were issued, to put the hospital out to bid through a public process.  

Well-informed sources state that members of the Chatham County Hospital Authority (CCHA) are not happy with Maggie Gill’s leadership. But, whether there were any negative votes on extending the lease for the land and buildings that the County owns – an asset of Chatham County – is not known.  It was announced in November that the CCHA had approved a 40-year extension for $1.00 a year. 

Certainly, many hospitals in the U.S. that have high levels of indigent care struggle to remain profitable. But, as Sen. Lester Jackson pointed out last week in an interview on the Memorial deal, both Augusta and Macon hospital's are profitable, and face enormous indigent care patient loads.  Locally, the St. Joseph's/Candler hospitals also have large indigent care, and un-reimbursed hospital costs they must shoulder annually.  

Here are some of the highlights of the Agreement that the Memorial Board apparently approved back on Sept. 21, 2015 when a ‘Letter of Intent’ was sent to Carl Armato, president and CEO of Novant, signed by Memorial Health, Inc, board chairman Harry Haslam Jr. and Maggie Gill, president and CEO:   

  • Novant Health, Inc. is acquiring Memorial Health, Inc.  The Winston-Salem, NC company will be become a ‘sole member,’ of Memorial Health, Inc., the umbrella corporation that owns Memorial University Medical Center (MUHC) and the hospital’s other entities.
  • As of the day of takeover, Novant will have sole control over operating budgets.
  • One member of the Memorial Health, Inc. board can be nominated to sit on the Novant Health, Inc, board, but Novant must approve the nomination.
  • There will be a local “Community Board,” but Novant has the final say over all appointees. 
  • Until the bonds are paid off that that Chatham County taxpayers guaranteed, the present board will remain in place unless a member is removed for cause, but Novant has the final say on any new appointees, and Novant has budgetary and hiring/firing and all other control.
  • Novant guarantees the jobs of the employees of MHI/MUMC for only one year.
  • Novant guarantees the jobs of the physicians of MHI/MUMC for only one year.
  • Novant agrees to pay off the hospital’s $160 million in bonds currently guaranteed by Chatham County over a period of time that is not designated, but as soon as “is economically feasible.”  Once paid off, other powers accrue to Novant.  While bonds have an early payoff penalty, there is nothing stopping Novant was doing so immediately, or refinancing the bonds under their guarantee. 
  • Novant agrees that until those Series 2012A bonds are paid off, “it shall not divest itself of any or all of its interest in Memorial or take or allow any action or inaction that would result in a loss of control of Memorial by Novant (each, a “Divestiture.”) That’s because this IS an acquisition – not a merger – and they can sell the hospital if they want in the future.  
  • The Memorial Board shall have a right of first refusal to repurchase Memorial in the event of a proposed Divestiture. The price will include buying all debt on the Balance Sheet, but there is no control over how much debt Novant can incur, and the practicality of Chatham County being able to buy back their hospital is unclear.
  • Novant has outlined “Priority Strategic Matters and Estimated Cost” for service expansion, but there are no dates or guarantees.  Four projects are listed which include ideas such as ia $35 million expansion in Pooler on what is termed “owned land,” presumably land owned by Chatham County.
  • Novant has agreed to make a $280 capital investment over the next 10 years – an average of $28 million a year.  But, the hospital spends millions a year in “capital investments” to update and replace equipment and renovate buildings, including projects that have been heavily funded by charitable giving through the work of the Memorial Hospital Foundation.
  • The deal calls for the Bylaws of the Memorial Health, Inc. corporation to be changed at Close to provide for all of the deal specifics above.

Stone states that she plans to dig into the deal now, and ask questions, as does Commissioner Tony Center.  

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    People in this conversation

    • Guest - Angry

      This is not what they are telling the team members at Memorial...

      Like 0 Short URL:
    • Guest - susan e van der Glas

      scary :( It is sad to see Memorial go to this company .

      Like 0 Short URL:
    • Guest - Lindsey

      Rated 5 out of 5 stars

      I absolutely believe this is going to be the best thing for the community. Memorial has been in a negative deficit for countless years and not one sole has been held accountable for the losses. It's now time for someone else to come in, clear house and start fresh and clean up the mess of Memorial.

      Like 0 Short URL:
    • Guest - Tao of Me

      Savannah, GA, USA

      They aren't telling Memorial employees anything about this. A recent survey of the facilities by Nicant staffers was billed as a "Joint Commission" practice survey. It was essentially a check of the facilities to see what Novant wanted to keep or improve.

      Like 0 Short URL:
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