Witnesses tell state: OK Memorial sale to for-profit

Jan Skutch and Mary Landers
Carla Edwards, a nurse at Memorial Health, speaks during the public comments section at the public hearing on the proposed acquisition of the hospital held at the Medical Education Auditorium. (Steve Bisson/Savannah Morning News)

A state official on Friday heard overwhelming support for the proposed sale of the parent corporation of Memorial University Medical Center to a for-profit health care system whose assets and commitment will stabilize the financially struggling local system.

"We care for every patient regardless of their ability to pay," Carla Edwards, a nurse who serves as the executive director of Memorial Health for Women, told Deputy Attorney General W. Wright Banks Jr. during a public hearing at Memorial's campus. "Many of our young mothers that we provide care for are uninsured or underinsured but we at Memorial still believe they deserve the best care with a healthy baby.

"While Memorial has made these families a priority for many years, we cannot continue to do so without financial support. For these moms and babies, I am asking that you approve this acquisition with HCA. HCA had committed to protect these life-saving services which are community assets that are vital for our citizens."

She was one of 17 individuals to support the proposal at the hearing. No negative voices were heard.

Another participant, Dr. Jim Dunne, chief of Memorial's Level 1 trauma unit, noted that it's the only such designated trauma unit from Jacksonville to Charleston and as far west as Macon.

"The reason people have a better outcome is not only because of the people but because of the resources," he said. "And we have been unable because of our financial challenges we've had at Memorial, our ability to rise to the level of those resources we need to take care of trauma patients has slipped significantly.

"Now I don't think that trauma would go away if the HCA deal went away, but I don't think we would rise to the level of care that we need to provide to this community."

And Memorial Interim CEO Kerry Watson calmly told Banks that, "We provide a number of safety net services here: Level 1 trauma, Level 3 neonatal, high risk OB, behavioral health. … Those are services that are only available in this region at Memorial. And if we can't find a solution that stabilizes this organization many of those services will not be available here in this location.

"Given the situation given the history the best direction going forward is in partnership, an acquisition by the Healthcare Corporation of America."

Banks was in town as part of Attorney General Chris Carr's 90-day review of the proposed sale of the Memorial Health's assets to the Hospital Corporation of America, a Nashville, Tenn.-based for profit who cash purchased will be $434 million.

The proposal includes a number of commitments by HCA to continue support of the Level 1 trauma care and Level 3 Neo-natal care unit as well as ongoing support for the medical education program with Mercer University School of Medicine Savannah Campus at Memorial.

Memorial Health Inc., Memorial University Medical Center Inc., and the Chatham County Hospital Authority submitted their plan to sell in a seven-binder submission of the proposed HCA transaction which included a draft asset purchase agreement valued at $710 million when Memorial signed a non-binding letter of intent in April.

Testimony Friday placed the value of Memorial at $320 million to $400 million with an additional $6 million to $8 million for real estate assets.

The Attorney General's office will accept additional, written comment until 5 p.m. Wednesday, then proceed to compile a report within 3o days of Friday's hearing to determine whether the proposed sale meets statutory requirements.

"I feel like this is the best result we could have come up with," J. Curtis Lewis III, chairman of the Memorial Health board, assured the gathering. "I just think it is going to be the best thing that's ever happened to the hospital, certainly since I've been here."

"Culturally, they are a great fit for our health system and for this community."

Lewis, a 12-year board veteran, will lose that role when the board shuts down upon completion of the sale but will remain a member of the local advisory board working with HCA.

Dr. Frank Rossiter Jr., who chairs the Chatham County Hospital Authority, notes HCA's commitment to the core services provided by Memorial and which the authority had insisted must be protected by any buyer.

And he said that upon closing of the deal, $25 million from the sale will be placed in an "irrevocable trust" for indigent health care in Chatham County.

That trust, which will be overseen by the authority, is expected to grow to somewhere in excess of $100 million within 18 months after costs are figured into the gross sum.

"As members of the hospital authority, it was a priority to have a health care partner committed to the care and improvement of the health in this community," Rossiter said. "HCA will ensure a dynamic and sophisticated health network remains in Savannah to serve the residents of Chatham County."

And, Hugh C. Tappan, president of HCA's South Atlantic Division, told the hearing officer that, "We are committed to continual investment in our facilities. It is our goal to help ensure that this community continues to have a dynamic and sophisticated health care network to serve the region."

In addition, Tappan said, HCA is committed to contributing $2.5 million to the Community Benefit fund over the next 10 years to fund community initiatives.

"In addition, we fully expect that through employee volunteerism and leadership giving, our contributions to the community will greatly exceed that $2.5 million.

And he said the deal provides for HCA to make $280 million in capital improvements over the next 10 years.

A financial consultant for Memorial Health, William B. Hanlon III told the gathering that Memorial was "increasingly struggling but wasn't on the brink of bankruptcy."

That situation is not an unusual among independent hospitals.

"I think on a macro scale you could say that independent health care organizations in the country are on the decline in number as well as in many cases performance," Hanlon said. "It's particularly difficult for a safety net hospital in today's environment to be economically viable.

"Particularly those that don't receive any other governmental support in the form of tax dollars, which is the case here today. An increased challenge for Memorial is that the state of Georgia did not expand Medicaid. So it ran into just a confluence of different challenges all at the same time. It fits a model that we see around the country of independent hospitals looking for the benefits of scale that only come from larger partnerships.

"The kind of scale HCA can bring and the talents they have in other markets and the experiences they have and can bring here we think will be a clear and direct benefit to the community."