Hospital owners granted two months
Published 9:19 pm Monday, March 30, 2009
Call it one last chance.
That’s what the next two months will be for owners of Troy Regional Medical Center, as they work to get financing secured one last time.
After adjourning its meeting last week, the Troy City Council reconvened Monday to hear a presentation from Troy Doctors Hospital LLC on requests to extend an agreement between the two entities.
Requests from doctor owners were to extend the agreement to purchase the hospital at $10.5 million in the event owners could no longer finance it themselves for an additional two months and then to carry that same agreement forward for five more years.
But after meeting in executive session, council members adopted only a two-month extension, at least for now.
“The request for five years was a very open ended request,” said Troy Mayor Jimmy Lunsford. “If they can’t get financing to extend the current loan in these two months, then there would be no need to agree to five years.”
This extension comes after the council already stretched the original year-long agreement expected to end Jan. 31 to the end of March. If the agreement had ended the city of Troy was likely to have had to take ownership.
The agreement to extend this time, did not come without several different stipulations.
Within the next few days, Lunsford has asked the doctors and the city come to a firm understanding of how a transition would take place, should the city need to acquire hospital ownership at any time. The city has also requested, along with Superior Bank, to have the terms of the five-year loan doctors seek in place by April 30 to give more time to consider further support before the May 29 extension comes to an end.
Lunsford said the additional time granted comes with hopes that the 14 physician owners and investor Gil McKenzie will be successful in efforts to operate hospital business, as they have hoped since negotiations began last year.
“It got to a point the city was prepared to step up and buy the hospital for a negotiated price of $9 million and backed the doctors group if they could close the deal by Jan. 31,” Lunsford said. “We were still doing our due diligence to close by Jan. 31, while you were doing yours to get financing. We went a step further, and I feel like we showed just how much we want you to be successful.”
Now that yet another step has been taken, Lunsford said there is one point that will remain nonnegotiable — more city money.
Though requests were not made Monday, as they had been before, for the city to purchase the hospital at $15 million, Lunsford said no price higher than $10.5 will ever become an option, especially since the city has already increased the mortgage loan by $1.5 million in the last year.
“Now we’re at a point dealing with public funds, there has to be a cap,” Lunsford said.
Chairman of the Board of Managers Chuck Wood said the doctors are seeking to refinance the loans already made and in addition will apply for another $2.5 million to complete the turnaround costs projected.
But, even some of the doctor investors have not agreed to step up to signing on the loan themselves.
“I know you have the majority of support but how strong varies from physician to physician, based on their financial capabilities,” Wood said.
McKenzie told the council members all owners have been requested to co-sign the line of credit but not all of them feel prepared to do that.
The agreement on how a transition of ownership would take place, should that have to happen, will be finalized within the next few days, Lunsford said.