The Shell Game of Corrupted Government Exposed
How the Hospital deal has changed
Publisher's Note: This article originally appeared in the Beaufort Observer.
Betty Murphy, our Chief Researcher, has done an analysis of the "final" hospital documents and the original Letter of Intent. She filed this report:
SOME COMPARISONS BETWEEN LETTERS OF INTENT AND THE FINAL DOCUMENT
CAPITAL IMPROVEMENTS
Original and Amended UHS Letters of Intent:
UHS commits Minimum $21 million capital expenditures in first 5 years.
Final Amended and Restated Lease Agreement:
In addition to rent UHS agrees to $21 million capital expenditures during first 5 years, Less any Excluded Liabilities (as defined in the Assignment Agreement, except to the extent that the Audited Balance Sheet (9/30/2010) sets forth a reserve related to such Excluded Liabilities)
LEASE PAYMENTS:
Original UHS Letter of Intent:
UHS will pay BRHS total prepaid lease payment of $30 million. Regarding County debts BRHS agrees this prepaid amount shall be used to satisfy such debt obligations.
Beaufort County Hospital photo by Stan Deatherage
Amended LOI:Se
Lease is reduced to $25 million. Indebtedness now applies to both the County and BRHS. In addition, UHS reserves the right to require a portion of the prepaid lease payment to be placed in an escrow account for a reasonable period to be used by BRHS or its affiliates to pay any EXCLUDED LIABILITIES.
AMENDED/RESTATED LEASE AGREEMENT:
A cash payment $5,597,715.58 (on closing date) to prepay in whole the Scheduled Indebtedness. Such Loan Payoff Amount shall be credited against the $25 million.
Cash payment of $6,073,686.46 will be delivered to "Excluded Liabilities Escrow Fund Account" for a period of five years to secure indemnification obligations.
Another cash payment not to exceed $13,324,243.40 into an escrow account with Bank of America to pay principle, premium and interest as such becomes due and payable. Escrow Amount shall be credited against the $25 million rental payment owed by UHS.
BRHS 403(B) BENEFIT PLAN:
In addition to rent, UHS agrees to make a cash payment to Valic of $2,100,570.00 estimated amount due.
In addition to rent, UHS shall $500,000 of BRHS cash, cash on hand, cash on deposit, cash equivalents, investment securities, or undeposited checks and an additional $400,000 (Lock Up Fee) into the Excluded Liabilities Escrow Fund.
NOTES ON GOVERNING: THE ECH-Beaufort Directors Council:
Original/Amended LOI:
Directors Council shall have 8 members appointed by ECH-Beaufort. BRHS shall have authority to nominate 3 members and Beaufort County Commissioners shall authority to nominate 1 member, a nominations subject to ECH-B approval.
Final Amended/Restated Lease Agreement:
Board of County Commissioners shall nominate 2 members. Nominations subject to review and approval by ECHB: if ECH-B does not approve a County nominee, the County continues to nominate alternates until ECH-B approves one.
As far as BRHS having input into the Directors Council, once the final papers are signed BRHS no longer exists. "The remainder of the Hospital's Directors Council shall be residents of the Primary Service Area who are both nominated and appointed by ECH-B."
Well the bottom line is on Aug. 25, 2011 everything associated with the name BRHS, the history, the loyalty and everything else will no longer exist. All that remains are memories, both good and bad. The only things that will continue with the name BRHS will be the Excluded Liabilities and potential lawsuits.
Commentary
How did the $6 million gorilla (Excluded Liabilities Escrow Fund) get into the room? What was once considered to be a minor issue has now grown into a major issue. The Original Letter of Intent (LOI) did not comment on creating a separate escrow account for liabilities. After the due diligence process began, UHS issued the Amended Letter of Intent which addressed the establishment of a separate "Excluded Liabilities Escrow Fund Account ". No specific amount of money was mentioned to cover the 10 liabilities listed in the LOI.
We're now talking about a major chunk of money - $6 million. The liability list has grown to 17. How did UHS arrive at this $6 million figure? That's $6 million dollars that has shifted from the positive side to the negative side and there has been no outcry from the citizens. Once again I wonder how many County Commissioners have actually read the final documents? Apparently, $6 million dollars is a drop in the bucket to them.
Editor's commentary
Betty has done an excellent job of wading through tons of legalese and extracting the salient facts. She has presented them in a clear and understandable manner. Setting aside the details, here's what we think the deal the Commissioners will vote on Thursday comes down to: They will be voting to give away two very important things. First, they will convey a facility that is worth much more than UHS is paying for it. At least $50 million more than is being paid for it. The seller will be taking what the buyer has decide to pay, regardless of true value. Secondly, and much more importantly, they will be giving away control of the future of health care to an organization outside Beaufort County and to individuals who will not be accountable to The People of Beaufort County. We have no idea who these people are who will be making decisions for us. Many of those people are have not been involved because they are still in college or less. This deal is being done because some people insisted on making this a no-bid-contract process. The deal must be signed. We have no choice. And that is the bottom line. A few people, to gain what they thought was the ideal, have deprived Beaufort County of any choice in the matter of how health care will be delivered in this community going forward. And we will predict here and now that in the long run that fact will come back to haunt us and our grandchildren. We will take what someone else will decide is good for us because we have no choice.
Betty Murphy is a volunteer researcher and writer for the Beaufort Observer. While living in Washington, DC, Ms. Murphy relied on her research skills when called upon to testify before several Congressional Oversight Committees on Family and Children's issues and legislation. She also served as a special consultant to various news media and documentary specials focusing on child support enforcement and domestic abuse. Since moving to "Little Washington" Betty has continued her volunteer work serving two terms on the Beaufort County DSS Board as well as several other committees.
Go Back
Betty Murphy, our Chief Researcher, has done an analysis of the "final" hospital documents and the original Letter of Intent. She filed this report:
SOME COMPARISONS BETWEEN LETTERS OF INTENT AND THE FINAL DOCUMENT
CAPITAL IMPROVEMENTS
Original and Amended UHS Letters of Intent:
UHS commits Minimum $21 million capital expenditures in first 5 years.
Final Amended and Restated Lease Agreement:
In addition to rent UHS agrees to $21 million capital expenditures during first 5 years, Less any Excluded Liabilities (as defined in the Assignment Agreement, except to the extent that the Audited Balance Sheet (9/30/2010) sets forth a reserve related to such Excluded Liabilities)
LEASE PAYMENTS:
Original UHS Letter of Intent:
UHS will pay BRHS total prepaid lease payment of $30 million. Regarding County debts BRHS agrees this prepaid amount shall be used to satisfy such debt obligations.
Amended LOI:Se
Lease is reduced to $25 million. Indebtedness now applies to both the County and BRHS. In addition, UHS reserves the right to require a portion of the prepaid lease payment to be placed in an escrow account for a reasonable period to be used by BRHS or its affiliates to pay any EXCLUDED LIABILITIES.
AMENDED/RESTATED LEASE AGREEMENT:
A cash payment $5,597,715.58 (on closing date) to prepay in whole the Scheduled Indebtedness. Such Loan Payoff Amount shall be credited against the $25 million.
Cash payment of $6,073,686.46 will be delivered to "Excluded Liabilities Escrow Fund Account" for a period of five years to secure indemnification obligations.
Another cash payment not to exceed $13,324,243.40 into an escrow account with Bank of America to pay principle, premium and interest as such becomes due and payable. Escrow Amount shall be credited against the $25 million rental payment owed by UHS.
BRHS 403(B) BENEFIT PLAN:
In addition to rent, UHS agrees to make a cash payment to Valic of $2,100,570.00 estimated amount due.
In addition to rent, UHS shall $500,000 of BRHS cash, cash on hand, cash on deposit, cash equivalents, investment securities, or undeposited checks and an additional $400,000 (Lock Up Fee) into the Excluded Liabilities Escrow Fund.
NOTES ON GOVERNING: THE ECH-Beaufort Directors Council:
Original/Amended LOI:
Directors Council shall have 8 members appointed by ECH-Beaufort. BRHS shall have authority to nominate 3 members and Beaufort County Commissioners shall authority to nominate 1 member, a nominations subject to ECH-B approval.
Final Amended/Restated Lease Agreement:
Board of County Commissioners shall nominate 2 members. Nominations subject to review and approval by ECHB: if ECH-B does not approve a County nominee, the County continues to nominate alternates until ECH-B approves one.
As far as BRHS having input into the Directors Council, once the final papers are signed BRHS no longer exists. "The remainder of the Hospital's Directors Council shall be residents of the Primary Service Area who are both nominated and appointed by ECH-B."
Well the bottom line is on Aug. 25, 2011 everything associated with the name BRHS, the history, the loyalty and everything else will no longer exist. All that remains are memories, both good and bad. The only things that will continue with the name BRHS will be the Excluded Liabilities and potential lawsuits.
Commentary
How did the $6 million gorilla (Excluded Liabilities Escrow Fund) get into the room? What was once considered to be a minor issue has now grown into a major issue. The Original Letter of Intent (LOI) did not comment on creating a separate escrow account for liabilities. After the due diligence process began, UHS issued the Amended Letter of Intent which addressed the establishment of a separate "Excluded Liabilities Escrow Fund Account ". No specific amount of money was mentioned to cover the 10 liabilities listed in the LOI.
We're now talking about a major chunk of money - $6 million. The liability list has grown to 17. How did UHS arrive at this $6 million figure? That's $6 million dollars that has shifted from the positive side to the negative side and there has been no outcry from the citizens. Once again I wonder how many County Commissioners have actually read the final documents? Apparently, $6 million dollars is a drop in the bucket to them.
Editor's commentary
Betty has done an excellent job of wading through tons of legalese and extracting the salient facts. She has presented them in a clear and understandable manner. Setting aside the details, here's what we think the deal the Commissioners will vote on Thursday comes down to: They will be voting to give away two very important things. First, they will convey a facility that is worth much more than UHS is paying for it. At least $50 million more than is being paid for it. The seller will be taking what the buyer has decide to pay, regardless of true value. Secondly, and much more importantly, they will be giving away control of the future of health care to an organization outside Beaufort County and to individuals who will not be accountable to The People of Beaufort County. We have no idea who these people are who will be making decisions for us. Many of those people are have not been involved because they are still in college or less. This deal is being done because some people insisted on making this a no-bid-contract process. The deal must be signed. We have no choice. And that is the bottom line. A few people, to gain what they thought was the ideal, have deprived Beaufort County of any choice in the matter of how health care will be delivered in this community going forward. And we will predict here and now that in the long run that fact will come back to haunt us and our grandchildren. We will take what someone else will decide is good for us because we have no choice.
Betty Murphy is a volunteer researcher and writer for the Beaufort Observer. While living in Washington, DC, Ms. Murphy relied on her research skills when called upon to testify before several Congressional Oversight Committees on Family and Children's issues and legislation. She also served as a special consultant to various news media and documentary specials focusing on child support enforcement and domestic abuse. Since moving to "Little Washington" Betty has continued her volunteer work serving two terms on the Beaufort County DSS Board as well as several other committees.
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