Here's the video on Monday's Hospital Board meeting | Eastern North Carolina Now

     Publisher's Note: We do very much appreciate this fine article on the BRHS debacle from our friends at the Beaufort Observer.

    The videos below will allow readers to review the way the Hospital board made its decision to recommend Community Health Systems over University Health Systems.

    In the first video Board chair Alice Mills-Sadler opens the meeting with an invocation and then reviews the RFP process to date. The board then goes into closed session briefly to receive advice from its attorney Joe Hahn.



    In the second video clip following a closed session for the attorney to brief the board on the legal issues involved with "confidential health care information," the Chief Financial Officer Richard Reif reviews the financial analysis of the three proposals. You can review the spreadsheet he is referring to by clicking here. The particular parts you will want to listen for are: The upfront "Lease Payment" which you will see on page 1; and the disposition of the property at the end of each lease proposal which can be seen on page 2.

    The "upfront" lease payment for CHS is $30 million. For UHS they offer $24 million.

    The CFO then reviews the differences between the three proposals in how they handle assets and liabilities. If you are a "numbers" kind of person you will note on page 5 of the spreadsheet that the Total Assets are listed as $50,964,372. That represents a depreciated value of the property at $36,322,195 basically for the real estate, with an un-depreciated value of $65,483,769. These amounts could be said to be the book value of the property at this time which would go to UHS at the end of the lease and be retained by the County under the CHS lease.

    In this video clip Mr. Reif reviews on page 7 of the spreadsheet the "bottom line" differences between the three proposals. This synthesizes the payments the vendors to pay upfront, the adjustments for assets and liabilities, including working capital, accounts payable (what the Hospital owes), accounts receivable (what the Hospital is owed) and the other assets and liabilities to come down to what he calls the "Combined Offer and "Net." For those who just want the "bottom line" this is it. You will hear Mr. Reif conclude that the net from CHS is computed to be $11,280,505 while the net from UHS is computed to be $1,837,476. And again, the other major difference is that at the end of the lease with CHS the County would still own the property while with UHS's offer the property would belong to UHS. Here's the video:



    The third clip is a continuation of the CFO's presentation and concludes with the beginning of the discussion. Dr. Brenda Peacock, who served on the Negotiating Committee, explains her reasoning for recommending UHS.



    The fourth clip begins with Board Chair Alice Mills-Sadler's speaking to her position (in support of CHS) followed by Negotiating Committee member Suzanne Gray who explains her support for UHS.



    The fifth clip begins with the last Negotiating Committee member, Hood Richardson, explaining his position in favor of CHS, followed by a discussion between Sadler and Suzanne Gray.



    The chair then opens the floor for board members not on the Negotiating Committee to express their positions. The first to do so was former board chair Sandy Hardy, followed Grace Bonner both of whom speak in favor of UHS. Howard Cadmus then addresses several issues that had been raised by Mr. Hardy. He is followed by ex officio board member Dr. Rachel McCarter, representing the doctors, who speaks in favor of UHS.



    The final clip begins with a brief discussion by Howard Cadmus, Rachel McCarter and Sadler and then Sandy Hardy makes another appeal for UHS. At this point the discussion loses focus but the outcome becomes obvious as Clifton Gray and Allen Roberson express their positions in favor of CHS. The die was thus cast and the vote renders Hardy, Peacock, Bonner and Suzanne Gray voting for UHS and Sadler, Cadmus, Clifton Gray, Richardson and Roberson voting for CHS.

    Commentary

    We would like to commend Mr. Reif for the work he did on assessing the proposals. This is an extremely complex issue but Mr. Reif provided both the detail and an excellent summary of each of the proposals which allowed the board members to see the actual differences in the three officers. It was, in fact, the best summary we have ever seen of such a situation.

    And readers should note that he is extremely conservative, specifically in computing the residual value of the Hospital at the end of the lease as measured from the current value. And that value is staggering, to say the least. He depreciated value is set at $36 million compared to the un-depreciated value of $50.9 million. Both of these numbers are very low if one considers the "fair market value" and even lower if one projects the fair market value at the end of the leases. We believe even a conservative estimate of that value would exceed $85 million if you include the improvements either CHS or UHS will make as specified in their proposals. And if one were to use "replacement cost" the number becomes astronomical in terms of Beaufort County.

    Some of the UHS supporters contend that "this is not about money." Well, it is about money. Fifty or $85 million dollars is not something the people of Beaufort County can afford to just give away. We believe this is what tilted the scales for CHS and against UHS. Were it not for this difference we could have supported the UHS proposals, perhaps with a little more tweaking of how they would handle the assets and liabilities.