Update: Hospital Board votes to recommend UHS offer | Eastern North Carolina Now

    At 6:45 p.m. tonight, the Beaufort Regional Health System hospital board voted to recommend accepting an improved offer from University Health Systems to lease the Washington-based hospital. The motion passed 7-2 with Alice Mills Sadler, Brenda Peacock, Suzanne Gray, Grace Bonner, Sandy Hardy, Clifton Gray and Allen Roberson voting in favor; and Hood Richardson and Howard Cadmus voting against.

    Initially, on Jan. 3, the BRHS hospital board voted 5-4 to recommend a lease offer from Community Health Systems, with Alice Mills Sadler, Hood Richardson, Howard Cadmus, Clifton Gray and Allen Roberson voting in favor; and Brenda Peacock, Sandy Hardy, Suzanne Gray and Grace Bonner voting against.



    CHS rescinded its offer on Jan. 11, after UHS supporters loudly protested the deal on the grounds that UHS would provide better quality of care.

    Even with the CHS offer off the table, before tonight's vote, UHS made two improvements to the Dec. 10 proposal that was originally rejected by the board: an increase in the upfront lease payment, and a slight improvement to its ownership clause, according to BRHS attorney Joe Kahn.

    "The changes to the offer that UHS is now offering: $30 million toward the upfront payment of the lease. As you may recall, their Dec. 10 offer was $24 million. The other amendment is with respect to what happens at the end of the lease. At the end of the lease, under their new offer, UHS will have a unilateral option to purchase the property for $10 million...They recall, under the Dec. 10 proposal, they were requesting that they would be entitled to full ownership outright, for no additional consideration, for all of the property at the end of the lease," explained Kahn.

    Speculation is that UHS made these improvements for two reasons: to compete with the remaining offer from LHP Hospital Group and to more closely match the financial terms of the CHS offer, which were presented as the supporting argument by those who initially voted in its favor.

    CHS's Dec. 10 proposal offered a similar $30 million upfront lease payment, as well as a $10 million payment for ownership of the hospital at the end of the 30-year lease.

It is important to note that CHS's ownership clause was non-binding and would require a mutual agreement by BRHS and CHS in order to transfer ownership. UHS's new ownership clause is unilateral, which means that it will decide, without input from BRHS, whether it will assume ownership at the expiration of the lease period.

    Before last night's vote was taken, BRHS hospital board member Clifton Gray commented that UHS's improved ownership clause, though it isn't ideal, had persuaded him to shift his support to UHS.

    "I think that the revised offer is, essentially, somewhat of a win-win for the public interest and also for the bottom line. When we voted previously, I voted for CHS because I didn't like the ownership clause, that UHS would own the hospital for no further consideration. I don't like, with the new ownership clause they have in it, I don't like the unilateral option that they have proposed; however, I feel that, under my fiduciary obligation to make sure that we have continued healthcare in this area, I have no choice but to vote to approve the UHS offer," said Gray.



    BRHS hospital board Chairwoman Alice Mills Sadler also reallocated her support to UHS. Like Gray, Sadler said she was satisfied that the board had met its fiduciary in securing an offer that was both strong in financial and intangible considerations.

    "This is the best, I think, that we can expect from them. They have stepped up and tried to match, at least, most of the stipulations that were placed in the offer that we first sent to the commissioners," she said.

    The Beaufort County Board of Commissioners, representing Beaufort County as the owner of BRHS property, is the entity charged with making the final decision. Sadler said that further consideration of the UHS offer will be the county's responsibility.

    "If there's anything else out there that the county board might find lacking in this, they certainly have their land option. They can do whatever they want," said Sadler. "But this board, I believe, that this board has met its duty to the people."

    The other board member who reallocated his support was Allen Roberson. He made no comment during the meeting.

    The two BRHS hospital board members who chose not to swing their votes to the side of UHS were Hood Richardson and Howard Cadmus. Both praised those who stood firm in resolve against certain BRHS employees, hospital board members, politicians, etc. who were ready to transfer ownership to UHS long ago, for much less reasonable terms.



    "We have saddled a long road in this process, all the way from a board that was willing to give this hospital away for nothing and walk away, to where we are today," said Richardson. "I think that the offer that UHS is making is getting real close to where we need to be, it's approaching the CHS offer. And I'm delighted that we have worked this thing for the benefit of the people of Beaufort County up to where we are today. And those who have participated on the positive side are to be congratulated, and those who participated on the negative side are to be kicked."

    UHS's improved offer was communicated to Kahn today through the UHS Vice President and general counsel, according to Kahn. The UHS Dec. 10 Letter of Intent must be formally revised, however, before the new terms are official. Included in the motion to recommend UHS, was a provision for finalizing and executing said Letter of Intent.

    "I believe we can hold them to their word given that it came from their Vice President and their general council," said Kahn.

    Sadler and Kahn will share the hospital board's decision to recommend UHS with the Board of Commissioners on Wednesday, at an undisclosed place and time. They will, at that time, request that the Board of Commissioners permit assignment of the underlying ground lease to UHS on terms consistent with the selected proposal.

    Sadler said she will be glad to deliver this recommendation to the commissioners, to hopefully put an end to the unrest among BRHS employees and the community.

    "Our hospital family, our healthcare family has been divided, in some cases brutally divided. Our community has been divided, in most cases brutally divided. I think that there is an opportunity for us to bring some closure to this," she said.

    Richardson, one of the seven county commissioners who will eventually vote on the UHS offer, remarked, at the meeting, that the option for BRHS to remain independent still exists. The Beaufort County board could legally decide to reject all outside offers and pursue continued autonomy for the local hospital.

    "If you look back on this deal and you get unhappy and you decide you don't like it. We do have the opportunity, although it is a stressed opportunity, to put in turnaround team and run the hospital itself," he said.
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