In a special called meeting Tuesday evening, the hospital district board of trustees voted 4-0 with one abstention and two members absent to accept the offer of Carolinas HealthCare System (CHS) to extend the company’s management agreement for up to six months.
The agreement between the district and CHS — which has provided the district with management services since Aug. 1, 2006 — is scheduled to expire June 14, 2011. The district’s top management personnel — Chief Executive Officer (CEO), Chief Financial Officer (CFO) and Chief Nursing Officer (CNO) — are CHS employees.
Under the terms of the offer accepted by the board, CHS will continue to provide management services on a month-to-month basis as long as necessary but not beyond Dec. 31, 2011, to assist the district in transitioning to a new management arrangement.
“The contract expires in June and we told the board we don’t think we’re the best long-term manager they need,” said hospital district CEO Bob Barber. “The hospital needs a capital partner and that is not our business model. We don’t invest in the hospitals we manage. We lease some and we own some hospitals but with hospitals we have a management agreement with we are strictly managers.”
Board Chairman Stan James said trustees are considering their options for a new management arrangement.
“When we transition over we have several options,” James said. “One is to have a greater degree of independence with affiliation with a larger institution and cooperate with them in our dealings with managed care and purchasing as we all as any contract negotiations.
“Carolinas is being most helpful in accomplishing this,” he added. “We also have other consultants who are advising us.”
Electronic Medical Records System
Whatever management affiliation the district finally chooses, James said it will not be for the purpose of securing capital investment. Instead, James said the district and county are instead discussing the county assisting the district in meeting its capital needs in the short-term.
The district and the county’s discussions center around the implementation of an electronic medical records system. The system is required by the federal government and hospitals that do not have the system in place by the end of 2014 will be severely penalized to the point where it will be difficult for them to operate.
“Essentially, they could be put out of business,” James said.
Implementation of the system is projected to cost approximately $4 million.
Union County Supervisor Tommy Sinclair has said the county is planning and has taken some initial steps toward standing with the district on a cash flow equity-type loan and a limited general obligation bond which would cover implementation of the electronic medical records system. The loan and the bond would be repaid when the federal government reimburses the district for majority of the cost of implementation.
“The loan the hospital may possibly never use,” Sinclair said. “It’s more like a home equity loan with a co-signer. If you don’t need it, you don’t use it.”
In other business, the board voted unanimously to accept CHS contract employee Alan MacPhee as the district’s Interim Chief Financial Officer.