Negotiations between Greenwood Leflore Hospital and the University of Mississippi Medical Center have hit a roadblock.
As a result, without further cuts in services and costs, the hospital could close before the end of November, according to a memo released Tuesday to the Greenwood hospital’s employees and medical staff by Gary Marchand, the hospital’s interim CEO.
In a subsequent interview, Marchand emphasized that a long-term lease with UMMC is still possible but it will not happen until early next year, if the Greenwood hospital can hold on for that long while the parties try to work out the outstanding regulatory, legal and financial complications.
Click on Title To Read Document
“No one’s left the table yet. I want to make that clear,” he said. “They’ve just been more difficult to resolve than we might have thought.”
The memo said that “the administrative team at GLH has begun the process of evaluating a plan for the closure of additional services and cost reductions that might allow certain services to continue into 2023.”
Marchand said he expected the cuts would include more layoffs, and he would have a better idea of the scope of them by next week. Staff reductions could be mitigated by recent attrition at the hospital, as some employees have already taken jobs elsewhere because of worries about their job security. The hospital’s current employment totals were not available late Tuesday afternoon.
Marchand said the hospital, in order to maintain its licenses and certificates of need, would have to continue to operate some inpatient services. Since August, the hospital has utilized only 12 to 18 inpatient beds, depending on staffing levels.
He also said he expected that the emergency room, physician clinics and at least some outpatient services would continue to operate.
The financially troubled hospital has been negotiating with UMMC, the state’s largest hospital, since September on a friendly takeover.
The parties have been under pressure to settle on the final details of the long-term lease before the Greenwood hospital, which is jointly owned by Greenwood and Leflore County, runs out of cash.
Both the county Board of Supervisors and the Greenwood City Council would have to sign off on a lease. So would the state College Board, which oversees UMMC.
Negotiators were trying to reach an agreement in time for the College Board’s last scheduled meeting for this year on Nov. 17.
Marchand said he was informed by UMMC Tuesday that, with some issues still unresolved, there was not enough time to have final legal documents prepared for that meeting.
“It’s nobody’s fault,” he said. “These are complicated documents.”
He said he has been reassured by UMMC that it is still interested in leasing the Greenwood hospital.
“I confirmed that three times today,” he said Tuesday.
Earlier this month, UMMC took over the hospital’s outpatient clinics for pediatrics and obstetrics. On Tuesday, the hospital board approved leasing those clinics, which sit across the street from the main hospital, for $14,000 a month combined. The lease for the obstetrics clinic includes its equipment and furnishings. The furnishings in the pediatrics clinic were sold to UMMC for almost $48,000.
A major stumbling block to leasing the 208-bed hospital has been how the two government insurance programs, Medicare and Medicaid, would handle the transfer of operational control to UMMC, Marchand said.
Medicare and Medicaid pay according to government-issued provider numbers, and it could take anywhere from four to nine months after a lease’s effective date to clear all the regulatory hurdles to get UMMC certified under both programs for its Greenwood operations, he said. During that interim period, UMMC would risk not being compensated for a significant portion of the care it provided to Medicare and Medicaid patients.
To get around that possibility, negotiators had hoped that UMMC could use Greenwood Leflore Hospital’s provider numbers until UMMC was issued its own. The catch there, Marchand said he learned less than two weeks ago, is that UMMC would also permanently assume the Greenwood hospital’s outstanding debt to Medicare for advance payments it received at the start of the COVID-19 pandemic.
Those advance payments, which originally totaled
$16.5 million, were in the form of a loan that the hospital has been paying back through deductions from its monthly Medicare reimbursements. At the end of September, the balance due was $5.6 million.
UMMC, according to Marchand, does not want to be on the hook for that debt, and it also expects the hospital to do about $3.5 million worth of deferred maintenance on the facilities.
The hospital, though, has exhausted all of its available reserves and does not have the cash to satisfy either of UMMC’s demands, both of which Marchand described as “reasonable.”
The Board of Supervisors and the City Council have been asked by Greenwood hospital officials to assume those obligations. The supervisors began discussing the request during a closed session Monday and are scheduled to resume their deliberations Friday. The council has called a special meeting for 9 a.m. Wednesday to take up the matter.
Marchand said he believes the lease proposal is dead and the hospital’s closure imminent if the county and city don’t assume those two obligations.
Robert Collins, the president of the Board of Supervisors, said he had known since early October that the hospital was short of cash to meet UMMC’s demands but he didn’t learn until Monday morning that hospital officials were looking to the county to help cover the shortage.
“This was a bombshell to us,” he said.
Collins said he learned the details of the request at a special called meeting at the hospital that was also attended by District 1 Supervisor Sam Abraham, Greenwood Mayor Carolyn McAdams, City Council President Ronnie Stevenson, hospital board Chairman Harris Powers Jr., hospital board Vice Chairman Marcus Banks, Marchand and the attorneys for all three entities.
Collins said he was unhappy over the 11th-hour impasse in negotiations with UMMC, saying Marchand and the hospital board had had plenty of time to work through the issues.
“They’ve been negotiating with UMMC since January,” Collins said. “Things like this aren’t supposed to happen when negotiating.”
He alleged that the majority on the hospital board had shut out the county’s two appointees — Emma Bell and Tracy Shelton — from providing their input in some of the lease discussions.
“If they wanted to do it right, they would have let the county board members participate in everything they did, and they didn’t. We weren’t represented,” Collins said.
“We’ve been getting the jerk around ever since all this has been going on. We’re not going to take the blame for this. We’re just not.”
He was noncommittal as to whether he would vote for the roughly $9 million bailout, which presumably would be split with the city.
“I want to know what UMMC is offering the county as to what kind of care we’re going to have,” he said.
To ease the potential burden of the Medicare loan, the hospital has filed a hardship exemption with the federal government to extend its remaining payback to 60 months at 4% interest. According to Dawne Holmes, the hospital’s chief financial officer, that would lower the monthly payment to about $103,000 a month. In September, the hospital’s repayment totaled $644,000.
The Greenwood hospital has also sought help at the state level to facilitate the takeover by UMMC. Lt. Gov. Delbert Hosemann told the Commonwealth in late August that he would be receptive to using state funds to help in the transition. The Legislature, however, is out of session until January, and there has been no apparent movement to call a special session to craft a package of financial assistance. Only Gov. Tate Reeves can call a special session.
“Throughout the past several months, there has been no Federal or State support of the lease transaction between UMMC and GLH,” Marchand’s memo said.
Since May, the Greenwood hospital has tried to buy time with two rounds of layoffs and the shutdown of several services. Still, in September, the latest month reported, the hospital lost another $2.4 million.
“We need to get closer to a cash break-even scenario if we’re going to be around through January,” Marchand said.
For the fiscal year that ended Sept. 30, total losses have been just under $18 million, despite the help of $9.6 million in coronavirus relief grants, mostly from the federal government.
Marchand said a temporary closure of the hospital until a lease could be finalized would not be a good option because it would add additional regulatory hurdles, which would further delay and possibly derail UMMC’s takeover.
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
