County OKs resolution for CMC/Covenant refinance deal

By Gary Nelson, Crossville Chronicle, Tenn.
McClatchy-Tribune Information Services

July 24--CROSSVILLE -- Cumberland County commissioners passed a resolution Monday evening giving its approval for Covenant Health to refund its bonds to refinance $40 million for Cumberland Medical Center.

The request was made by Covenant Health, a Tennessee nonprofit corporation which now operates Cumberland Medical Center.

Roy Turner, 7th District commissioner, made a motion to approve resolution 07-2014-6, and Joe Koester, 5th District, supported the motion.

Then, a discussion and debate ensued.

At least one commissioner questioned why the Cumberland County Commission should have anything to do with the resolution and not the city of Crossville.

"I'd just like to know why the county is being asked to approve this and not the city of Crossville as they did in the past?" Carmin Lynch, 9th District commissioner, asked.

Cumberland County Attorney Randal Boston told Lynch it was required by state law because two counties were involved.

Lynch asked why the county was having to perform the action when state law says the municipality is supposed to. Boston said he did not know why.

Joe Ayers, of Cumberland Securities, the agency representing Covenant Health in the bond refunding and refinancing, explained when funds are going to be issued in another county and not where the hospital is located, it must be approved by the county where the hospital is located.

He further explained the Health, Educational and Housing Facility Board of Knox County would be issuing the bonds for financing for Cumberland Medical Center (CMC). CMC is using the financial stability of Covenant Health to restructure its debt. CMC and Covenant are going to use the Knox County Health, Education and Housing Facility Board to issue the revenue refunding bonds.

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Nancy Hyder, 2nd District commissioner, asked why Cumberland Securities was requesting this on behalf of Covenant and CMC.

"How come you came to us and not Covenant or CMC? You're the ones who are making money on this deal," Hyder asked.

"There is a $800,000 in interest savings per year for Cumberland Medical Center ... we reached out to the (county) mayor and finance director on behalf of Covenant," Joe Ayers of Cumberland Securities said.

CMC Chief Financial Officer Larry Moore also attended the meeting and agreed with Ayers.

Ayers added the savings would help ensure CMC and Covenant continue operating a hospital in Cumberland County with potential health care cost savings to county residents.

Commissioner Turner said he is a paramedic with Cumberland County EMS and did not like the new ambulance transport policy of CMC since the Covenant affiliation.

"They are requiring a transport to Parkwest, a Covenant hospital, instead of Cookeville, and most health insurance won't pay for it because it's farther than Cookeville. That costs (them) more, and it's not saving them any money," Turner said.

Mike Harvel, 7th District commissioner, asked, "Is this going to put any liability on the county?"

"Absolutely none whatsoever," Ayers said.

County attorney Boston agreed and said he reviewed the resolution and had no issues with liability.

"This is the same resolution that has been used with all other counties and Covenant in the state," Ayers said.

Lynch said, "I feel like something's being dumped on us here and just can't wrap my head around it."

Allen Foster, 4th District commissioner, called for the question on the vote and said, "CMC thinks it's OK and it will help them. The attorney says it's OK and creates zero liability and it will result in a significant savings for CMC. Why would we not pass this?"

Foster also said he didn't see how an ambulance transport policy had anything to do with the resolution that was being considered.

The resolution was approved in a 12-5 vote. Commissioners Hyder, Jan McNeil, 5th District; Terry Carter, 6th District; Turner and Sonya Rimmer, 8th District, voted against the resolution.

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Voting in favor were commissioners Harry Sabine and Brian Houston, 1st District; Caroline Knight, 2nd District; Johnny Presley and Davd Hassler, 3rd District; Charles Seiber and Foster, 4th District; Joe Koester, 5th District; Larry Allen, 6th District; Harvel, 7th District; Jeff Brown, 8th District; and John Kinnunen, 9th District.

Commissioner Lynch abstained.


(c)2014 the Crossville Chronicle (Crossville, Tenn.)

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Distributed by MCT Information Services



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