No. 1: Lease proposed for Bay Medical [The News Herald, Panama City, Fla.]

Dec. 31--PANAMA CITY -- Sacred Heart Health System has been a contender to partner with Bay Medical Center for years, but when the proposal to lease the not-for-profit hospital was revealed, Bay County residents were introduced to the idea of a joint venture and the LHP Hospital Group.

For several months hospital officials have been working to put together a deal to lease the hospital and pay off debt. County commissioners have been vocal about not being included in the lease negotiations process that has potential to impact the next 40 to 60 years of hospital management.

Citing the economic downturn, local unemployment rates and high interest rates from debt and the changes to the national health care system, Bay County's only standalone hospital began searching for a way to affiliate with a larger hospital group. Bay Medical Center officials have been working since September to present a lease and purchase agreement to the hospital's board and the Bay County Commission, which has to sign off on the deal.

The lease agreement has been completed and sent to county commissioners, but the purchase agreement that would outline the hospital's assets and transfer ownership to the proposed joint venture is still in the works. Bay Medical Center President and CEO Steve Johnson believes the asset agreement could be completed as early as this week.

"We are not much further along than we were last week," he said. "The county has the lease agreement and they have hired Southwest (Consulting Group) to do some due diligence and we will answer any questions that still linger out there."

The hospital board of trustees will vote on the two documents this month. If the hospital board and county commissioners approve the proposed deal, the hospital would be leased for 40 years with two unilateral 10-year extensions to the joint venture partners Sacred Heart and LHP. The new partnership will pay a lump sum of about $155 million to the hospital to pay off existing debt and the remaining money will be used to create a new Bay Medical Center Foundation.

The lease agreement was structured to try to ensure the joint venture partners will maintain the same level of charity care and service level for the community. Sacred Heart and LHP officials have both stated they believe the future success of Bay Medical Center rests on their ability to grow volume and services.

"I think people want to have a single answer to how we got to this point," Johnson said. "I would hope our population knows (dealing with health care reform) is not just the number one story in Bay County; this is the number one story in the nation. ... The entire industry is undergoing monumental changes."

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