Officials: BRHS deal won’t be inked until June

Published 1:19 am Wednesday, May 4, 2011

The pending agreement with University Health Systems of Eastern Carolina for the lease and subsequent purchase of Beaufort Regional Health Systems won’t be completed until June, officials with the local hospital said Tuesday.

“We are making progress,” said Beaufort Regional Health System lawyer Joseph M. Kahn at a meeting of the BRHS Board of Commissioners.

Kahn, who participated in the meeting via a telephone conference call, said that despite that progress, a deal among Beaufort County, UHS and BRHS for the future management and sale of the local hospital won’t be completed until “the first or second week in June.”

In March, UHS lowered its offer for the 30-year lease-purchase agreement from $30 million to $25 million in an amended letter of intent presented to members of the BRHS board.

That letter of intent sets the deadline for negotiations at May 31.

BRHS board member Hood Richardson echoed Kahn’s remarks, saying the county, UHS and BRHS probably will miss the May 31 target date “by a week or 10 days.”

UHS is “playing their cards very close on this,” he said.

Richardson also serves on the Beaufort County Board of Commissioners.

In January, the BRHS board voted to accept the lease-purchase offer from UHS, but the ultimate decision to accept or reject the offer lies with the county commissioners.

The amended letter of intent presented by UHS also reduces the $10 million that UHS initially offered for the purchase of the BRHS property at the end of 30 years by “the amount of any Excluded Liabilities paid by UHS on BRHS or its affiliates behalf.”

There are 10 such liabilities listed in the letter. They include liabilities associated with taxes, contracts not assumed by UHS, environmental hazards associated with underground storage tanks and asbestos exposure, issues related to employee grievances or terminations and any liability associated with Medicare, Medicaid or other third-party payor programs as a result of billing errors, fraud or violation of any health-care statutes, among others.

The letter also stipulates that UHS will reserve the right “to require a portion of the prepaid lease payment to be placed in an escrow account for a reasonable period to be used by BRHS or its affiliates to pay any Excluded Liability.”

Sources familiar with the negotiations have told the Washington Daily News that some of the current discussion among lawyers for the three groups involves the amount of money to be placed in escrow to cover any costs that arise as a result of any of these liabilities.

They have told the Daily News that some concerns have been raised by negotiators over possible liabilities faced by BRHS under statutes governing physician self-referral.

The lease-purchase offer from UHS also includes the promise of “a minimum of $21 million in capital expenditures” in the first five years of the lease and listed four priorities including conversion at BRHS to a system of electronic medical records, emergency department expansion and renovation, patient room renovation, expansion and renovation of the Marion L. Shepard Cancer Center and “annual normal capital expenditures.”

Sources familiar with the negotiations have told the Daily News there have been differences of opinion among county leaders, UHS and BRHS over the order in which these projects will be completed.

In other business, the BRHS board voted 4-2 to buy equipment used in prostate and urinary-track procedures to replace aging equipment that had begun to malfunction during some surgeries. Board members Clifton Gray III and Howard Cadmus cast dissenting votes.

Board Chairwoman Alice Mills Sadler and members Allen Roberson and Edwin M. “Sandy” Hardy were absent from the meeting.