Official: Deal won’t be inked until September

The negotiations over the future of Washington’s hospital and its affiliated medical practices will likely continue for another three months, the chairwoman of the Beaufort Regional Health System Board of Commissioners said Wednesday.

The pending agreement with University Health Systems of Eastern Carolina for the lease and subsequent purchase of Beaufort Regional Health System won’t be completed until September, according to board Chairwoman Alice Mills Sadler.

“The health-care industry is one of our country’s most highly regulated areas and a transaction of this type is very complex,” Sadler said. “All parties are working diligently to complete the requirements of the transaction and regret that aspects of the transaction must, of necessity, take time.”

Sadler’s remarks came in a prepared statement she read after an hour-long closed-door meeting of the BRHS board and its lawyers Wednesday afternoon.

“The hospital wants to assure the citizens of Beaufort County of its strong commitment to the best interests of quality health care in Beaufort County and of its equally strong commitment to complete this transaction in a manner that will assure the continuation of quality health care in Beaufort County in the future,” she read.

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 BRHS board members.

Joseph M. Kahn, a lawyer for the BRHS board, said in an interview after Wednesday’s meeting that the terms of the letter of intent remain unchanged as a result of the continuing discussions among the lawyers representing BRHS, UHS and the Beaufort County Board of Commissioners.

“The health-care industry is highly regulated,” he said. “We have to make sure all the i’s are dotted and the t’s are crossed.

In the meantime, the financial picture for BRHS is improving thanks to a pending adjustment in the system’s financial audit, hospital reimbursements from Medicaid and efforts under way to improve collections for services, the board was told.

BRHS expects a payment of some $2 million in reimbursements from Medicaid by the end of the month, according to interim Chief Finance Officer Richard A. Reif.

“At which time, we should be prepared to reimburse the county for any lease payments due,” he said.

The hospital’s financial picture also has improved by some $1.5 million as a result of an error contained in the September 2010 audit that incorrectly calculated depreciation of some items. As a result, an amended audit will be submitted to the BRHS board and the county commissioners, he said.

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 county commissioners were scheduled to meet in a closed-door session with their lawyers regarding the pending agreement with UHS late Wednesday afternoon.

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.

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

Board members Clifton Gray and Edwin M. “Sandy” Hardy were absent from the meeting.