While Orangeburg County Council has given the Regional Medical Center permission to borrow $22 million, it still wants RMC trustees to consider leasing out the hospital, the chairman of county council says.

Orangeburg County Council Chairman Harry Wimberly said after more than year of waiting, council decided to give the hospital permission to borrow following consultation with its financial advisor.

But he says an unsolicited 2003 offer to lease the hospital by Community Health Systems should be further examined as an option. CHS purchased QHR, which has a contract to manage the hospital, in July 2007.

Wimberly said the county has an "open position" on what hospital trustees do, as long as they proceed in a manner that is financially sound and act in the best interest of the hospital. He said council is not necessarily for the hospital being sold or leased.

"I believe I would say one could form the wrong opinion to just leave the unsolicited offer we received," Wimberly said. "From the medical standpoint, there are some things in there that could really help Orangeburg County. Whether it is the best thing or not, that would be the decision the board will have to make a collective decision on."

CHS offered a 30-year lease at $7 million a year, plus $2 million in taxes a year and other considerations.

In a letter dated July 3, 2003, CHS Senior Vice President Kenneth D. Hawkins said the company would provide "the capital needed to recruit new physicians, add services and renovate and maintain the hospital as a state-of-the-art medical facility."

CHS also said it would also "put in place operational efficiencies" which it believes would increase market share by reducing patient out-migration.

And Wimberly said he has heard rumors from good sources that CHS would still like to lease the hospital. He would not name the sources.

"The fact is that CHS wants to lease the hospital, still," Wimberly said. "CHS owns Quorum, therefore it is the feeling of council that we would not lose any value by having this agreement." QHR was formerly known as Quorum.

Wimberly said the CHS offer is one of numerous offers the county has received over the years to purchase or lease the hospital.

Orangeburg County Administrator Bill Clark said the county has never acted upon any of the offers, leaving the hospital autonomous in its decision making.

"There was never any will for council to get involved in that," he said. "There was never any desire to follow through on that."

Hospital to review

county conditions

The county has said if the hospital wants to borrow $22 million, both QHR and CHS will have to sign paperwork stating they will not lease or buy the hospital for any less than the appraised value or the "unsolicited offer of 2003," whichever is greater.

Wimberly says council just wants to make sure that borrowing the money won't lower the hospital's value.

Now the hospital is studying how to proceed in light of the conditions council has placed on it.

Chairman James Amaker said the hospital board will review the county's conditions over the next few days and weeks to better decide on how it will move forward.

"The board has not had a chance to make a decision," Amaker said during a phone interview last week. "There are still a few things we need to get some answers on."

Amaker is referring to the 18-page informational packet trustees received from the county a day prior to their January board meeting. In the packet, council provided the hospital with the terms under which it would allow it to borrow $22 million.

Amaker said the board will look at whether now is still a good time to enter the bond market, as well as council's terms.

The matter was not brought forward during the hospital's January board meeting, but prior to the meeting RMC President Tom Dandridge noted that an executive session would be needed to discuss the issue.

Following the executive session, Dandridge said the matter was discussed and that there will be a meeting in the near future to begin the regular procedure related to a bond issuance, such as information gathering and setting time lines. No date has been set for that meeting.

Amaker said, in the interim, County Council's requests have also been forwarded to CHS and QHR for review.

Michael Blackburn, QHR regional vice president, said any decisions regarding the strategic direction of the hospital will be made by the hospital's board and County Council. The hospital is owned by Orangeburg and Calhoun counties.

"QHR has enjoyed a positive and productive relationship with the Regional Medical Center and we look forward to continuing our partnership with Orangeburg and Calhoun counties throughout the course of our management contract and into the future," Blackburn said.

"CHS is looking at that paperwork. I would expect there would be some response in the near future. It is the board's responsibility to take our advice, take others' advice. They will be the one to make a decision on this. We don't have a particular position at the moment," he said.

To lease or

not to lease?

Speaking on his own and not as board chairman, Amaker said there is little question in his mind pursuing the sale or lease of the hospital, "would not be in the best interest of Orangeburg County or Calhoun County citizens."

"I don't think it is in the best interest because with you leasing or selling the hospital to a company that is interested in strictly the bottom line, then that is what they would be interested in," he said. "All the money we could have for the patients we take care of now, they would not have to take care of those patients. But this is a decision the whole board will have to make when the time comes."

Calhoun County Council Chairman David Summers echoed this sentiment, calling the possibility of a sale or lease "ludicrous."

The hospital is owned by Orangeburg and Calhoun counties.

"None of us, either Orangeburg or Calhoun County, could afford to pay what it would cost us for our indigent care," Summers said, noting that the hospital does not cost the counties anything. "The hospital is financially strong now. It was strong financially 40 years ago. If the time comes, then we need to worry about it. Right now it is not a good time to ride a good horse to death."

Summers said Calhoun County Council has had few problems with the RMC. And nothing has changed.

"We don't have a problem with the hospital as it stands," Summers said. "We have a good attorney who checks everything out. Sometimes you can over-lawyer something."

He did thank Orangeburg County Council for deciding to move forward with the bond issuance. Calhoun County Council endorsed the borrowing in Nov. 2006.

Wimberly defends

Orangeburg County

Wimberly said County Council's approval of the bond, after a little over a year of withholding its blessing, is not an about-face measure.

"No, we were not in error," Wimberly said. "There was never any doubt that the hospital needed help. It was just a matter of time."

"It was a decision council made for the betterment of the hospital," Wimberly continued. "The advice we got from our financial advisor was that without a cash infusion into the hospital, that they would definitely be headed to some problems."

Wimberly said County Council was initially willing to give the go-ahead when the first bond request was made, though at that time it also wanted to issue the same stipulations. He said the stipulations were "basically refused" by the hospital trustees.

"We sent a request back to the hospital that before we would consider the bond issuance, we would certainly have to have some type of incentive contract from Quorum," Wimberly continued.

Beyond the assurance letter agreement between CHS and QHR, Council is also requiring the hospital to follow the county's rules for borrowing money.

Council also wants an affidavit stating that the $25 million transferred to Edisto Health Foundation came back to the hospital and that the "funds are invested according to the law of public funding."

During a joint October 2006 session, Council questioned why they weren't informed about RMC giving some $25 million to a new foundation that is able to earn a higher return by making investments the hospital isn't allowed to under state law.

After council reiterated its request that RMC change its investment strategy, a split board of the Edisto Health Foundation agreed two months later to return the $25.4 million to the hospital over a six-month period.

Financial matters

Orangeburg County Administrator Bill Clark said the financial operations of the hospital has been a concern of the county.

"Historically, the operation margins at the hospital have been very small and some years they have actually gone down from a profitability standpoint," he said. "While there is an obligation to infuse cash into the operation, along with that goes along the obligation to make enough payments to repay it. You have to be careful that you are not overcommitting the ability of the hospital to pay back $22 million. That is what we wanted to be careful about."

Wimberly said he hopes the stipulations will help to clear the air somewhat between both the county and hospital.

"There has been a lot of mistrust on both sides and let's hope by county council putting forth this resolution, it will help solve a lot of that."

T&D Staff Writer Gene Zaleski can be reached by e-mail at gzaleski@timesanddemocrat.com or by phone at 803-533-5551. Discuss this and other stories online at TheTandD.com.

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