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Council Given Lease Agreement

<p>Legal advice. Booneville Mayor Jerry Wilkins (standing) chats with city attorney Johnny Williams about a 35-page lease agreement between Booneville Community Hospital and Mercy Fort Smith prior to last week’s city council meeting. Action was delayed on the lease until a meeting in November.</p>

Legal advice. Booneville Mayor Jerry Wilkins (standing) chats with city attorney Johnny Williams about a 35-page lease agreement between Booneville Community Hospital and Mercy Fort Smith prior to last week’s city council meeting. Action was delayed on the lease until a meeting in November.

The Booneville City Council, at the request of Mayor Jerry Wilkins, declined to take up a lease agreement between Booneville Community Hospital and Mercy Hospital in Fort Smith.

On Oct. 10 Mercy and BCH announced an agreement wherein the Fort Smith hospital will lease and operate BCH as Mercy Booneville starting on January 1. Mercy was due to start a temporary agreement with the hospital on Nov. 1.

Wilkins’ insistence that the council delay acting upon the lease was based, he said, upon timing. Wilkins received a copy of the 35-page document on Friday, just three days in advance of last week’s meeting, and some aldermen were seeing the document for the first time on Monday.

Hospital chief executive officer C. David confirmed the short notice but said waiting until the next regularly scheduled council meeting could be problematic. However, because the next regularly scheduled meeting would be the week of Thanksgiving, Wilkins said that meeting is likely to be pushed up to Nov. 18.

Hill said he did not expect there would be any issues with the agreement, which has been approved by attorneys for Mercy, the bond holding company, and the hospital’s own counsel.

Hill also attempted to highlight the document’s specifics which set up a five-year lease with a five-year renewal option.

“I’m not hiding anything, there’s just a lot of stuff in here. (City attorney) Johnny (Williams) has read it and there’s just a lot of stuff in here that pertains to fireman’s care, and government participation and accreditation, and Hillburton and lien and environmental law,” said Hill. “It’s very, very comprehensive.”

In terms of employees, Hill said himself, chief financial officer Stuart Lisko and all employees “are still there.”

The lease, Hill said, covers the new hospital building but excludes the old building and the area known as “the ditch” on the east side of Daniel Avenue. Also included are the rural health clinic, the home health and maintenance buildings and the operation of the clinic at Magazine Schools.

“Mercy pays the monthly bond payment and all the fees associated with the bond, as well as the $100 a month lease to the City of Booneville,” said Hill. “Mercy assumes virtually all current contracts – they will look at each and every one of them. We keep all the accounts receivable.”

Hill said that amounts to $1.9 million presently and, although after Jan. 1 there will be no additional receivables, the money derived from receivables through Dec. 31 will be used to retire hospital debts, including a loan at First Western Bank.

When the agreement was announced in Fort Smith, Mercy officials stated Mercy would not be inheriting any debt.

Existing debt, according to BCH chief financial officer Stuart Lisko will include a loss of $224,866 from September. The first quarter loss was $135,034 but that is $108,000 better than hospital officials had budgeted for the first quarter of the fiscal year.

Also retained by the hospital are cost settlement money from Medicare and Medicaid through Dec. 31, Hill said.

Mercy also purchases all current inventory and supply from the hospital and will adopt all employees at their current service year count, paying benefits such as vacation accrual accordingly, but charging those against the hospital.

Hill said the inventory and supplies value outweighs the benefit cost.

“Mercy pays all expenses going forward after January 1,” said Hill. “They pay all utilities, insurance, license, permits, repairs, any replacement equipment.”

Hill said it also should go without saying but “Mercy is a Catholic, faith-based organization so we will be operated under the Catholic ethical and religious directive for healthcare services. We will not perform abortions at our hospital.

“We don’t do it today, that’s not going to be a change.”

The corporate board of Mercy Fort Smith will be the governing board of the hospital, Hill said, but there is an advisory board that makes recommendations for the regional hospital for which Booneville is permitted two seats.

Asked by Wilkins who would be in those seats, Hill said he suspected members of the current hospital board. Wilkins asked if that could not be one hospital board member and one alderman.

The hospital board will also continue to exist, Hill said at the request of current hospital board president James Fields, but after Jan. 1 it will have few assets to oversee and, after the transition, will need to meet infrequently, but at least on an annual basis.

Hill also said he and Lisko would handle all financial filings for the board.

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