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Hospital, Mercy Lease Agreement Approved

A full house was on hand last week to witness the Booneville City Council’s approval of a lease agreement through which Mercy, Fort Smith will operate Booneville Community Hospital.

Booneville Mayor Jerry Wilkins noted the attendance, which included the hospital board, and specifically thanked chief executive officer C. David Hill, chief financial officer Stuart Lisko and the three doctors in the audience.

“It’s just been an uphill battle (and) you’ve done a marvelous job to keep the doors open,” said Wilkins. “On behalf of myself, and I’m sure the city council included we’d like to say thank you, we’re glad you’re here.”

The lease, which takes effect on Jan. 1, had been presented to aldermen in their October meeting but facing a deadline of last Friday to have all documents signed, and to avoid meeting during the week of Thanksgiving, the council held it’s November meeting one week early.

Hill said the lease poses “absolutely no risk to the city” because Mercy assumes all risk and reaps all profit from the operation of the hospital once 2014 begins, including the monthly bond payment.

Since the lease agreement was made public, Hill said one of the most frequent questions he has faced is why the existing hospital board must remain intact.

Hill said the reason is the bonds for the hospital were sold through Booneville Hospital, Inc., the corporation must remain viable. To change the bonds, Hill added would require the bonds be reissued and “bond holders aren’t going to want to do that.”

As such, Hill said, the Booneville Hospital, Inc., board of directors will be required to meet annually.

When the agreement was announced in September, Mercy officials stated all previous debt is the responsibility of the hospital.

Among those is a note at First Western Bank in Booneville. Hill also said that he had met with bank officials about the note and informed them of plans to retire the note through accounts receivable collections for services through Dec. 31 , which will be collected 60 to 90 days after the first of the year.

Until then, Hill said, sales tax proceeds will continue to be utilized for the payment, as is the case now.

The tax collection will not be available starting in January, according to the terms of the lease. That caused a question from Dr. Richard Eccles.

“Mercy Hospital, one of the 10 largest health care, religious organizations in the country — they have revenue of $6 billion a year. Why do we have to give our tax money to them,” said Eccles. “When you look at Paris and look at their soccer fields. You look at Mansfield and their football field and their baseball and softball fields. You look at other communities our size that have indoor recreation centers with swimming pools.

“We have a downtown that needs to be renovated. We have a theater that could be renovated with matching grants. Why do they need our tax dollars?”

Wilkins noted the tax proceed distribution was determined through a vote of the people to go toward a hospital.

Eccles said he understood that and wasn’t opposed to Mercy.

“I think all the satellite hospitals have tax support from cities or counties,” Wilkins said. “That cannot be changed.”

Hill also stated that the $360,000 in collections pales in comparison to the “$1.3 million house payment.”

“It’s not like we’re putting a whole bunch of money in Mercy’s hospital when you have almost $1 million just to pay for the building,” said Hill. “Doc I’ll be honest. We spent a lot of money on that hospital, maybe a lot more than we should (have). We’ve got Mercy to come in. (They) don’t pay this kind of money to lease other hospitals of similar size so some of that is offset by tax money.”

Wilkins also renewed his request that the two Mercy’s regional advisory board seats Booneville will receive be filled by a hospital board member and an alderman.

Another question, Hill said, involved the clinic, which Hill said would be a separate, direct lease between Mercy and Dr. Michael Miranda.

Eddie Gossett made the motion to approve the agreement. Mel Brewster seconded. There was no objection.

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