Plan to Save LG Hospital Explained to City Council

Craig Moreau, CEO of the Hospital Center of Excellence (HCOE), gave an update to the La Grange City Council Monday night. HCOE plans to take over the management of St. Mark’s Medical Center (SMMC) from Community Hospital Corporation (CHC) effective Sept. 1.

“Over the past 18 years the hospital has faced numerous challenges including a fundamental shift to outpatient care,” Moreau said. “Additionally, the hospital has a substantial mortgage payment, an onerous Master Lease Vacancy Agreement that has had SMMC paying for vacant space in the medical office building, and management challenges, all of which have been exacerbated by a catastrophic lack of funds almost from the start.

“The result of these challenges has left the hospital with almost no cash on hand on more than one occasion, and that has precipitated increasing involvement by CHC, headquartered in Plano,” Moreau added. “While the board of the hospital bears some criticism in the community, the current board has not always had many options. They are unpaid volunteers, and having met all of them, I believe they have done what they could to meet the challenges at that time with integrity, and their hearts are in the right place. With all that said, it is time for a change.”

Moreau said HCOE brings a fresh perspective and experience to the table. He said HCOE needs $8.5 million in equity funding to address the hospital’s financial challenges. He said some community members have agreed to help with the funding. He said HCOE also met with nine area banks “to gauge interest in a local participating loan to refinance the mortgage.”

“CHC has generously agreed to leave the $1.44 million owed to them by SMMC on the table,” Moreau said. “We have legal counsel and hospital transaction experts working with us to address the challenges that have surfaced, and we are still on track.”

He said HCOE will seek financial assistance from the public. “We will be reaching out to the community starting next week to solicit equity funding through a form of tax advantage borrowing,” he said. Once HCOE takes over management, Moreau said, they plan to re-open general and orthopedic surgery along with endoscopy. Moreau said the Rural Emergency Hospital (REH) designation that St. Mark’s obtained earlier this year will remain in place for the time being. The REH designation brings the hospital more than $3.3 million (per year) in “relatively unrestricted federal funding.”

REH rules state that patient hospital stays may not average more than 24 hours.

“However, that doesn’t mean we can’t keep people for an extended period of time,” Moreau said. “We have to average 24 hours or less of observation. If someone needs to be there two or three days, that just means we need to have some other people there for two or three hours to balance those out. So starting almost from day one, you will see a fundamental shift in the patients who are there.”

Moreau said St. Mark’s may not manage in-patient services under the REH designation, but he said the hospital may be able to contract with an outside provider to manage in-patient services.

“A large portion of our business plan involves leasing space out to specialty providers,” he said. “We could do things that haven’t been done in the St. Mark’s building for years or never at all, such as oncology, dialysis and things that are desperately needed in this community. Cancer kills Fayette County residents almost three times as high as it does in other areas. Certain vascular events are as much as six times as high in death rates for our residents. Those are things we are going to try and rectify quickly.”

Moreau spoke about HCOE’s vision to expand its service area beyond Fayette and Lee counties to become a regional medical center.

“We want to offer things here that are not offered anywhere else close to here,” Moreau said. “From cancer to vascular care, routine screenings – our imaging systems are pretty good, and our imaging staff is exceptional.”

Councilwoman Violet Zbranek said that Kelley Oliphint, the first administrator at SMMC, had a vision for the hospital to become a regional center like Moreau described. Oliphint died from brain cancer in 2008 at the age of 42.

“I never met Kelley Oliphint and honestly I didn’t know too much about him, but as we dug into this, his name came up over and over and over again,” Moreau said. “He really had a vision to take it to something grand. Unfortunately, he succumbed to something that’s killing our patients on a high basis – cancer. I think about him often. I feel like he is still a large part of what’s going on, and we have a vision to become a regional asset.”