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UMMC Response to Greenwood Leflore Hospital Lease RFP finally revealed

Friday, January 27, 2023, 4:00 pm News Flash Archive

When University of Mississippi Medical Center (UMMC) put in a response/bid to lease the Greenwood Leflore Hospital (GLH) on August 31, 2022, a great deal of effort was made to keep the proposal hidden from the public.

Today, The Taxpayers Channel is publishing both UMMC's RFP Response and Draft Lease for the first time.

In its response and draft lease, UMMC rejected numerous requirements included in the RFP, some of which would be of concern to hospital employees and the general public. The UMMC proposal included:

no job guarantees for any current employees
a short term 10 year lease only
no assumption of hospital debts and liabilities
no coverage for current pension plan underfunding
no liability indemnity for city, county, or hospital officials
only trivial rental payments
no promises to continue to provide specific medical services
no proposed improvements or new service lines

The documents can be seen here:

UMMC Response to GLH RFP

UMMC Draft Lease of GLH

Last September, The Taxpayers Channel filed public records requests to the city of Greenwood, Leflore County, GLH, and UMMC. Greenwood, GLH, and UMMC each denied our records request, claiming the documents were exempt from the Public Records Act.

Leflore County Chancery Clerk Johnny Gary acknowledged receipt of our records request, but never acted upon it. According to state law, the county had 7 business days either to provide the records, or reject the request and provide legal justification for doing so. It has now been over 4 months since our request was filed.

We reported extensively on the secrecy surrounding the lease negotiations, and GLH's history of keeping secret much of the public's business, due to loopholes the legislature carved in the Public Records and Open Meetings Acts to shield government-operated hospitals from the normal sunshine laws that apply to other government entities. See our reporting here: City, county, hospital officials still keeping UMMC proposal top secret; county supervisors very upset about possible adverse terms of the deal

The Taxpayers Channel never received the requested documents in response to our four public records requests, but obtained them elsewhere.

UMMC filed its secret RFP Response on the day of the deadline, August 31st. After many twists and turns, UMMC abruptly pulled out of the talks on November 4. See our reporting here:

GLH announces UMMC has made an offer to take over hospital services; more closures, layoffs announced

UMMC terminates talks to lease Greenwood Leflore Hospital

As we previously reported, the RFP contained several possible "deal breakers," conditions to which we believed no reasonable bidder would agree.

Indeed, UMMC balked at some key provisions laid down in the RFP. For example, on page 3 of the Response, at paragraph 6, the RFP required that:

. . . the prospective Lessee will agree to guarantee the provision of the following level of services following the Closing, at a minimum: . . . continuation of general acute care beds, rehabilitation, surgery and emergency room services as currently offered, unless the County and City agree to a reduction in services.

But UMMC rejected this demand in its Response:

Currently offered services will continue to be available to the community as determined through community need and financial viability, in UMMC's sole discretion.

Thus, UMMC rejected any oversight by the city and county of what services UMMC would offer if it leased the hospital.

At page 4, paragraph 8, the RFP required that the bidder specify:

Annual or monthly rent payments for real property and tangible property.

But UMMC wouldn't actually pay any net money to the city and county for the lease. Instead:

The University of Mississippi Medical Center proposes to pay a rental amount sufficient to cover the cost to maintain property insurance for the real and tangible property in such coverages and amounts as are acceptable to UMMC.

In other words, the only "lease or rent payments" that UMMC would pay was the cost of the property insurance, which the city and county would then be required to purchase with the "rent" money provided.

At page 4, paragraph 10, the RFP states that the:

Bidder should explain how it will protect the County and City from claims or liability arising following the Closing in absence of ability to provide an enforceable third party indemnity.

But UMMC says it cannot and will not provide such protection:

The University of Mississippi Medical Center, as another governmental entity, is not and will not be in a position to protect the City and County from claims of liability arising prior to or following the Closing.

At page 6, paragraph B(2), regarding lease contracts the hospital currently has, either leasing space to or from outside entities, UMMC states that it "would not assume hospital rights and obligations under the current leases, but would rather enter into new contracts for any lease arrangements which it believes advisable to continue."

At page 7, paragraph D, the RFP states that various contracts that the hospital has with physicians and vendors may only be viewed in secret, and asks the bidder to provide a list of the contracts which it will refuse to carry out if it leases the hospital.

UMMC's response is blunt:

UMMC would not assume any contractual obligations of the Hospital, but would rather enter into new contractual relationships with any vendors whose services or supplies UMMC deems necessary for the operations it would undertake if selected as the winning bidder.

This explains why GLH issued notices of termination to all its physicians, in anticipating of UMMC closing the lease agreement under these terms. The, when UMMC backed out of the lease talks, GLH had to extend those contracts which it had prematurely terminated.

At page 8, paragraph B, the RFP states its "EMPLOYMENT DESIRES" as follows:

The County and City also desire to maximize opportunities for its medical staff and its workforce. In addition to the assumption of written key contracts with physicians and physician groups as listed on Exhibit 8, it is the specific desire of the County and City that currently offered services remain available to the community and that all Hospital employees who are not subject to written contracts be offered continued employment from the Closing of the lease on terms substantially equivalent or better than current salary and benefit programs. Bidders should address their ability or intention to meet the desire of the County and City.

But UMMC refused to make a commitment to fulfill that desire:

The University of Mississippi Medical Center is unable to commit to maintaining all hospital employees or contracted physicians. UMMC is committed to operating a viable healthcare system to support the needs of the Greenwood Leflore community. Therefore, we will hire employees and contract with physicians as necessary to meet the needs of the facility.

As to capital improvements, the RFP required that:

Each Bidder should propose any capital and service line improvements it will commit to finance and implement and the time table for these enhancements.

But UMMC declined to provide any specific commitments at all:

The University of Mississippi Medical Center does not currently propose any capital or service line improvements but will commit to evaluate any such improvements for community need and viability.

At page 11, paragraph E, the city and county state that they desire a lease term of not less than 20 years nor more than 50 years.

UMMC offers less:

UMMC anticipates an initial lease term of ten (10) years with three (3) subsequent renewal options of ten (10) years each.

At page 11, paragraph E, there is an "RFP Non-negotiable Requirement":

No sublease or assignment of any lease during the entire lease term, and no lease or other transfer of Hospital real property shall be allowed during twenty (20) years from the Closing of a lease without prior approval of the County and City.

But UMMC disagrees with that "non-negotiable" requirement:

UMMC anticipates provisions within the lease which allow UMMC to sublease or assign, in whole or part, as deemed necessary and appropriate by UMMC, to sustain a healthcare system which meets the community's needs while remaining viable.

At page 12, paragraph F, the RFP again addresses the amount of rent the bidder proposes to pay:

The Bidder should clearly state the amount of rent that it is proposing to pay for the lease for the Hospital. The rent should be based on the value of the land, licensed beds and services and facilities owned by the County and City. Rent values should be designated as for real property and tangible property.

But UMMC reiterates its rent "low pay/no pay" position:

The University of Mississippi Medical Center proposes to pay a rental amount adequate for the City/County to maintain the property insurance on the facility and its contents in such coverages and amounts as are acceptable to UMMC.

At page 12, paragraph H, the city and county clearly are hoping that the bidder will take responsibility ("assume") the debts and liabilities of the hospital:

Each Bidder should explain whether it intends to assume the Hospital's existing, disclosed debts and its lease obligations, including the Hospital's unfunded pension liability . . . .

But UMMC says no:

The University of Mississippi Medical Center does not propose to assume any of the current debts, liabilities or any other obligations of the hospital, including but not limited to its unfunded pension liability.

As of the latest audit of GLH's pension fund, it is $18+ million in the hole.

At page 13, paragraph I, an "RFP Non-Negotiable Requirement" requires the bidder to indemnify city, county, and hospital officials from liability:

The prospective Lessee should agree to indemnify and to hold the City, City officials, County, the members of the Board of Supervisors and other County officials and the Hospital Board members and the County's and City's respective officers, employees and agents harmless from and against any and all liability arising in connection with the operation of the leased assets by the Lessee from and after the date of Closing. In the alternative, Bidder may explain any exception or explain any alternative claims escrow or insurance that will be provided at the Bidder's cost to assure equivalent protection.

No Can Do, replies UMMC:

UMMC does not have statutory authority nor does it propose to indemnify nor hold the City, County, Board, or any other entities or individuals harmless from and against any liability arising in connection with the operation of the facility. UMMC will be responsible for its own acts and omissions insofar as authorized under the Mississippi Tort Claims Act.

At page 13, paragraph J, another "RFP Non-Negotiable Requirement" requires 12 months of continued employment for employees and physicians:

Each Bidder should indicate its willingness to continue to offer employment to those employees of the Hospital on the Closing for at least 12 months from the Closing at terms of employment equal to or better than currently in effect or such longer period as may be contained in any written physician contract listed on Exhibit 8.

But UMMC repeats its refusal to agree with this:

UMMC is unable to guarantee the employment of any current employee of the Hospital.

At pages 8, 10, and 11 of the Draft Lease, UMMC describes a "Capital Improvement Account," that will be funded by UMMC, but at its sole discretion, by paying additional "rent payments" to the city and county. But the money in the fund will belong to UMMC, and will be spent at UMMC's discretion to make capital improvements to the hospital, and to purchase equipment. Any remaining funds left upon termination of the lease will be returned to UMMC.

In other words, none of the money can be used by the city or county at all, except to pay for improvements to the hospital at UMMC's direction.

Most of the attached schedules to the Draft Lease were left blank by UMMC.

All of this explains the crisis that developed during the negotiations regarding the pension liability, the $5.5 million owed by the hospital to Medicare, and the deferred maintenance costs of $3.5 million.

UMMC wasn't going to pay for any of that, but there was no proposed "rent money" for the city or county to cover them either. Under UMMC's proposal, the city and county would receive no net money to play with, or to finance other, non-hospital projects, other than to pay for the hospital's property insurance, and to pay for hospital improvements that UMMC decides it needs in the future.

Now that the UMMC lease offer has collapsed, Greenwood and Leflore County are pushing forward to "re-advertise" a possible lease of GLH with another RFP. The responses that UMMC made to the original RFP are notable, because from the start, UMMC rejected several of the "non-negotiable" requirements that the original RFP imposed.

No doubt the draft lease we have published today was revised many times during the subsequent, failed negotiations.

That being said, it is important to recognize the points on which UMMC rejected the requirements of the original RFP, and to raise the question, will those same requirements, that UMMC found objectionable, be included in the proposed new RFP?

To review our reporting on GLH and its financial woes, please see here: Index of Greenwood Leflore Hospital news articles

John Pittman Hey
The Taxpayers Channel

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