New River Medical Center directors approve lease, affiliation agreements; Schneider resigns from district board

New River Medical Center’s Board of Directors approved lease and affiliation agreements Thursday night to formally affiliate with St. Cloud-based CentraCare Health System effective April 1.

The board’s approval of the two agreements wasn’t unanimous, however.

Prior to the board’s resolution vote, Boardmember and Silver Creek Township representative Doug Schneider resigned in protest.

Schneider wasn’t happy legal language and terms that were included in the leasing documents presented by Thomas Schroeder, New River Medical Center’s legal counsel. He announced he would not vote on the documents presented and confirmed he would permanently step down from his board position effective immediately.

Schneider left the board meeting room Thursday night before the affiliation and lease agreement vote was taken.

Boardmember Linda Doerr announced she would abstain from voting on the two agreements, citing a conflict of interest. Doerr is employed by CentraCare as a vice president for senior services at St. Cloud Hospital and is CEO of St. Benedict’s Senior Community.

The board’s initial vote on the lease and affiliation agreements ended in a 3-3 deadlock. After further discussion that addressed concerns about providing the public with additional information about the affiliation and leasing process, board members voted 5-1 to approve the agreements and conduct a public information meeting in early March to further explain the significance of Thursday night’s vote. Doerr also abstained from that vote.

Schneider responded to a media email request Friday morning  requesting further clarification of his board resignation decision.

“I feel this whole process was designed to keep the public uninformed,” he stated. “Having a committee to negotiate this lease/purchase allowed them [the board] to get around the open meeting laws.  As an elected representative, I only received information less than for days before a closed-door meeting and less than three days to make a final decision at an open meeting.  All along the public was told that this was an affiliation/lease not a lease/purchase.  I live in this community with my friends and neighbors and I will not be party to deceiving them in any way.”

Schneider was referring to a purchase option provision in the lease agreement that will allow CentraCare to purchase New River Medical Center if $2 million were placed in a restricted account maintained by a tax-exempt, non-profit community foundation that would support or promote activities to benefit the general health in communities served by the hospital district.

“I don’t feel enough work was put into the sale portion of this agreement,” Schneider said. “The presentation given at the meeting [Thursday] only showed one side of the story.  The hospital has not been valued in any way as to what it is worth.  By not valuing the hospital, the citizens lose out on any additional services, money, or future growth to the hospital.  I don’t feel any due diligence was done in regards to the sale of this hospital.”

Schneider said his resignation left Silver Creek Township without any representation in the affiliation and lease agreement discussion. “My hopes are that this will give the seven hospital districts some type of ground to fight this legally,” he said.

In his email, Schneider also said he felt a better deal could have been negotiated for the purchase of the hospital.

“I think CentraCare is the best fit for the community and is a great organization, but a lease/purchase and not an affiliation/lease is not right,” Schneider said.

Since January, CentraCare has operated New River Medical Center under a management agreement signed by both organizations. During this time, both parties have been working towards finalizing the lease and affiliation agreements, New River Medical Center selected CentraCare after spending several months analyzing the pros and cons of affiliating with a health system.

CentraCare will lease New River Medical Center’s facilities for a 30-year period, with a renewal provision to lease for 60 years.

New River Medical Center and CentraCare have agreed to enter into the due diligence process which includes an independent audit by an outside agency. After the completion of pending due diligence and final approval by the CentraCare Health System Board of Directors, the affiliation will move forward.

The approved agreements confirm CentraCare’s pledge to strengthen and grow local health care services,  stated a news release issued Friday morning. CentraCare’s financial commitment to the Monticello-Big Lake Hospital District will total more than $68 million, and include the following:

·CentraCare will recruit and maintain primary care and specialty providers who support local health care, an estimated $1 million investment during the first 18 months of the affiliation agreement;

·CentraCare will invest in local facility, capital and technological advances that will allow the New River Medical Center campus
to remain state-of-the-art. Specially, CentraCare will fund $21.3 million in such improvements in the first five years of the affiliation agreement and $24.3 million in the second five years of the agreement.

· CentraCare will invest a minimum of $3 million to  maintain, develop and grow services to ensure a continuum of health care services are offered and provided locally. To accomplish this, CentraCare will increase the number of primary care physicians employed locally through New River Medical Clinic or any affiliated successor clinic, reopen the obstetrics and birth center by the spring of 2014, maintain locally-based acute inpatient, emergency room, ambulance and skilled nursing facility services and establish an observation unit and expansion of emergency room facilities and services.

· CentraCare has agreed to ensure New River’s financial viability through commitments regarding current debt and offsetting operating losses in order to avoid future tax levies by the hospital district. CentraCare will assume $11.6 million in years one through five of the affliation agreement and $7.2 million in years six through 10, paying principal and interest payments on existing New River bonds and capital leases.

·CentraCare will encourage and enable continued local input for local health care through community representatives on a local governing board. The agreement approved Thursday listed the following local board representation structure:  One member who is a district representative; one member who is not a current member of the district board and who resides within the boundaries of the District and who is appointed by the district from nominees proposed by CentraCare; two members who are appointed by CentraCare and ex-officio members that include the president of CentraCare Health System – New River, LLC, the health care facility administrator and the hospital’s chief of medical staff. Employees will have the opportunity to become employed with the new CentraCare affiliate.

“New River Medical Center is proud to partner with CentraCare Health System,” said Sheldon Johnson, New River board chairman, in a news release issued Friday morning. “We believe CentraCare is the best partner for our organization, our patients and our Hospital District.  CentraCare has demonstrated they are committed to growing local health care services and investing in our local medical community.”

“We are pleased to have the opportunity to strengthen and expand health care services in the Monticello/Big Lake area,” added Dr.Terry Pladson, CentraCare’s chief executive officer. “Our mission is to work to improve the health of every patient, every day.”

See next week’s print edition of the Monticello Times for a full report on the Feb. 14 New River Medical Center Board of Director’s meeting and the hospital board’s decision to formally affiliate with CentraCare.