Tulare’s hospital district board made public Tuesday night a slate of draft agreements between the district and Adventist Health, the district’s potential partner in operating Tulare Regional Medical Center.
The board plans to continue the discussion at its July 25 and schedule a special meeting for August 1; interested citizens can discuss the agreements at both. Additionally, an ad-hoc committee was formed to provide a review of the documents and recommendations to the board.
The agreements include:
- An interim Management Services Agreement between Tulare and Adventist until voters approved Adventist’s lease of the hospital
- The potential lease agreement between Tulare and Adventist,
- The potential asset sale agreement between Tulare and Adventist,
- A credit arrangement between Tulare and Adventist,
- A security agreement that would pledge collateral between Tulare and Adventist,
- A short form deed of trust and assignment of rents.
During the meeting, one question from the crowd drew significant discussion: could leasing the district’s property to Adventist Health, a faith-based healthcare organization, and allowing it to operate the hospital until the lease was approved, run afoul of the 1st Amendment?
Barry Caplan, a Porterville resident, noted that Adventist Health was a religion-based organization and added that Andrea Kofl, Adventist’s President of the Central Valley Network, described the organization’s care to the Voice as “Christ-centered.”
Leasing the hospital to a religious organizations, and/or allowing it to operate the hospital until the lease was approved, could prove to violate 1st Amendment restrictions on government entities favoring one religion over another, he said.
“I have engaged in an online discussion with a gentleman I have good faith reason to believe works for the IT department of Adventist, and he has explained to me that meetings of management and others often begin with prayers. This is one specific way in which the facilities that the District owns and benefits financially from the lease from will entangle you with religion,” Caplan said. “This is not a statement about the quality of care that will be provided. The constitution does not make exceptions for ‘unless the service is good enough.’”
Todd Wynkoop, an attorney for the board, said that the hospital would not need to worry about those religious issues because it would lease the hospital to Adventist and effectively not have any involvement in Adventist’s Tulare operation.
“There are churches built on leased county land,” Wynkoop said. “Because of this being a lease, you are not operating this facility. You are only owning the land under the facility.”
He went in-depth: the district currently owns and operates Tulare Regional. Once it leases the facility, it will cease to be operated as a public hospital.
“Tulare Regional Medical Center will no longer be a public hospital,” he added. “It will be a private hospital owned by Adventist Health, leasing land still owned by the district, which the district is receiving revenue from.”
Wynkoop said that it was his opinion there were no 1st Amendment issues and that he could write a memo advising the board of the same; but, given the complexity of the issues involved, such a memo could cost $20,000.
“As an attorney at McCormick Barstow, I’d really like you to pay me $20,000 to write that memo,” Wynkoop said. “But as your counsel, what I’d tell you is it’s not $20,000 you should spend.”
He said that during the period between the hospital’s re-opening and Adventist assuming the lease, it would be “wholly appropriate” to ask Adventist to operate the hospital as a secular institution.
“We have not had that discussion,” he said.
Caplan also asked whether Adventist would potentially decline to serve certain groups of people — such as LGBT individuals — or decline to provide mental health, birth control, or other services.
Randy Dodd, Adventist’s Vice President of Business Development, was on hand at the meeting to respond to those concerns.
“I think like many hospitals in our country, we have a religious foundation. There are Catholic hospitals, there are Methodist hospitals, there are Adventist hospitals. We do not turn people away because they don’t share the same faith that we have. In fact, we work very closely with ministerial associations that allow all faiths in to our hospital to care for those religious interests of patients in the hospital getting medical care,” Dodd said.
“It certainly doesn’t change, if you will, the types of services that we provide to all people that come to our facility,” he added.
Responding to a question from the crowd, Dodd said Adventist’s services are only limited by the level of care that each of its facilities could provide.
“We’re not limited by religious directive, if you will,” Dodd said.
Interim Management Services Agreement
Adventist Health would initially administrate the hospital, according to the provided draft of the Interim Management Services Agreement. That agreement, once finalized, would govern until voters approve a November ballot measure that would allow Adventist to lease the hospital.
Under the terms of the agreement, Adventist would manage day-to-day operations of Tulare Regional Medical Center and provide an executive leadership team, including a CEO, CFO, Chief Nursing Officer, and vice-presidents.
The nonprofit would keep the net income earned while it was managing the hospital under the agreement, and take over billing/collection services as well.
Members of Adventist’s management team are already on the grounds of the hospital preparing for the reopening, Interim CEO Larry Blitz told the Voice last week.
“Adventist Health has a presence here at the Allied Building in Tulare, and we’re working with their point guard so to speak Randy Dodd, and almost everything we do we want to run by them,” he said. “Even though the district still has the responsibility to run the hospital until the vote happens, we still want to run things by them because we don’t want them to have to make any changes.”
“They’re there in good faith, dedicating a lot of resources to this project, and we’re basically working with them on a minute to minute basis for them to have the kind of data they need, and us to get the kind of support we need,” he said.
Meetings were being held to discuss needed repairs, salary structures, benefits structures, recruitment, and staffing needs, Blitz added.
If the ballot measure were to fail, and voters did not approve Adventist’s lease of the hospital, its management would end November 30. Day-to-day management of the hospital would revert to the district.
That lease would be for five years, with five initial five-year increments, for a total of 30 years. Requirements in the lease would force Adventist to keep the hospital as an acute care hospital throughout the term of the lease, ensuring that acute care services could not be abandoned for more lucrative, or convenient, forms of operation.
Under the agreement, Adventist would pay a fair market value rent, increased yearly to account for the Consumer Price Index — a measure of inflation.
The first year’s rent would be entirely offset against repayments on a $10m loan that the nonprofit would provide Tulare. The second year’s rent, and each year thereafter, would have 50% of rent payments offset against the loan.
The draft agreement provided to the public also allowed Adventist the option to purchase the hospital. Board President Kevin Northcraft said it wasn’t part of their original pitch to the board.
“One of the things — our RFP process in which Adventist Health responded made no reference to the sale of the hospital,” Northcraft said. “We’re in discussions to try to resolve that issue — don’t panic over the feeling that we’re losing our hospital.”
Another key provision relates to the perpetually-stalled hospital tower expansion: if the tower wasn’t finished within 10 years, and/or the hospital was not considered seismically compliant on or before January 1, 2030, Adventist could exit the agreement with 270 days’ notice.
If the board accepted a loan from Adventist, and/or entered into the Interim Management Services Agreement with the nonprofit, and the lease was not approved, Wynkoop told the board that certain consequences would result.
“Adventist [would] no longer operate the hospital [under the Interim MSA], the line of credit becomes due in five years, and operation and liability responsibility reverts to the district,” he told the board.
“So, we have a short reopening and closure of our hospital, among other things,” Northcraft responded.
Xavier Avila, a member of the board, said that he wanted to impress upon the public the importance of the lease being passed.
“It’s vital that this lease gets passed, overwhelmingly, on November 6,” Avila said.