Siloam Springs considers deal with Community Health Systems
Posted on Tuesday, August 19, 2008
SILOAM SPRINGS — The city might receive a new hospital and $ 8 million up front if it agrees to a deal with the company that owns hospitals in Springdale, Bentonville and Johnson.
The deal would be with Community Health Systems Inc. of Franklin, Tenn.
That was the discussion during a joint workshop Monday night between the city board and the hospital board.
The city would lease the new hospital to the company, and the company would agree to build the hospital within three years.
The Siloam Springs Board of Directors and the Siloam Springs Memorial Hospital Board of Governors must approve the deal.
“ We’re actually getting $ 8 million plus our working capital, ” City Administrator David Cameron said. “ The lease gets us some local control. ”
A hospital board would oversee the operations of the hospital like the current one does. The hospital chief executive officer and residents would make up the board, which would likely include nine members.
“ The board would be similar, doing everything it does now, ” said Michael Portacci, president of division II operations for Community Health Systems. “ We’ll screen and interview candidates for the hospital board. ”
Current hospital board members have remained on the board for the majority of the company’s acquisitions.
The company likes Siloam Springs because it’s close to its other hospitals in the area.
The company owns Northwest Medical Center in Springdale, Northwest Medical Center in Bentonville and Willow Creek Women’s Hospital in Johnson.
“ It’s opportunity, ” Portacci said. “ It’s both defensive and offensive. ”
City and hospital officials and doctors of Siloam Springs Memorial Hospital traveled to Shelbyville, Tenn., to look at a county-owned hospital that Community Health Systems built recently.
The company stipulated in its contract with Bedford County, Tenn., that it would build the hospital in five years, but it was completed in 2 1 / 2 years, Cameron said.
The $ 40 million, 104, 000-square-foot hospital was built on 25 acres and was licensed for 60 beds, according to a June 12 article in the Shelbyville Times-Gazette.
Dr. Bud Meehan said the staff at the Shelbyville hospital said moving into the new hospital was like moving from the “ dark ages. ”
“ We asked some tough questions, and I think we got very good answers, ” Meehan said. “ The people in the community got what they need. ”
Cindy Kugel, chief nursing officer for Siloam Springs Memorial Hospital, said the staff told her that when Community Health Systems said they would do something, that’s what they would do.
Hospital staff who quit complained of being intimidated by the size of the new hospital compared to the older one.
“ People that left, left on their own, ” Kugel said.
The hospital in Siloam Springs is expected to cost $ 35 million, said Kenneth Hawkins, senior vice president of Community Health Systems.
He projects the size of the hospital to include between 50 and 100 beds and 100, 000 to 120, 000 square feet.
He has yet to assess the hospital’s needs, so he could not give the exact size of the building.
After the meeting, the hospital board voted unanimously for the city to go ahead with the deal.
The city board is expected to vote on the deal Tuesday night.
The next phase, if the agreement is approved by the city board, would be the due-diligence process, which is expected to take 90 days, Cameron said.
He said he would report to the city and hospital board every two weeks during this process.
The city recently purchased 63 acres in northeast Siloam Springs on which to build a new hospital.
A deal with prospective buyer Community Partners LLC fell through last year.
Community Health Systems, a publicly-owned company, has 116 hospitals in 28 states.
It’s revenue in 2007 was $ 7. 1 billion and is expected to be $ 11 billion for 2008.
FEEDBACK:
Something to say about this topic? Submit a Letter to the Editor online
