In 1932, a 29-year-old nurse from Nebraska shelled out her own cash for a hotel gone bust and turned it into Indian River County’s first hospital.
By today’s standards, Garnett Radin’s gumption seems boundless. But her wildest dreams probably never envisaged the enterprise that exists today, as the Indian River Medical Center seeks a much larger partner to take over its sprawling campus.
The institution Radin started with her $22,000 was appraised last year at more than $150 million. That was just the land, bricks and mortar, not equipment, machinery or furnishings. It also didn’t include intangibles like the reputation of the hospital, the devotion of its wealthy donors, and its strong position in an attractive market.
Those are all desirables that four leading healthcare companies are making a pitch for in person this week in the hospital’s administration wing.
Orlando Health was first up Tuesday. That company, a nonprofit, owns the well-respected Orlando Regional Medical Center. Thursday afternoon at 3:30 p.m., the for-profit health care giant HCA was to make its pitch and explain its interest in owning another hospital so close to one it already owns, Lawnwood Regional Medical Center in Fort Pierce.
Then Friday morning, Adventist Health System, the faith-based chain which owns Orlando’s Florida Hospital, was to make its presentation at 11 a.m. And Saturday, also at 11 a.m., the renowned Cleveland Clinic was set to float its notion of including IRMC in its esteemed brand. Cleveland Clinic’s only other hospital outside of Ohio is in Broward County, about two hours south of Vero.
The last presentations by consultants which were open to the public drew a packed room of interested citizens. Prior to that, though, public interest in the process had disappointed hospital officials, particularly the elected trustees of the Indian River County Hospital District Board, who are charged with protecting taxpayers’ financial interest in the hospital.
That Hospital District, acting on behalf of taxpayers, owns the land and most of the buildings on the hospital campus. They comprise the majority of a portfolio of healthcare-related real estate owned by the District.
While Nurse Radin ran the hospital for years even after the formation of the Hospital District in the 1950s, today the hospital is operated by an independent nonprofit corporation, IRMH Inc. Its lease with the district goes back to May 1985, when it was agreed that what was then called Indian River Memorial Hospital would take over medical center operations.
As “rent,” the hospital management company agreed to pay the district’s existing and future debt, including bonds. To date that sum totals $80.8 million.
The IRMC lease runs through 2034, but when a new partner is selected, an amended lease will likely be negotiated; all four finalists, including the only for-profit chain, HCA, are looking to lease the buildings, not buy them outright. All offered to spend large sums on the property over the next five to 10 years – up to $265 million, in the case of HCA.
Two of three non-profits would take control of the hospital in what is known as a member substitution, assuming both hospital corporation assets and debts. The third nonprofit, Orlando Health, tentatively proposed an asset purchase, but was said to be flexible about its acquisition structure.
HCA also suggested an asset purchase. The assets purchased would likely include hospital equipment and supplies and medical facilities not owned by the Hospital District.
As for the presentations this week, Barry Sagraves, a consultant from the Chicago-based Juniper Advisory, urged hospital and district officials not to think about dollars at this stage. Rather, the focus should be what is best for future health care for members of the community.
“Whether money goes to the district or the hospital or a community foundation, it’s not the time to start worrying about that. You should be finding partners that you want to explore a relationship with. We’ll get to the 75-page contracts down the road.”