News Analysis
The Sebastian River Medical Center turned out to draw a purchase price almost twice as high as it originally appeared following announcement of Orlando Health’s plans to imminently close the largest of the three Indian River and Brevard county hospitals it acquired as a package deal from bankrupt Steward Healthcare.
The disclosure last week that Orlando Health intends to bulldoze the 300-bed Rockledge hospital means it spent $439 million for the three-hospital package but only really wanted two of them – the much smaller Orlando Health Sebastian with 178 licensed beds, and Orlando Health Melbourne with only 119 beds.
In closing Rockledge, Orlando Health turns out to have paid more than $400 million not for a 697-bed cluster of hospitals but only 397 beds.
“Prior to its acquiring Rockledge Hospital, the healthcare system was aware that years of neglect had left the facility in such poor condition that it did not meet the system’s standards for patient care environments,” an Orlando Health spokesperson said.
“Following in-depth inspections that could only occur after acquisition, it was determined that the cost to repair and renovate Rockledge Hospital far exceeds the cost of a new, state-of-the-art hospital. Accordingly, a decision has been made to close the facility. This decision is necessary to ensure the safety of patients and team members.”
The Rockledge hospital, which opened in 1941 and expanded piecemeal over the decades, serves some of the poorest areas of Brevard County.
The Sebastian Hospital, on the other hand, has a $65 million, 90,000-square-foot tower expansion that Steward opened in 2020 and serves some of the fastest growing areas of Indian River County in Sebastian and Fellsmere.
Orlando Health clearly was eager to get a foothold in the county, hoping to capitalize on the unique market opportunity created by Cleveland Clinic’s bad luck to have taken over Indian River Hospital right before a global pandemic.
The Sebastian hospital’s eight brand-new operating theaters in the tower stayed open for all kinds of knee and hip replacements and other non-emergency procedures during the seven-month period when Cleveland Clinic and other hospitals with big Covid wards could only operate on emergent patients.
Sebastian shipped the bulk of its Covid patients to Brevard County, and Vero surgeons went where they could still make money during the pandemic. Barrier island patients grew accustomed to being scheduled for surgeries in Sebastian, though many had never before stepped foot in that hospital.
Orlando Health’s big and costly challenges going forward in Sebastian stem from deferred maintenance on older parts of the hospital, and on major systems and pricey equipment likely not serviced or calibrated after vendors stopped getting paid.
Meanwhile, Orlando Health Melbourne, only 23 years old, sits at the edge of Brevard’s exploding hi-tech and defense corridor, with L3Harris, Northrup-Grumman and other big firms operating in space that resembles college campuses. That means loads of younger people with excellent group health plans.
The hospital borders the city limits of rapidly growing West Melbourne, with high-end new housing communities sprawling way past Interstate 95. Orlando Health Melbourne enjoys a lucrative surgery trade thanks to a major surgical suite expansion and bustling outpatient surgery center.
Orlando Health says it plans to ultimately build a new Brevard hospital from scratch, but that will take years.