Editor’s note: A quarter of a century ago, Lisa Zahner spent the afternoon interviewing then-80-year-old Sebastian River Medical Center founder Dr. Kip Kelso at his Roseland home. Portions of this story were taken from her report published in Florida Today on March 12, 1998.
As Orlando Health was preparing its facilities to keep patients safe and maintain operations ahead of Hurricane Milton, spokesperson Kena Lewis took the time to send Vero Beach 32963 a ‘save the date’ note for next week’s big celebration of the takeover of the Sebastian River Medical Center.
“Our ‘Go Live’ date is Thursday, Oct. 24. We will have celebratory events simultaneously at all hospitals. We are still finalizing the details,” said Lewis, who serves as assistant vice president for Public Affairs and Media Relations.
Orlando Health is finally set to close on its $460 million deal to purchase Sebastian River Medical Center plus two Brevard County hospitals from bankrupt Steward Health Care. Ahead of the expansion, Orlando Health appointed former Orlando Regional Medical Center CEO Ohme Entin as senior vice president of its East Region spanning the Treasure and Space coasts.
It’s appropriate that the Sebastian hospital will enter this new, exciting era with nonprofit Orlando Health’s resources behind it in 2024, 60 years after its meager beginnings as the dream of one man, Sebastian’s former family physician, Dr. Kip Kelso.
Though tiny, the North County hospital was cutting-edge from the very beginning.
Kelso was one of the few doctors in the North County in the 1950s, the kind who might deliver a baby in the morning and comfort a patient in their final hours that same evening.
“Sometimes I’d go back and forth from Melbourne to Vero Beach three or four times a day if patients were critical,” he said in a 1998 interview.
A native of Atlanta, Kelso was a fifth-generation physician, with specialties in internal medicine and pulmonology. He served in the U.S. Army, and was trained at the University of Oklahoma, Tampa General Hospital and Baptist Memorial Hospital in San Antonio. He landed in Vero Beach in 1950 and served as the county’s top health official before going into private practice in 1956 in Sebastian.
“They were paying me $5,500 a year and they wouldn’t increase my salary, so I went out on my own. I had a wife and kids to support,” Kelso said.
Kelso lived in Roseland near the old Ercildoune bowling alley until his death in 2005. He soon saw the dire need for a hospital in the north end of the county, and that goal drove the dynamic doctor to what some at the time called bizarre lengths to make that hospital happen.
Fascinated with treasure hunting, Kelso was a partner in the Real Eight salvaging group which searched for the 1715 Spanish Fleet, a company eventually taken over by Mel Fisher. But the biggest treasure Kelso ever found was at the 1964 New York World’s Fair.
There he spotted a prototype 22-bed, 100-foot-wide transportable field hospital that he was determined to bring home to Roseland. With the help of his medical practice partner Dr. E.B. Hardee Jr., Kelso purchased the round steel and aluminum building, had it transported by truck and set it up on his own property.
A product of the space age, designed and built in Alabama by Dr. Hugh McGuire, it featured a “clean” circular core and operating room, frozen patient meals and a control center that could monitor the vital signs of all of the patients via remote sensors – standard technology today, but generations ahead of its time in the 1960s.
The hospital used computers for research, a centralized medical records system, and even rudimentary “telemedicine” to triage patients who could not travel to the hospital, according to healthcare management consultant Frank Kohn who has written about the Atomedic Hospital project.
The hospital operated via temporary permits, but though Kelso fought with state licensing officials for more than a year, Tallahassee refused to license the facility as a hospital. The structure was used to store supplies and equipment and it burned down in 1971 at the close of a day of loading-in supplies when allegedly, the heater had been turned on after not being used for many years, resulting in nearly $1 million in losses.
But Kelso’s efforts led to a successful fundraising campaign to build a brick-and-mortar hospital which opened in February 1974 on property donated by Kelso, who served as the first chief of medicine and was honored with having the medical-surgical unit named after him.
“I thought once I got it going that it would pay off. I was right. We got a hospital here – and a good one,” Kelso said.
The 103-bed Sebastian hospital was operated by American Medcorp until Humana purchased it in 1978 and added 30 beds. Fewer than three dozen doctors staffed the hospital and 14-bed intensive-care unit. At the time, Sebastian even had a labor and delivery unit, but that was phased out later.
Health Management Associates purchased the hospital in 1993, added a second floor and 37 beds.
As a Vero Beach 32963 story about the hospital’s 40th anniversary reported in 2014, “a $25 million expansion project was completed in 2010, adding 42 private patient rooms, a 16-bed ICU and a state-of-the-art $3 million cardiac cath lab.
The following year saw the acquisition of the daVinci Surgical System and, in 2012, the Sebastian Certified Stroke Center entered into partnership with University of Florida Health. Then in 2013 a second cardiac cath lab was added, as was a MAKOplasty partial knee resurfacing and total hip replacement system.
Steward Health Care bought the hospital in 2017, selling the real property and buildings to Medical Properties Trust and then leasing them back from MPT.
Steward expanded surgery facilities to eight operating rooms, and opened a 90,000-square-foot tower building in July 2020, offering 48 additional private rooms plus new pre-op and post-op facilities, in the midst of the Covid pandemic.
The Sebastian hospital mostly skirted the pandemic-era prohibition on elective surgeries by transferring its Covid patients to its West Melbourne hospital. Over the past four years, it has become the outpatient surgery center of choice for many area physicians. At its height, SRMC employed 750 doctors, nurses and support staff, making it the fifth largest private employer in Indian River County.
But since Steward took over the hospital, there have been rumblings of financial problems locally with vendors and utility bills going unpaid, plus national reporting of massive Steward corporate debt restructuring efforts, kicking the proverbial can worth hundreds of millions of dollars down the road.
Finally on May 6, the Dallas-based corporation filed Chapter 11 bankruptcy in a Houston federal court and announced all of its 31 hospitals were up for sale. Hospital giant HCA had been negotiating with Steward to buy Sebastian River Medical Center back in April, but those talks fell through.
Orlando Health was announced on Aug. 29 as the only qualified bidder, offering $439.4 million in cash for Sebastian River Medical Center and Steward’s two Brevard hospitals, plus nearly $21 million in employee paid time off on the books for a total of $460 million.
The “enterprise bid” was for both the hospital operations and the real property owned by landlord MPT, complicating the transaction somewhat, but the parties decided as part of a larger settlement that MPT would transfer the real property to Steward, and Steward would then deed it to Orlando Health.
A notice of the real property sale was filed with federal bankruptcy Judge Christopher Lopez on Sept. 25. Final sale documents pertaining to the Oct. 23 closing have not yet been posted on the court docket.
