The face of the soon-to-be-combined Cleveland Clinic and Indian River Medical Center began to emerge last week as the Indian River County Hospital District trustees picked a slate of candidates for a seat on hospital’s new board of directors.
Cleveland Clinic must now decide which of the three candidates becomes the Hospital District’s single representative on the new 17-member board. The candidates are real estate broker and former St. Edward’s School board chairman Dale Sorensen; ophthalmologist and City Council member Val Zudans; and retired computer services and IT executive and IRMC board member Matthew Reiser.
In a separate, nearly unanimous vote, the District Board picked one of its own trustees, Karen Deigl, as well as one community member, attorney John Moore, to serve on a committee created in the hospital takeover agreement, expected to be finalized in January or February.
The Commitment Integrity Committee, as it is called, is intended to ensure Cleveland upholds its 10-year, $250 million commitment to IRMC’s new incarnation, Cleveland Clinic Indian River – including a vow to maintain several key areas of treatment at the hospital.
Moore, whose local prominence stems as much from his philanthropic family as from his law practice, is a graduate of Vero Beach High School and the University of Notre Dame, where he majored in accounting. After a stint with Arthur Andersen in Dallas, he earned a law degree at the University of Virginia. He moved back to Vero in 1993. His practice focuses on real estate law and estate planning.
“My hope is that it’s an absolutely do-nothing job,” said Moore in jest: the committee’s sole focus is to resolve disputes that might arise with Cleveland Clinic during the first 10 years.
“The ideal is that this whole thing runs smoothly,” he added. “I’m excited about the prospect of Cleveland Clinic coming. The hospital is the largest public asset in town, and how we as a community manage it is one of the determinants of success for the community.”
Moore has experience with change at the hospital. Appointed by Gov. Jeb Bush to serve on the Hospital District Board, he recalls the controversy when in the early 2000s, the district renegotiated a lease with IRMH, Inc., the management company that is about to be supplanted by Cleveland Clinic. “People were saying we were effectively locking us in forever,” he said. “Obviously, that wasn’t the case.”
Like Moore, Deigl is aware that the seat on the committee is a 10-year term. “Yes, I have made plans to retire, but not for 13-and-a-half years,” she said with a laugh. Since 2006, Deigl has been president and CEO of the Senior Resource Association and also oversees the county’s Go-line bus service, with a combined $7 million budget. Prior, Deigl was executive director of the Hospital District.
“I’m very, very honored to have been selected by my peers,” she said. “I don’t vote for popularity. I know how to make hard decisions. If there’s a situation that arises with this lease and Cleveland Clinic may not be not compliant with one of the fundamental elements, I will certainly be one who looks very closely at it and finds out why.”
The Commitment Integrity Committee is specifically charged with determining and ultimately resolving, by discussion or if necessary, arbitration, any breaches on Cleveland Clinic’s part of promises outlined as “fundamental commitments.”
Along with the promised $250 million, 10-year capital outlay, those commitments include covering any IRMC entity’s default on a debt listed in the hospital’s financial statements. During that same 10-year period, Cleveland Clinic is prohibited from “permitting or causing a change of control,” such as a sale or transfer of the hospital.
Cleveland also can’t change the stated purpose of the hospital’s fund-raising arm, the IRMC Foundation, which is “to generate contributions to supplement the capital requirements of the hospital.”
One critical role the Commitment Integrity Committee could play would occur in the event Cleveland Clinic uses a clause in the agreement to drop or otherwise change the areas of treatment it has promised to continue for the next 10 years at IRMC. Those service lines, as they are called, include maternity care, in-patient well-baby and pediatric care, mental health care, and the treatments provided by the hospital’s cancer, heart and gastroenterology centers.
According to the agreement that outlines the takeover, Cleveland can eliminate one of those service lines only “in the event another healthcare system or hospital operates a required service at a comparable level to IRMC.” That other facility would have to be in Indian River County or within a 25-mile radius of the hospital, whichever distance is greater.
The agreement states that Cleveland Clinic would have to first notify the Hospital District and give the Commitment Integrity Committee 90 days’ notice before shutting down any service.
The committee’s two other members, who will join Moore and Deigl, will be chosen by the current IRMC board of directors on Dec. 12.
Members serve independently and do not represent either the District or the hospital board. If a breach of Cleveland’s obligations under the takeover agreement is alleged, the committee has to give written notice to the health system as well as the boards of the hospital and the district. After that, committee members and representatives of Cleveland Clinic – and their lawyers, of course – are required to meet “on a regular basis to discuss and resolve the alleged breach.” If a resolution can’t be reached within 60 days, the committee can pursue an enforcement action with an arbitrator.
A decision to take an enforcement action requires 3 of the 4 votes. If the committee votes to bring an action and prevails, expenses are paid by the Cleveland Clinic Foundation and will not go against the $250 million capital commitment. On the other hand, if the committee does not prevail in its enforcement action, Cleveland Clinic’s expenses do go against the capital commitment.
