GEORGETOWN, Ohio — The sale of Brown County General Hospital took a huge step forward Wednesday with the passing of two resolutions — one by the BCGH Board of Trustees, the other by Brown County commissioners, and the signing of an asset purchase agreement.
While there are still several steps to take before a final closing, everyone at the board of trustee meeting expressed relief and pleasure with the progress made in the deal.
The signing of the asset purchase agreement comes after two extensions for the letter of intent originally signed by BCGH and Southwest Health Care in January.
By selling to Southwest Health Care, the hospital will go from a nonprofit, government facility to a private, for-profit business, which has complicated the transaction. One of the major road blocks — bump in the road, as one person at the meeting said — is legislation that is pending which, if approved, would allow existing hospital employees to roll over their vacation time and also keep their seniority within the hospital. Otherwise, Brown County Attorney Jessica Little said the employees would have to be paid for their vacation, as state law mandates when an employee leaves, for any reason, they are to receive payment for unused vacation. Eric Sontag, chair of the board of trustees from BCGH, estimated the payout would be less than $600,000. Little said the legislation would be a “huge benefit to the employees.”
The actual closing may take place by June 1, but much depends on the legislation, whether it passes or another resolution is agreed upon.
The resolutions passed by the trustees and commissioners cited the financial condition and operations of BCGH as the grounds for the sale. According to the resolution passed by commissioners, the conditions had “deteriorated to the point where there is doubt as to the ability of the hospital.”
The resolutions also acknowledge the long road to find a purchaser for the hospital, including two attempts when the intended purchasers, Essent Healthcare and Falcon Investors pulled out abruptly.
The goals of the trustees throughout each attempt to sell were threefold: to maintain a full service acute care general hospital in Brown County, to maintain jobs at BCGH to the “extent consistent with the needs of the facility’s operations” and to use reasonable efforts to protect the county general fund from exposure for hospital obligations.
Southwest Health Care has agreed to assume all liabilities of the hospital, indemnify the board of county commissioners for any claims or losses and will provide a secured promissory note for $300,000 for the funds owed by the hospital to the county, according to the resolution.
Brown County Commissioner Ralph Jennings said Southwest Health Care will assume the debts of the hospital, but a total price for the sale has yet to be calculated. Jennings said the number varies from day to day and will be finalized at the closing.
“I think it is uphill from this point,” he said.
Commissioner Bill Geschwind said though it has been a long process, he is pleased the asset purchase agreement is completed. It is his hope that Southwest can “resurrect” the hospital.
“It’s the right thing to do at this time,” Geschwind said.
Commissioner Rick Eagan voted against the resolution, but did sign the asset purchase agreement after the resolution passed 2 to 1. Eagan said he voted against the resolution because he was not comfortable with the deal, citing misgivings he had about Southwest CEO Paul Tuft.
Jennings has said previously commissioners and BCGH officials knew there was a “past” with Tuft and it had been reviewed. According to news articles, Tuft had taken over a number of hospitals under various company names, with many later going bankrupt. Tuft was questioned about hospital ventures in the past and Jennings said he answered those questions satisfactorily.
Tuft owns one hospital currently through another corporation, Jennings said. That hospital is Pacifica of the Valley in California. Southwest Health Care does not currently own any hospitals.
Another issue Jennings said was looked into was National Century Financial Enterprises, a Columbus-based company that Tuft had secured financing through for other transactions. In 2002, NCFE filed for bankruptcy and in 2008 top executives went to prison for various charges, including fraud, according to one news report.
Jennings said Tuft had borrowed money from the company, but was not implicated in any criminal actions during an investigation, remaining “unscathed.”
Tuft, sporting a red “Buckeyes” ball cap at the meeting, expressed his excitement that the deal was progressing.
“We’re looking forward to making everybody in Brown County proud that Brown County General Hospital is here,” he said. “I am thrilled to be here.”
Sontag said the reason why everyone was at the meeting was to ensure continued health care in the community.
“That’s what it’s all about,” he said. “I’m very happy.”
Paul Tuft
