The Mark Twain Health Care District board approved a 30-year lease with Dignity Health on Wednesday morning, a move that, with voter approval, could ensure the future of Calaveras County’s only hospital and its eight clinics.
The current lease expires Dec. 31, 2019. Mark Twain Medical Center and its clinics are one of the county’s largest employers with an annual payroll exceeding $30 million. The health care district is a public agency.
In a 7:30 a.m. public meeting attended by about 30 people at the hospital in San Andreas, board members Talibah Al-Rafiq, Debbie Sellick, Lin Reed and Susan Atkinson voted in favor of two resolutions to move forward with Dignity Health, a multi-hospital nonprofit billed as one of the nation’s largest healthcare systems.
Board member Ann Radford abstained from voting because she is a nurse practitioner at the Arnold clinic and a Mark Twain Medical Center Corporation employee.
Peggy Stout with Mark Twain Health Care District said the board’s approval of a new partnership with Dignity Health was a time-sensitive move needed to meet an elections office deadline to get a measure to voters on June 5 ballots.
The health care district’s boundaries are the same as Calaveras County, which is home to about 44,000 residents and more than 28,400 registered voters, Rebecca Turner, county clerk-recorder and registrar of voters, said Wednesday.
Before voting, the district board heard a summary of a fair market value report assessing the district’s hospital, clinics, equipment and other property.
The district board approved a contract with a Dallas-area consultant, Value Management Group Health, for the fair market value report on Dec. 18, and the board set a limit of $50,000 for the work.
The fair market value and business enterprise value of the hospital, adjusted for non-operating assets and liabilities, was determined by VMG Health to be $28.6 million as of Jan. 18. The most recent previous appraisal, completed in January 2016, calculated that district assets were valued at $27.95 million as of June 2015.
The consultant concluded that a draft term sheet showing Dignity Health proposing to purchase 49 percent of Mark Twain Medical Center corporation for $14.5 million is consistent with fair market value.
“We have to have fair market value,” Reed said before the board voted. “It would not have been fair to take a measure to voters that was below fair market value. We are all committed to meeting fair market value.”
Other terms the board approved state that Dignity Health will pay the district rent of “at least $100,000 per month,” and the first five years’ rent, at least $6 million, will be prepaid at closing.
The new lease agreement with Dignity Health will ensure continued operation of the district’s general acute care hospital and emergency room in San Andreas for at least 10 years, and up to 30 years.
Terms approved by the district board include an incentive for Dignity Health to continue leasing and operating the hospital.
“If the lease is not renewed for the full 30 years, an early termination fee will be paid to the district equal to $10,000 for each month of the remaining 30 years, which the district can use to help fund alternative arrangements for the medical center,” a resolution approved by the board states.
After the board voted to approve moving forward with Dignity Health, Randy Smart, the executive director for Mark Twain Health Care District, said, “The challenge now is we’re not done. The voters have to ratify the term sheets and resolution, by a simple majority.”
Smart noted that he and district board members cannot tell people how to vote on the San Andreas hospital and its clinics in June, but they can try to educate people.
“We need to do that,” Smart said.
Atkinson noted that the State Attorney General is in the process of reviewing the recently-announced merger of Dignity Health and Catholic Health Initiatives, another multi-state nonprofit operator of hospitals and clinics. Karl Silberstein, a senior vice president of financial operations for Dignity Health, confirmed this and emphasized the new partnership will be a combination of Dignity Health and Catholic Health Initiatives.
Bob Diehl, president and chief executive officer of Mark Twain Medical Center, applauded the new partnership with Dignity Health. Diehl referred to a federal Medicare website that compares hospitals based on consumer feedback, saying the San Andreas hospital recently outscored its nearest neighbors in Amador and Tuolumne counties.
“We got a three-star rating,” Diehl said. “That compares favorably with the nearest hospitals, to the north and south.”
Asked for more detail, Diehl asked Nicki Stevens, marketing manager for Mark Twain Medical Center and Dignity Health, to share more information about the Medicare comparison.
The Hospital Consumer Assessment of Healthcare Providers and Systems is a national survey that asks patients about experiences during recent hospital stays. Ratings are on Medicare.gov, which is billed as the official U.S. government site for Medicare.
As of Wednesday, the Medicare.gov Hospital Compare page showed Mark Twain Medical Center with a 3 out of 5 stars overall rating. Sutter Amador Hospital and Adventist Health Sonora each had 2 out of 5 stars overall ratings.
“There are plenty of good hospitals that end up with a one-star rating,” Diehl said. “We’re thrilled to get three stars.”
Rick Jackson, an accountant with JWT & Associates of Fresno, reviewed audited financial statements of Mark Twain Health Care District for the board. Jackson said his firm’s audit gave a clean opinion of the district’s finances and none of the district board members asked Jackson any questions.
Two county supervisors, Dennis Mills, District 4, and Clyde Clapp, District 5, sat in the audience during the meeting Wednesday morning.
“We have to change the public perception,” Mills said, emphasizing he attended the meeting as a citizen and resident. “This is a good hospital and a good location.”
Mark Twain Medical Center is the only hospital in Calaveras County, and with its clinics, is the third-largest employer in the county, according to Smart. The hospital and its clinics have more than 300 employees, including 35 doctors.
Contact Guy McCarthy at email@example.com or (209) 588-4585. Follow him on Twitter @GuyMcCarthy.