County Commissioners hear Hospital board's recommendation but take no action | Eastern North Carolina Now

     Publisher's Note: We do very much appreciate this fine article on the BRHS debacle from our friends of the Beaufort Observer. We plan to do an article soon on the process now that the county commissioners have this issue in their laps, but we could not neglect this outstanding article in the meanwhile.

    The Beaufort County Board of Commissioners, meeting in special session in the Courthouse heard a report tonight (1-3-11) from the Beaufort Health System Authority with its recommendation that the Commissioners enter into a lease for the health system property with Community Health Systems (CHS). The board took no action except to agree to a recommendation from the County Manager that it meet with representatives of University Health Systems (UHS) and CHS next week.

    There was general confusion about exactly what the purpose of the meetings will be. Hospital board member and County Commissioner Hood Richardson suggested that the Commissioners not enter into "negotiations" with either party other than working out any real estate matters with CHS. However, Commissioner Robert Cayton indicated he wanted to discuss CHS's personnel policies and whether it has been the object of any law suits related to discrimination. He also indicated he wanted to discuss Aurora being assured of the clinic there continuing to operate.

    Then Commissioner Jay McRoy said he wanted to address landlord tenant authority, suggesting that the Hospital's recommendation was not binding on the Commissioners.

    Commissioner Al Klemm indicated he wanted to read the Final Proposals before voting.

    Both Mr. McRoy and Mr. Klemm have previously stated they favored UHS taking over the hospital. Mr. Klemm has contended that he had previously done "research" on the issue and arrived at his conclusion that UHS was the preferred choice. He did not indicate why he now wants to study the proposals before making a decision since he had previously said he had already made his decision.

    In a brief interview after the meeting, the Observer asked County Manager Paul Spruill what precisely the purpose of meeting with two of the four proposers would be and he stated that this had not been determined. When ask if the Commissioners have the legal authority to do anything other than accept or reject the Hospital board's recommendation or whether it has the authority to substitute its judgment and select someone not recommended by the Hospital board he responded: "that's what we will be looking into tomorrow." Neither the Hospital attorney nor the County attorney would render an opinion on the question until after they advise their respective boards.

    Here is the first video which includes the report from the Hospital board chair and a discussion by the County Manager of the process from this point on.



    The next video includes the discussion by the commissioners and the decision to meet with UHS and CHS next week.



    Commentary

    Monday night's Commissioners' meeting was astonishing. It might have appeared that the County Manager was suggesting that now that the Hospital board has made its recommendation the Commissioners may now proceed to open their own negotiations with two of the four "suitors." We find that astonishing and potentially dangerous legally.

    The Commissioners undoubtedly have the authority to lease the real estate and to structure such a lease to meet their conditions. But we cannot imagine a "landlord" (as Mr. McRoy characterized the position of the Commissionners) having the authority to dictate the terms and conditions of the operating contract the Hospital board has negotiated with Community Health Systems. In our view, that would be like the owner of the property a retail store was located on trying to tell the tenant which supplier the tenant would buy from, and under what conditions and what its personnel policies must be (as Mr. Cayton indicated he now wishes to do.)

    At the very least, if these Commissioners had wanted to be involved in operational details of the hospital they should have insisted that such items be included in the Requests for Proposals.

    And we are astonished at Mr. Klemm's "johnny-come-lately" concern for the details of the proposals. He made his decision that the hospital should be given to UHS even before the original proposals were submitted.

    We think if the County now rejects the Hospital board's recommendation based on anything other than the real estate issues involved that they will have shown bad faith in the negotiating process and would thus subject the County to legal liability that, at best, could cost the County tons of money to defend and potentially tie up the hospital operations to the detriment of the people who need health care. At very least we believe the County has only the option of accepting the Hospital board's recommendation or rejecting it. As long as the Hospital board holds a lease to operate the health system we do not believe the County has the legal authority to dictate the operational decisions that are by statute assigned to the Hospital Authority, not the County Commissioners. Under "Dillon's Rule" the County has only that authority specifically assigned to it by the Legislature. The Hospital Authority is a statutory creation of the Legislature and has specifically assigned duties and authority, see for example: N.C.G.S. 131e-13 which gives the Authority the power to contract for the delivery of health care services in Section 131e-(e): "a hospital authority as defined in G.S. 131E‑16(14) or a municipality may lease or sublease hospital land to a corporation or other business entity, whether for profit or not for profit, and may participate as an owner, joint venturer, or other equity participant with a corporation or other business entity for the development, construction, and operation of medical office buildings and other health care or hospital facilities, so long as the municipality, hospital authority, or other entity continues to maintain its primary community general hospital facilities as required by subsection (a) of this section."

    We would suggest the clear legislative intent to assign this power to the Authority is amply expressed in this statute and thus by exclusion the County cannot legally usurp that authority.

    We believe it entirely appropriate for the County to negotiate with CHS on the lease arrangements for the real estate. And we would assume the County can refuse to lease the property for any reason it deems sufficient. But we do not believe it can lease the property to anyone except someone recommended by the Hospital Authority and certainly not while the Hosptial Authority's lease is still operative.

    So we agree with Mr. Richardson. The Commissioners should not re-negotiate the deal. Were they going to do that they should have just done it themselves to begin with. But the law does not permit that. Thus, if they supplant the statutory process now they certainly would have violated the intent of the law.

    We do not believe Mr. Cayton's concerns are appropriate to be addressed in the lease of real estate. Nor do we agree with Mr. McRoy that a landlord can or should dictate non-property related items to a tenant. And we believe Mr. Klemm's position is absurd. He has already made his decision and announced it. He did so before the proposals were even in. In fact he ran for office with that as a campaign issue. We do not think he comes to the table with a fair and unbiased mind nor clean hands. He should recuse himself from further participation in order to avoid encumbering the County with unnecessary liability.

    In short, we believe the County Commissioners should negotiate only with CHS and then only to the extent that such negotiations are directly and materially related to the real estate and debt owed the County.

    And we can't resist pointing out this irony. Those people who have campaigned against the County Commissioners being "in the hospital/health care business" should now really understand the old adage: "Be careful what you wish for..."

    What is distressing to us is that the reaction of three commissioners tonight simply indicates that there obviously was not a clear understanding about what the role of the County Commission in this process was suppose to be and that should be cleared up before they go one step further.

    If they don't, we fear this will be a lawyer's field day.