If the UHS deal goes as proposed they will get $175 million worth of property for $10 million | Eastern North Carolina Now

     Publisher's Note: We do very much appreciate this fine article on the BRHS debacle from our friends at the Beaufort Observer. It is the opinion of this publisher that their continued, complete reporting and analysis of this controversial issue is unparalleled in scope.

    We have previously published here our opinion that the major difference between the lease proposals on the Beaufort Regional Health System was in the end-of-the-lease option. Community Health Systems proposed to lease the facility for $30 million for thirty years and at the end of the lease negotiate a purchase or extension via mutual agreement between the County and CHS.

    On the other hand University Health Systems proposed a $24 million initial lease payment with full ownership of the facility at the end of the lease.

    After UHS saw what CHS's offer was they raised their initial payment to $30 million to match the CHS offer. But they still propose to take over the property at the end of thirty years for $10 million.

    We have attempted to ascertain how much the property is worth today or how much it is projected to be worth in 2041. That number has proven elusive.

    The current book value is a depreciated value that does not include all of the property. So it is no where near close to an accurate valuation, but we suggested the current value was at least $50 million. That number has been contested by some UHS supporters.

    It's hard to value a hospital. Not many "comparables" exist. So we went to the Local Government Commission for guidance. They did not want to project a value but one official there we highly respect from previous experience with them put "a bug in our ear." She suggest: "find out how much they've got it insured for." That way you know what they think its worth and what an insurance company thinks its worth.

    At first the BRHS refused to release the data. Then, three weeks later they released it on February 9, 2010 after a letter of intent has been signed agreeing to the $10 million buyout.

    The hospital property is insured for $72,269,832. Sixty two million dollars more today than what UHS proposes to pay for it in 2041.

    Now, if you apply a 3% per year aveage increase in value over thirty years you come to $175,417,851.01.

    So we will be giving UHS $175 million worth of property (at minimum) for $10 million.

    We'll have more to say about that after we get over the shock.