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Brooksville, Spring Hill hospitals approach doctors about ownership stake

Brooksville Regional and Spring Hill Regional have offered their physicians a slice of the hospitals' pie.

Whether they will bite is unclear.

The hospitals sponsored a meeting with the doctors last month asking them whether they were interested in investing in the hospitals, a business practice know as a joint venture.

As a condition of attending the meeting, the physicians were given a form that bound them to confidentiality. According to a copy of the form obtained by the Times, they were not to disclose information discussed at the meeting or any materials distributed.

At the end of the meeting, they were asked to fill out a nonbinding form to indicate their interest in the idea and also what dollar amount they might consider investing.

The implications of that meeting have raised some eyebrows because changing the structure of the hospital's ownership would be important to Hernando County government and taxpayers. The county owns the land and buildings that comprise both hospitals while Naples-based Health Management Associates Inc. owns the hospital businesses. HMA has leases with the county for use of the real estate.

County officials, though, have heard about the new ownership idea only thirdhand and have not been contacted by the hospitals themselves. Any change in the ownership structure would affect the leases the hospitals have with the county and would require county approval, according to Kent Weissinger, assistant county attorney.

Those lease agreements are lucrative for Hernando County.

For Brooksville Regional Hospital, which is valued at $36-million, the county this year will receive $252,178 in lieu of property taxes and another $116,567 in lieu of taxes that would have been collected for Hernando County Fire Rescue. For the $22.7-million Spring Hill Regional Hospital, Hernando County receives $198,195 in lieu of property taxes, as provided for in the lease.

HMA also operates Pine­Brook Regional Medical Center, valued at $6.2-million, and this year will pay $43,648 in lieu of property taxes and $30,517 in fees for Hernando County Fire Rescue.

In addition, the county receives $300,000 per year from HMA for the old hospital site in Brooksville that was bought by a private entity.

The only details of the proposed joint venture appear in the materials distributed to the doctors at last month's meeting. Those forms state that the joint venture under discussion would be among Naples HMA Inc., certain affiliates of Naples HMA and certain physicians.

"Naples HMA is currently a corporation and owns the hospital but plans to convert to a limited liability company," the materials state.

According to HMA's Web site, joint ventures are among the ways the company collaborates with its physicians.

"In selective markets, we have offered physicians the opportunity to partner with us in collaborative joint ventures. This posture, which extends to the joint venture of certain select HMA hospitals, includes participation in joint ownership of medical equipment, medical office buildings and diagnostic imaging or surgical centers," the Web site states.

It goes on to say that additional joint ventures are anticipated in the future.

Kathy Burke, chief executive officer for Brooksville Regional and Spring Hill Regional hospitals, has not commented, even though she signed the forms distributed to the physicians at the meeting.

"The meeting we had was just a preliminary meeting to gauge interest, so it would not be appropriate to comment further at this point," said Robin Schneider, Brooksville Regional marketing director.

According to a list of questions and answers included with the doctor information, the hospital would sell interest to the doctors because "when structured correctly a hospital-physician equity partnership aligns interests so that patient care improves, efficiency increases and value to both physician and hospital rises."

Another question asks how profits are distributed to physicians.

"Cash flows, positive and negative, are distributed evenly to each individual ownership unit,'' the answer reads.

The timing of the offering comes as HMA's stock is down. The stock had sold at $21.35 a share in mid February 2007 before beginning a sharp decline. On Jan. 12, the cost was $1.63.

Largely because of the potential for conflicts of interest for doctors, joint ventures are heavily regulated, and articles written by health business sources across the country indicate that such ventures are complex and offer a variety of legal and tax challenges.

In Hernando County, another related issue has surfaced. Letters between the county, school district representatives and the Property Appraiser's Office indicate that the school district is questioning whether it is also owed fees in lieu of taxes by the hospital.

County attorneys anticipate some legal action may be filed on that issue and have told the County Commission that they do not believe the county will be a party to that action.

Barbara Behrendt can be reached at [email protected] or (352) 848-1434.

Brooksville, Spring Hill hospitals approach doctors about ownership stake 01/17/09 [Last modified: Saturday, January 17, 2009 1:19pm]
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