Regional Healthcare Inc. announced Thursday that it intends to form a partnership with Morton Plant Mease Health Care to deliver health care services in Hernando County.
The two sides have signed a non-binding "letter of intent" in which they have agreed to negotiate the terms of a partnership during the next 90 days.
Under the proposal, Regional Healthcare would continue to operate as a locally controlled, not-for-profit health care system, and Morton Mease would assume all or most of Regional's debts. Brooksville Regional Hospital and Spring Hill Regional Hospital would be unaffected.
However, a joint venture consisting of Morton Plant and OrNda Healthcorp would replace Quorum Health Resources as the facilities' manager. Quorum has been credited with turning the hospitals around since Regional Healthcare fled to bankruptcy court in 1993 seeking protection from creditors.
Morton Plant Mease is a not-for-profit hospital company based in Clearwater; OrNda, which owns North Bay Medical Center in New Port Richey, is a for-profit hospital chain based in Nashville, Tenn. Representatives of both companies declined to comment Thursday.
Before any partnership could take effect, Regional Healthcare would have to get the consent of the U.S. Bankruptcy Court, Hernando County commissioners and Regional's leading creditor, CNA Insurance Cos. of Chicago.
But if approved, the partnership would mark a significant turnaround for a company that has struggled for more than three years to restructure $63-million in debts. Most of the debts stemmed from tax-exempt bonds that were issued to build Spring Hill Regional Hospital and upgrade Brooksville Regional.
"This proposed partnership will greatly benefit RHI and Hernando County residents," Tom Barb, Regional Healthcare's chief executive officer, said in a statement. "It not only would assist RHI to resolve its bankruptcy issues, but would assure the continuation of the quality non-profit health-care system we now enjoy in our county."
Barb, whose two-year contract would not be affected by any change in management, declined further comment Thursday afternoon.
Betty Escamilla, chairwoman of the Regional Healthcare board of directors, referred questions to Tom Singleton, senior vice president of Quorum, who did not return phone calls.
Ed Rice, an attorney for CNA Insurance Cos., said he was aware that Regional Healthcare had been negotiating with several companies, including Morton Plant, about a possible partnership or merger.
"I'm not sure we know of the details of any proposal," he said. "Obviously, we'd have to review it pretty carefully."
Hernando County, which owns the Brooksville Regional Hospital building and holds the licenses for the beds at both hospitals, also would have a say in any partnership deal with Morton Plant, County Attorney Bruce Snow said.
A county plan to settle Regional Healthcare's bankruptcy case failed last year after the company's board rejected it. Another plan to end the bankruptcy case came in 1994, when former Oak Hill Hospital administrator Dennis Taylor, who now runs North Bay Medical Center, twice offered to buy all or part of Regional's assets.
"From my perspective, this type of an arrangement appears to be a win-win situation for everybody," Snow said. "Number one, the local hospital will be able to resolve its bankruptcy. Number two, the community will continue to be able to have a not-for-profit system to provide health care for its residents. Number three, Morton Plant Mease has an excellent reputation as a provider of health care within the Central Florida area."
With the onset of managed care and improvements in medical technology that have reduced the length of hospital stays, hospitals nationwide have been forced to form partnerships to cut costs and become more efficient, said Willard Wisler, president of the Tampa Bay Hospital Association.
"I think it's a logical step," Wisler said of the possible partnership between Regional Healthcare and Morton Plant Mease. "Morton Plant is a progressive organization that can see the value of a regionalization that would be permitted under a partnership.
"RHI would have the referral system that would help them to be able to call upon Morton Plant Mease for things that they might need. They would also have an outlet for patients that might need to be transferred, and would have access to managed care contracts that might not be available to them."