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County to discuss takeover plan for hospitals

Word that a Chicago insurance giant is seeking control of the local non-profit hospitals has sent county commissioners into a tizzy.

They will have a special meeting at noon today to discuss a CNA Insurance Cos. plan that would allow it to take over Regional Healthcare. Though it is unclear whether commissioners have reviewed a rival plan filed by Regional Healthcare, they are expected to vote on a resolution endorsing Regional Healthcare's plan.

The proposed resolution says that the county "vehemently opposes" CNA's plan, which Regional Healthcare says "absolutely subverts the hospitals' mission as not-for-profit, locally controlled institutions."

The resolution would authorize county attorneys to take any necessary steps to prevent a judge from accepting CNA's plan.

Regional Healthcare and CNA filed their reorganization plans last week. The rival plans explain how the two companies would bring Regional Healthcare (parent company of Brooksville and Spring Hill Regional hospitals and PineBrook Regional Medical Center) out of bankruptcy.

CNA's plan calls for Regional Healthcare to pay off all creditors except CNA, which would assume control of the hospitals.

In Regional Healthcare's plan, all its creditors would be repaid in full with some interest. The plan would give taxpayers ownership of the two Regional Healthcare hospitals _ Spring Hill and PineBrook _ that are not already owned by the county.

On Thursday, both sides will return to court to argue over the plans, which is why commission Chairman Ray Lossing called the emergency meeting.

Regional Healthcare officials hope to go into the court hearing with a resolution that shows Hernando County residents support its plan.

In a memo to commissioners, Regional Healthcare board chairwoman Betty Escamilla gave a number of reasons why CNA's proposal is not in the county's best interest. Most of the points relate to the county's lease with Regional Healthcare for Brooksville Regional Hospital.

Escamilla wrote that CNA's action would be inconsistent with Florida law, which states that public assets cannot be leased to a for-profit institution. In the past, CNA has dismissed this argument because it would become the sole shareholder of Regional Healthcare, which would remain a non-profit company.

County Attorney Bruce Snow said that there may be nothing illegal about a for-profit company becoming sole shareholder of a non-profit company.

"The question of whether a for-profit corporation can be the member of a not-for-profit corporation . . . I have the impression that it can, but I have not researched it yet," Snow said.

CNA has headed the effort by Regional Healthcare's creditors to recover their investments in the company, which sought bankruptcy protection in 1993.

In its plan, CNA said that it would continue to run the non-profit hospitals with an eye toward charity care. However, the company also said it might try to negotiate an affiliation or even the sale of Regional Healthcare.

It is that prospect that worries commissioners.

"I do not want CNA taking over as the head of our local hospitals," Commissioner Paul Sullivan said. "CNA is a huge corporate giant. I'm not convinced that (CNA control) over the hospitals can or will improve health care, and it may even deteriorate. We don't want that."

For Commissioner Nancy Robinson, the issue is about protection.

"The position of the board has been that these are county assets," Robinson said. "This is about the protection of this asset and maintaining the asset for our citizens."

CNA's attorneys were not available for comment Monday .

_ Times staff writer Alisa Ulferts contributed to this report.

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