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Carefully orchestrated Westlake maneuver may have backfired

Hospital "Hearing" meeting serves as Reality Check. Probing, major, relevant questions are asked with some answers, some answers yet to be learned. Hospital Board proceeding with controversial, hurried vote today, despite request for Kentucky Attorney General's opinion, despite possibility of a lack of a quorum today, should any members with close ties to lending banks choose to recuse themselves because of possible conflicts or should there be changes in board number for any other reason. This morning, looking back at the meeting: while a few questions are yet to be asked,and some which were answered are covered in this article, many huge questions remain.
Update Friday, July 20, 2012, at 6:58amCT: CJE Ann Melton has confirmed the resignation of Hospital Board Member John Nall and that his resignation has been accepted. Adair County Hospital Board of Trustees now active are: Chairman Jim Evans (Phone:) and Members Josh Harden (Phone:), Bruce White (Phone:) , and Russell Guy Perkins (Phone:). Westlake's number is 270-384-4753.

By Ed Waggener

There was little doubt yesterday, at the Adair County Hospital Board's "public hearing" that the hearing at 9amCT, at Trinity United Methodist Church's Fellowship Hall, that was staged to be at a time when, predictably, few could or would attend.

The staging appears to have backfired, and may have actually provided a much-needed reality check for all concerned, before the biggest challenge in the history of Adair County heads off on a irreversible course.

Most notable was the keynote outrage of Seventh District Magistrate Billy Rowe, who spoke first at the meeting, saying, "This is ridiculous!" and looking around the mostly empty hall, said, "Look how many people are here." The count at the time, including hospital/Spectrum representatives, was around 40 people, a tiny fraction of the turnout which could have been expected had the timing been better.

Judge Ann Melton asks those opposed, as she is, to the proposed Hospital Tax (for the purpose of paying off a debt on a facility Adair County no longer owns) to call her office at 270-384-4703 and/or to to call their Magistrates, Harold Burton (1) 270-250-2579, Daryl Flatt (2) 270-634-1033, Sammy Baker (3) 270-378-1536, Perry Reeder (4) 270-634-3234, Billy Dean Coffey (5) 270-250-4449, Joe Rogers (6) 270-250-3285, and Billy Rowe (7) 270-634-0334, to let them know their feelings.
The change in attitude was significant: Magistrate Rowe had been one of possibly a majority of Adair County Fiscal Court members who have appeared sympathetic to the Hospital Board in the past - of the magistrates who signalled, in court, that they were backing - even blessing - the Hospital Board District's behavior and occasionally giving nods to them, with "Heckuva of job, Brownie!" pronouncements.

(Most in the community believe that only the authoritative leadership of County Judge Executive Ann Melton (270-250-2730) and what may be a newly enlightened Fiscal Court can save the community from what many think could be the worst mistake in Adair County history. Given her and the Court's commitment, concerned business leaders, the more community minded banks, and leaders of Adair County's business, civic, and healthcare community would join with whatever political forces may be available, and keep the hospital a local entity. Otherwise, it appears, a Westlake-weary community does not seem ready to rise to the challenge.)

Surprisingly, questions from the audience should have been obvious ones, before

Those who did show up for the meeting were well prepared for event. Donald Gene Burton, brother of First District Magistrate Harold Burton, asked Roger Klein, Westlake Interim CEO and a Spectrum Healthcare Partner, how much his organization has been paid. Klein said that it was in the range of $50-60,000 per month, and that had been reduced since the organization sent one of their number home to save money.

It was an obvious question one would have thought the Hospital Board would have made clear all along, and that this Fiscal Court, which frequently shows flashes of greatness but occasionally threatens the decades old work with micromanagement, minutia - the trivial - has not tended to ask, in deference to the Hospital Board. (And, in all fairness, those of us in the media - in addition to the Adair County Community Voice's Sharon Burton, who did - should have demanded.)

Extrapolation of Klein's statement would suggest a figure of around $1 million dollars. Questions remaining are the exact amount Spectrum has been paid and whether that figure will change with the sale of the hospital? Where will unpaid balances to Spectrum Care stand as a priority, whether the sale is completed or not?

But one major comparison was never asked

One wonders why the board isn't asked to show how much money the hospital has lost under Spectrum Partner's leadership, and how that compares to the amount of money lost in the decades under the previous administration. Whether or not the rate of loss actually accelerated under Spectrum Health Partners? And, as a percent of a total revenues, which regime has the worst record? And are either an acceptable standard for what could, and should be?

Klein gives three options for hospital as only ones

Roger Klein gave three options as the only ones available to the board and to the community: 1) Carrying through on the sale. 2) Taking bankruptcy and having a bankruptcy judge order a tax, or 3) Facing a forced bankruptcy.

As Spectrum Healthcare seems to have done over the course of its over long stay here, he never asked the obvious question: What about getting the community to come up with another answer? What about asking Adair County Judge Ann Melton and the Fiscal Court to step in, as they have on previous occasions (without being asked and without deserved credit for saving the hospital from previous impending financial crises) to find a community solution?

Amount being paid by LifePoint is now known, somewhat

In answer to a question from the audience, Mr. Klein said that the LifePoint offer for the hospital's assets had been $12.5 million, but said that Spectrum had been able to negotiate and get that figure raised to nearer $12.9 million.

(County Judge Ann Melton commented, this morning, after reading the article, that she has absolutely no complaint about LifePoint. "They can't be expected to pay more than they have to just because we need the money," but she did say she thinks some of the bank consortium are to blame. "Why didn't they do due diligence before making the loan. They based it on a $20 Million appraisal for Westlake's assets. And why don't they now do what Medicaid has done, agree to a 20% reduction in their loan and write off part of their mistake instead of acting like scavengers?")

Generally accepted total indebtedness is $18 million

A generally publicized total for the Adair Hospital District's indebtedness is $18,000,000. The difference between LifePoint's offer and that figure should be reduced by certain receivables.

Whatever isn't made up will owed by the Adair County Hospital District as a shortfall. The District would survive until its debts are retired or until it declares bankruptcy or is forced into involuntary bankruptcy.

Bill Anderson: How long would a tax last

Citizen Bill Anderson suggested that the proposed tax might last 40 years or more. Anderson questioned the makeup of the Board and their ability to handle the money involved. Can hospital stay open if sale fails to go through?

Adair County Hospital District Board Chairman Jim Evans was asked if the hospital might close in the next few days if the sale does not go through. He said he was not 100% sure but that it might be a problem if the sale does not happen.

Any action against previous management?

The mystery surrounding the forensic audit of the previous management of the hospital remains that: a mystery. Chairman Evans said, in response to a question, said that it's his understanding that it has to remain confidential. Evans did say that the audit had been surrendered to the Kentucky State Police and the Kentucky Attorney General's Office, but that he could not elaborate more. It remains confidential, he said.

The question remains unanswered, too, as to how a settlement, were there to be one, would affect the balance sheet on the sale and hoow it would affect the the longevity of the proposed Hospital Tax, were one to become a reality.

Will there be a quorum today?

There is a possibility that a quorum might not be present for the meeting, should only four members show up and should two of those, with close ties to lending banks, recuse themselves because of those ties. Member Josh Harden's wife works for First & Farmers National Bank, one of the consortium of banks owed money by the Adair County Hospital District; and Member Bruce White works for United Citizen's Bank of Southern Kentucky, another bank which is part of the consortium.. Representatives of UCB say they are in no way pushing a sale. It could be determined that it is inappropriate for these two members to take part in the vote or the meeting.

No evidence the board won't proceed, regardless

Still, there is no indication that the Adair County Hospital District Board of Trustees won't proceed with today's meeting, despite an opinion already secured from KACO's lawyers that the tax cannot be imposed, and without waiting for an Attorney General's opinion on the tax.

They are acting, Roger Klein said, on their attorney's advice. And, he said, because the sale to LifePoint is still tentative. He said that they might not be willing to carry through on the purchase. He said that any buyer would want clear title at the time of sale and to know that nothing would muddy the waters.

Four court members were present

Court members present, besides Magistrate Billy Rowe, were Joe Rogers (6), Sammy Baker (3), and Billy Dean Coffey (5).

County Judge Ann Melton did not attend. She now communicates with the board largely through attorneys.

Three hospital board members present

Three of the Adair County Hospital District Board of Directors, Chairman Jim Evans and members Josh Harden and Bruce White attended.

While this report contains what we consider the relevant points from the meeting, there is more which we hope is covered by other media present at the meeting. It represents eyewitness observation for most, but not all of the meeting. Comments - especially questions - on the meeting, the proposed sale, the tax, and any possible alternatives are welcome. Submit using the reply device with this story. -EW

This story was posted on 2012-07-20 06:46:18
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Tax hearing from the back of hall, few present, most angry

2012-07-19 - Trinity Fellowship Hall - Photo by Ed Waggener.
Roger Klein, interim CEO of Westlake Regional Hospital and a Spectrum Healthcare Partner, is dwarfed by the vast hall where a sparsely attended meeting was held. Klein was fielding the heat from the majority who spoke, who chastised the board for holding the meeting at 9am in the morning. Many were not as outspoken as Seventh District Magistrate Billy Rowe, who made the keynote comment, "This is ridiculous," though to make matters bipartisan, Vicky Pike, said she thinks somebody needs to go to jail.

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Mood while alone in the back of near empty hall

2012-07-20 - Photo by Ed Waggener.
Adair County Sixth District Magistrate,
the member of Fiscal Court with the most seniority, sat alone in the back of the cavernous and nearly empty Trinity UMC Fellowship Hall at yesterday's 9amCT, hearing on a proposed ad valorem tax the hospital district is rushing to a vote today, Friday, July 20, 2012.

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