The Greenwood City Council has agreed to put up half of the approximately $9 million it will take to reportedly complete the proposed takeover of Greenwood Leflore Hospital by University of Mississippi Medical Center.
The council voted unanimously at a special called meeting Wednesday to issue an irrevocable letter of credit or secure other means of funding to cover its share of the commitment for the hospital the city owns jointly with Leflore County.
It now remains to be seen whether the county Board of Supervisors will do the same. The supervisors are scheduled to meet at 10 a.m. Friday to take up the issue, after postponing a decision at their regular meeting on Monday.
Gary Marchand, the Greenwood hospital’s interim CEO, explained to the City Council that the bailout was a necessary component of completing a long-term lease by UMMC.
“What they want to see is a funding commitment from the owners, at this point, as a demonstration in good faith,” said Marchand.
Greenwood Leflore Hospital has been losing money for years and is on the brink of financial collapse. Marchand has said that without further reductions to its operations, the hospital would close by Nov. 30.
Marchand announced Tuesday that the hospital expects to cut additional services and expenses, including job cuts, to try to keep its doors open into January, which now appears to be the earliest in which a lease can be finalized.
Any lease proposal must be approved by both the City Council and the Leflore County Board of Supervisors. If both sides provide their approval, the agreement would be provided to the state College Board, which has authority over UMMC, for its approval.
The hope was to have the lease ready to present to the College Board at its last meeting of the year on Nov. 17. Marchand has said, however, that UMMC notified him on Tuesday that there was now not enough time left to get the complex legal documents finalized for the College Board’s consideration next month. Marchand said the College Board has strict requirements on what appears on its agenda and often requires documents to be submitted more than a month in advance.
Since May, the Greenwood hospital has tried to buy time with two rounds of layoffs and the shutdown of several services. The hospital currently has 589 full- and part-time employees, down from almost 800 before the first round of cuts. Another 70 work for Aramark, the private contractor that handles laundry, housekeeping, maintenance and food services at the hospital.
Despite those austerity measures, the hospital lost another $2.4 million in September, the latest month reported. For the fiscal year that ended Sept. 30, total losses have been just under $18 million, despite the help of $9.6 million in coronavirus relief grants, mostly from the federal government.
The hospital has exhausted all of its available reserves and is living on borrowed money in the form of advance Medicare payments it received at the beginning of the COVID-19 pandemic in 2020. Those payments, however, are a loan that the hospital is having to pay back through deductions in its monthly reimbursements from Medicare.
As of Sept. 30, the hospital still owed $5.6 million on the Medicare liability, which was originally $16.5 million. UMMC’s unwillingness to assume any of the outstanding debt has been one of the two major remaining sticking points in the negotiations, Marchand said.
He explained that upon execution of a lease, it would take between four to nine months for UMMC to be issued new provider numbers to receive compensation from Medicare and Medicaid for services provided by the Greenwood hospital. To avoid the loss of that revenue, he said, the proposal would be for UMMC to use the hospital’s current provider numbers while it is going through the regulatory process to be issued new ones.
Once UMMC uses GLH’s provider numbers, however, it also assumes responsibility for the remainder of the advance Medicare payments, negotiators have recently learned.
The original thought, Marchand said, was for GLH to apply for a forgiveness of the loan, but that was taken off the table due to the numerous regulations that would kick in by UMMC assuming the loan.
UMMC is also asking for $3.5 million to be spent by the current owners of the 208-bed hospital on deferred maintenance, including replacing the roof within the next two years. Marchand said UMMC was initially requesting $4.5 million for repairs and replacement, but that figure was whittled down during negotiations.
UMMC is asking that the city and county guarantee to assume both obligations.
“If there is no lease, you don’t have to do a letter of credit,” Marchand told the City Council. “If there is a lease, then you (with the county) provide a $9 million letter of credit, and that letter of credit can be used to fund these deferred maintenance obligations and COVID loan repayments as those payments reoccur.”
Other than the request the hospital has made to Medicare for a hardship exemption to spread out the remaining payback over five years, there are currently no other options to help alleviate the situation, according to Marchand.
The City Council sounded committed to doing what it took to complete the lease and avoid closure of the hospital.
“We’re going to need $4.5 million, which we do not have,” Council President Ronnie Stevenson said.
Still, he said, he came around to agreeing to UMMC’s demands.
“They want money to put in to our hospital that we own for maintenance. We’re fixing our own roof. We’re fixing our own parking lot. I feel like now it’s worth it because it’s not like we’re giving money to UMMC. It’s like we’re fixing what we own.”
- Contact Kevin Edwards at 662-581-7233 or kedwards@gwcommonwealth.com. Tim Kalich contributed to this report.
