The first official step has been taken that could lead to leasing Greenwood Leflore Hospital to a larger medical institution.
During an hourlong closed-door session Monday, the hospital board voted unanimously to recommend that proposals be sought for the potential lease of the hospital, which is jointly owned by Greenwood and Leflore County.
The request for proposals would have to be approved by the Greenwood City Council and the Leflore County Board of Supervisors. Tom Flanagan, the attorney for the hospital board, said he anticipated that the legal documents would be ready for consideration by city and county officials at their next meetings.
The Greenwood City Council meets Tuesday and the Leflore County Board of Supervisors, next Monday.
Flanagan said any interested party could submit a lease proposal, although Greenwood hospital officials have been in recent discussions with the University of Mississippi Medical Center about an affiliation.
The hospital board has been weighing for months the need to affiliate with a larger medical institution in response to the Greenwood hospital’s troubled financial condition.
For the first nine months of the current fiscal year, the hospital has lost $10.6 million. The losses would have been nearly double that if not for $9.2 million in mostly federal grants to deal with the COVID-19 pandemic.
The hospital was already losing millions of dollars a year before the pandemic, but those losses have been accelerated due to rising costs and low patient volumes, both of which have been largely attributed to COVID-19’s impact.
Gary Marchand, part of the leadership team that is filling the void following last week’s sudden resignation by CEO Jason Studley, said as the pandemic has gone through several different variations of the coronavirus, patient numbers have not rebounded to the levels that hospital officials originally anticipated. Inpatient volumes are more than 40% less than where they stood prior to COVID-19’s arrival in 2020, and emergency room and physician clinic visits are down 20% to 25%, according to Marchand.
“It’s just been for the past four or five months where the lack of any volume recovery has become obvious,” he said.
Consequently, the hospital’s cash reserves have been steadily declining. In June, the hospital bled another $1.7 million in cash, leaving it with an operational cash on hand of $3.6 million, not counting $8.1 million in remaining advance Medicare payments that the hospital is paying back in monthly installments.
The lease, which would be for 20 to 50 years, should be finalized by the end of the year if everything goes as planned, Marchand said. One growing concern, though, is whether the hospital has enough cash to hold on for that long.
The $3.6 million in reserves, based on recent financial trends, would last for just the next two to three months. The hospital is hoping the federal government will make a hardship exemption and either extend the repayment schedule on the Medicare loan or forgive it in full or part. Under current federal law, however, the request for such leniency cannot be made before Sept. 30 — more than two months away.
Marchand said the hospital is working on an emergency plan of cost cuts that would allow it to continue to operate independently until a lease could be finalized. He said the plan could include additional layoffs, but they would not be as severe as the 30 job cuts the hospital announced in May.
Marchand, who served as interim CEO before Studley’s hiring in 2020, has been heavily involved for the last nine months in approaching potential partners for the Greenwood hospital. All have been nonprofit medical systems with significant operations in Jackson, he said.
He said he is relatively confident that at least UMMC will submit a lease bid, assuming city and county officials sign off on the recommendation to pursue a lease agreement. If either the city or the county board rejects the recommendation, Marchand said the hospital will be faced with either closure or substantially scaling down its operation.
Last week, Studley resigned in anticipation of the likelihood of an affiliation, which he has endorsed.
In a statement released over the weekend, Harris Powers Jr., the hospital board chairman, said, “The Board appreciates the many contributions that Jason has made to the operations of Greenwood Leflore Hospital, and it wishes him the best in his future endeavors.”
An interim CEO has not been named, although Marchand has assumed some of the chief administrator’s responsibilities.
“The Board is in the process of restructuring the leadership team to assure hospital operations continue to maintain the appropriate standards of safe and high-quality care for the residents of our service area,” Powers said.
Dorothy Glenn, a member of the City Council, attended the open session of Monday’s hospital board meeting. She was the lone elected official in attendance. “Everybody needs this hospital, so all of them need answers,” Glenn said after exiting the meeting room when the hospital board went into executive session.
She said she was undecided on whether she would support an affiliation, although she acknowledged the necessity of some type of change.
“We know that if we are losing money, we have to take a different approach.”
- Contact Tim Kalich at 662-581-7243 or tkalich@gwcommonwealth.com.
