The Saint Luke’s Health System is now in control of operations at Allen County Regional Hospital, capping two years of efforts by hospital trustees to find the best management model in the ever-challenging healthcare industry.
Saint Luke’s took over at midnight, under a minimum 10-year lease agreement in which the Kansas City-based system will oversee all medical and other operations, including staff. The county continues to own the hospital building and other facilities. A lease payment from Saint Luke’s will cover the remaining costs of what was initially a cost of $30 million in bonds and loans to build the hospital in 2013, relieving local taxpayers of much of the burden.
Voters, though, will be asked in October to continue a quarter-cent sales tax to support the continued maintenance of the hospital building and other facilities. If the question fails, property taxes will be used to meet any financial obligation needed to maintain the facilities.
History
Allen County took back control of hospital management in 2013, after decades of being leased to health care systems that eventually were bought out by Hospital Corporation of America. The relationship with HCA soured when the county wanted to build a new hospital, but the Nashville-based system refused to contribute, according to Register files.
So, the county built a hospital on its own and took over ownership, while maintaining a relationship with HCA. Under that agreement, HCA provided three top administrative positions and other services.
The contract with HCA expired June 30, 2020.
At the beginning of 2018, the county-appointed Board of Trustees, which oversaw operations, decided to review their options. Perhaps they would renew the management contract with HCA, or renegotiate it. Perhaps they would consider a new management contract.
Initially, the one thing they didn’t want to do was lease the hospital again. Many of the trustees still resented how things turned under the lease with HCA.
But after trustee Terry Sparks made an impromptu visit to Wright Memorial Hospital in Trenton, Mo., which was leased to Saint Luke’s, he suggested the board give Saint Luke’s a chance to make a proposal. Sparks said he was impressed with the way Saint Luke’s operated its three rural, critical-access hospitals, including Anderson County Hospital in Garnett, just 30 miles or so to the north of ACRH.
The board heard a proposal from Saint Luke’s officials in October 2018, along with proposals from HCA and two other companies. In December, trustees decided they’d either stay with HCA or lease to Saint Luke’s.
Saint Luke’s is a non-profit, faith-based health system with 16 hospitals and campuses in the Kansas City area. They also offer a number of primary care offices, community clinics, hospice offices and long term care facilities. In recent years, they’ve opened several pint-sized community hospitals, eight-bed facilities that offer emergency room care as a model for areas that can’t support a full hospital.
After the presentation, a majority of trustees slowly warmed to the idea of a lease, based largely on support for the idea from the public and county commissioners. Supporters said a deal with Saint Luke’s would provide financial stability and quality service with an experienced, well-regarded healthcare system. It also could provide opportunities to cooperate with Anderson County Hospital in Garnett. It also would be financially beneficial, both for the taxpayers and the hospital’s long term viability in an ever-changing and challenging hospital industry.
The COVID-19 crisis has proved just how fragile those systems can be. Hospitals across the nation have restricted access to only essential services, losing out on revenue from outpatient services, clinics, wellness visits, surgeries and more.
ACRH immediately took out a $3.7 million loan as a proactive measure to stem financial losses, but was able to receive federal grants to offset much of its lost revenue.
