A for-profit, privately held long-term-care company has joined with two not-for-profit community hospitals in Massachusetts to propose a $50 million redevelopment of a state hospital that's been closed since January 1992.
If the state's Division of Capital Planning and Operations approves the project, the Lakeville (Mass.) State Hospital would be the first of nine to be redeveloped since Gov. William Weld ordered their closure in a move to save money and "privatize" the state's care of indigent, mentally ill and mentally handicapped residents.
The joint proposal brings together two nearby acute-care hospitals-Morton Hospital of Taunton and St. Luke's Hospital of New Bedford-and Cleveland, Tenn.-based Life Care Centers of America, which operates 137 nursing homes, nine of them in Massachusetts.
Redevelopment of the 73-acre campus includes housing for long-term care, assisted-living arrangements, retirement residences and care of patients with Alzheimer's disease. In addition to new construction, two existing buildings would be renovated.
Still to be determined is the tax status of the property and its effect on both local government revenues and the project's tax-exempt financing options. Ellen Lutch Trager, a Boston healthcare attorney who put together the deal, said the development will generate government revenues of some sort, however. She speculated the providers might agree to pay for city services in lieu of taxes or make some other arrangement with local governments.
The state Department of Public Health paid about $23,000 a year in lieu of taxes at the time Lakeville closed, said Ms. Trager, director of healthcare strategies at the law firm of Brown Rudnick Freed & Gesmer.
The joint venture also will negotiate payments to the state on a proposed 65-year lease of the property. Those and other negotiations are awaiting the state's decision to officially confer developer status on the venture, she said.
Lakeville was opened in 1922 to care for tuberculosis patients and others with chronic diseases. But it eventually housed patients needing everything from nursing-home to specialized rehabilitation care, said Roseanne Pawelec, special assistant to the commissioner of capital planning and operations.
A June 1991 report recommended closing a system of state health facilities that was antiquated and not providing proper care, Ms. Pawelec said. Patients at the closed hospitals were transferred and subsidized at private-sector facilities.
Closing the nine state facilities also saved $60 million in operating costs per year as well as $144 million in capital expenses that would have been necessary during the next 10 years to modernize them, she said.
For the hospitals, Ms. Pawelec said, the state sites are an opportunity to develop new sources of revenue through "interesting strategic alliances" with other providers.