A healthcare entrepreneur with a checkered past has dropped his efforts to buy a Sun Valley, Idaho, community hospital and replace it with a lavish private hospital in neighboring Ketchum, Idaho.
Last month, LeRoy Pesch, M.D., acting on behalf of Seattle-based financing group Sun Valley Clinic Corp., proposed to buy Moritz Community Hospital from the town and move it up the road to the vacant Alpenrose Hotel in Ketchum, which he planned to convert into a 25-bed private hospital for rich vacationers.
However, after his proposal was met with heated opposition from hospital officials and a local healthcare task force, Dr. Pesch last week said he would no longer pursue his efforts to buy the hospital.
MODERN HEALTHCARE obtained a copy of the letter Dr. Pesch sent to Sun Valley Mayor Jo Ann Levy on Oct. 4. In it, Dr. Pesch said his group decided to withdraw the offer after the Sun Valley Subcommittee for Hospital Alternatives removed Dr. Pesch's proposal to buy Moritz from its planning agenda on Sept. 30.
"The manner in which this matter was handled and the remarks made by members of the subcommittee in so doing, make it very clear that any further attempts on our part to pursue our interest in developing (a private hospital)...will be met with further diversionary and dilatory tactics," the letter said.
It also recommended that Sun Valley's City Council regain control of Moritz's assets from the hospital's board of directors.
Dr. Pesch couldn't be reached for comment. Sun Valley officials confirmed that he has withdrawn his proposal.
Dr. Pesch first met with Sun Valley officials on Sept. 19 to formally propose his plan to transform Moritz into a healthcare clinic and recreational facility called the "Clinique del Sol" for travelers to utilize while vacationing in the Sun Valley/Ketchum region.
The proposal had a price tag of $14 million to $16 million-although Dr. Pesch was quoted in the local Idaho press as saying Sun Valley could reap as much as $6 million in profits by approving the sale.
However, local hospital officials and members of a recently formed healthcare task force in Sun Valley opposed Dr. Pesch's program from the start. They claimed his project would thwart the hospital's efforts to merge or affiliate with St. Luke's Regional Medical Center in Boise, Idaho.
In addition, Moritz hospital is part of the Wood River Medical Center, a joint merger made in 1992 between the town of Sun Valley and county-owned Wood River Hospital in Blaine County. But Dr. Pesch's interest was only with Moritz's campus, not Wood River Medical Center.
"We worked hard to put the Wood River merger together, and were looking to affiliate (with St. Luke's)," Wood River Administrator Alan Stevenson said. "Dr. Pesch's proposal throws a wrench in the works because he's only interested in purchasing the assets of Moritz, not (Wood River)."
In addition, officials questioned whether Dr. Pesch's private hospital would adequately serve underprivileged residents or Medicare and Medicaid patients in the region.
Finally, they said they were equally skeptical whether Dr. Pesch, who has a spotty record as a healthcare manager, would have the financial backing to complete the deal if approved.
"The board was also very skeptical of the proposal in light of Dr. Pesch's recent endeavors in healthcare," Mr. Stephenson said.
Dr. Pesch is best known for losing millions of dollars of his own money in an unsuccessful effort to build a healthcare empire during the 1980s.
In 1984, he merged his company, REPH Acquisition Co., with Republic Health Corp. and eventually took the company private in a $400 million leveraged buyout. The company immediately began losing money, and Dr. Pesch was ousted as chairman in 1987.
In 1991, Dr. Pesch's West Seattle Hospital was forced into Chapter 7 liquidation by creditors. Disgruntled hospital employees accused him of failing to pay an estimated $300,000 in back salaries.
And in 1992, he made a bid to buy two hospitals owned by Affiliated Medical Enterprises-only to have it nullified after the Anaheim, Calif.-based chain discovered that Dr. Pesch didn't have the appropriate funds to purchase the hospitals (Dec. 14, 1992, p. 3).
Dr. Pesch has since relocated to Sun Valley from Lake Forest, Ill., where he operates LAPesch & Co., a real estate financing company.