Columbia/HCA Healthcare Corp.'s proposed lease of an ambulance service in rural Kentucky is drawing fierce criticism from local officials and a lawsuit from a competing ambulance operator.
An agreement to pursue a lease between Columbia and Logan County Ambulance Board, which oversees the county ambulance service, was announced in May. Critics of the deal are up in arms because no formal agreement has been announced and no formal selection process appears to have been followed.
In a May 23 letter to state Attorney General Ben Chandler, five area magistrates complained about the secrecy of the deal. Its terms haven't been disclosed, and the public was never given a chance to comment on it, they said (See graphic).
What's more, a competitor alleges that a powerful member of the ambulance board had a conflict of interest in the decision because he is employed by the Columbia hospital that would operate the service. The competitor, Bowling Green, Ky.-based Commonwealth Health Corp., filed suit June 18 in Logan County Circuit Court requesting a temporary injunction against the deal. Commonwealth argues an open-bidding process, which is required for state agencies, should have been followed by the county as well.
Logan County, which has a population of about 28,000, is in the southeastern corner of Kentucky abutting Tennessee. The county, Commonwealth and a volunteer organization all operate ambulance services in the area. Columbia currently doesn't directly provide ambulance services in Logan County.
Columbia owns 100-bed Columbia Logan Memorial Hospital in Russellville, the only acute-care hospital in the county, which would operate the county ambulance service.
Ann Scott, business development director for Columbia Logan, said no firm agreement has been reached with the Logan County Ambulance Board, and no lease has been signed. She said the hospital is waiting for the board to assess the value of the service's equipment and accounts receivable before proceeding.
"We believe this is a natural extension of the services our hospital already provides to the community," Scott said.
Columbia Logan and Commonwealth have been in fierce competition for ambulance-service contracts in the area. Recently, Columbia criticized the board of Auburn (Ky.) Emergency Medical Services for conflicts of interest after the volunteer ambulance provider accepted a buyout from Commonwealth instead of a deal with Columbia. Two board members of the Auburn ambulance service work at 350-bed Medical Center at Bowling Green, which is owned by Commonwealth.
The Logan County Ambulance Board, with support from Columbia, challenged the service area defined in Commonwealth's certificate-of-need application in an effort to derail the Auburn deal. A hearing was held July 9, and a decision is expected July 23.
The tables are turned in the case of Logan County.
Commonwealth alleges that members of the Logan County Ambulance Board have conflicting interests. That includes board Chairman Ken Smith, who is employed as a lab technician at Columbia Logan and who also serves as Russellville's part-time mayor. Other board members or their families also are employed at the hospital or have connections to it, Commonwealth alleges.
Scott said the board members affiliated with Columbia abstained from voting on whether the service should be leased to Columbia.
A hearing on the Commonwealth lawsuit demanding an open-bidding process is expected to be held during the first week of August.
Commonwealth said despite two presentations to ambulance-service officials about various deals, it never was asked to make a formal bid. On May 21, Logan County Ambulance Board officials told Commonwealth they planned to negotiate a deal with Columbia.
On the day Commonwealth filed its lawsuit, it also submitted a formal bid for the service. Under its proposal, it would lease the service for three years for $100,000 per year and then buy the service for $150,000. Including the cost of capital outlays and the provision of certain charitable services, the value of the offer totals $1.2 million, Commonwealth said.
In their letter, the five magistrates of Logan County Fiscal Court in Russellville told the state attorney general that an open-bidding process should have been used. The court is an administrative arm of the county government.
Noting that Columbia may be offering "reasonable compensation," the magistrates argued that the public can't be sure of fair value for the service without an open-bidding process.
They accused the ambulance board of putting "public assets in the hands of a for-profit entity without revealing any information about that arrangement."
"The fiscal court and the taxpayers were shut out of the decisionmaking process involving this public asset. Perhaps even more disturbing is the fact that the taxpayers of Logan County still have not been told the price or terms of the arrangement," the letter said.
Chandler is reviewing the letter for possible action, a spokesman for his office said.