Negotiations have resumed between the Metrocrest Hospital Authority of Farmers Branch, Texas, and Hospital Partners of America to develop physician-partnership arrangements for 149-bed Trinity Medical Center in Carrollton, Texas, and 118-bed RHD Memorial Medical Center in Dallas. Metrocrest previously announced on Feb. 25 that the talks, which had been going on for six months, had been terminated.
Also terminated at the time were a 25-year lease agreement for Trinity and a three-year management agreement to operate RHD Memorial. Although the lease and management agreements were announced Aug. 30, 2007, Metrocrest President Charles Heath said last month that those deals were never consummated and unraveled when the physician-partnership deal could not be reached. We had never signed those agreements, Heath said. It was all part of the same agreement.
Last month, Charlotte, N.C.-based Hospital Partners offered to continue to manage the two hospitals in a transition period during which Metrocrest would select a new operator, according to a news release. Metrocrests 25-year lease agreement with Tenet Healthcare Corp. expired in August 2007, and Hospital Partners was one of seven companies asked to submit management proposals in early 2006.
Regarding the breakdown in talks, Donald Flatt, chairman of the Metrocrest board of directors, said in a Feb. 25 news release that It became clear after six months of negotiations there were too many outstanding financial issues to allow the process to go forward. Flatt added that there was no single stumbling block in reaching an agreement, and it was decided that it was better to move on and restart the search for a financial partner.
Heath, however, noted thatwith the way the deal was being structuredit was going to create potential problems for us with refinancing our long-term debt. He also explained how the deal would have had physicians owning up to 40% of the lease for the hospitals, with Hospital Partners owning the rest. In addition, Heath said that physicians, Hospital Partners and Metrocrest would all have had representation on the hospitals governing boards. We wanted to do that, Heath said. We feel that having physicians as your partners is a great way to do business.
Metrocrest spokesman David Margulies echoed Heaths comments while announcing March 4 that negotiations have restarted. The talks that had broken off have resumed, he said, adding that disagreements are solely about complex financial issues; its not over the philosophy of running the hospitals or performance.
A representative from Hospital Partners could not be reached for comment.
The Metrocrest Hospital Authority is considered an instrument of state government as well as a unit of local government. It does not levy taxes, but has the power of eminent domain and is exempt from all federal taxation.