County commissioners still plan to sign a 40-year lease extension for Union's hospital, officials say, despite criticisms that the county didn't seek competitive bids and doesn't know whether it could have gotten a better deal.
Since 1995, the county has leased the facilities and land at Carolinas Medical Center-Union in Monroe to a single vendor – Carolinas HealthCare System, the nonprofit parent company of the Carolinas Medical Center hospitals.
The current lease isn't set to expire for 12 years. The extension would allow Carolinas HealthCare to run the hospital until 2048. The lease may be extended twice more, to 2088.
N.C. Sen. Eddie Goodall, R-Union, wrote county commissioners that the lack of competitive bids was “incomprehensible when we are discussing the healthcare of almost 200,000 people.” In an Aug. 25 e-mail, he went on to say that it was “even more astounding when we are talking about an asset of Union County worth, I would guess, hundreds of millions of dollars.”
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But commissioners chairman Allan Baucom said he's “totally confident we're getting the best contract for the health care for the citizens.” He said the county could not have solicited bids for a new lease because the current one won't expire soon. “It's not that there's any attempt to circumvent the process,” he said.
N.C. law requires local governments to solicit competitive bids for new leases. But the law is silent on lease renewals, so bidding procedures would be governed by the existing contract, said Eileen Youens, an assistant professor of public law at UNC Chapel Hill's School of Government.
“A government wouldn't be under obligation to look at (bidding) until the original lease is up,” Youens said.
Carolinas HealthCare's rival, Presbyterian HealthCare, won't challenge the lease renewal, spokeswoman Marcia Meredith wrote in an e-mail. “But if the county commissioners decide to explore other healthcare options, we would welcome the opportunity to be invited to participate,” she said.
‘Minor points' to be settled
Commissioners delayed voting on the lease Monday because the sides were working on “minor points about money disbursements on who gets what and when,” commissioner Roger Lane said. He declined to elaborate.
He said negotiations are nearly finished, but couldn't say when the commissioners might vote on the lease.
Under the proposed lease, the company's annual rent would be $2.75 million and could be revised every five years starting in 2019. The lease also calls for CHS to make a one-time $25 million payment in the first year. The company also would invest $200 million in new services over 10 years.
The lease extension was necessary for Carolinas HealthCare to secure financing, said Dennis Phillips, executive vice president for the CHS metro group. “If we're taking the risk to issue bonds, you need to be able to be there for an extended period of time,” Phillips said.
He also said the $200 million investment in new services “is not, long-term, what it'll be to get where Union needs to be. It'll be greater than that.”
Openshaw regrets his vote
Commissioners in April voted 5-0 to instruct county staff to negotiate the lease renewal. Commissioner Lanny Openshaw, a critic, said he didn't see a proposal until it was presented at that meeting.
“I regret voting for that,” he said. “I did not have enough information to review those numbers.”
He also criticized the length of the lease and how it defines Carolinas HealthCare's investment. The $200 million investment includes six projects CHS already is working on, such as health facilities in Waxhaw.
“If we can't do better than what we've seen so far, I think we should consider selling the property,” he said.
Scott White, a CHS spokesman, didn't know how much the six existing projects would cost. A committee of Union residents and hospital workers worked more than a year to devise a list of needed health-care investments that totaled $200 million.
The Community Trustee Council, a hospital advisory group, includes residents appointed by county commissioners and approved by Carolinas HealthCare. One is Weddington Mayor Nancy Anderson, who said she works three to four times a month as a registered nurse at a CHS rehabilitation facility in Charlotte. She says the council makes its decisions independently of the healthcare company.
She also disagreed with past trustee council members who, Anderson says, have said the group didn't carry much weight with Carolinas HealthCare.
“ … I know when people listen to me,” Anderson says. “When I have a senior manager for CHS calling me on a Saturday from Hilton Head, that seems to say to me that I'm important.”