Helen Ellis, hospital reach deal

Under a letter of intent, University Community Hospital in Tampa will kick in millions of dollars to pay off the struggling hospital's bonds. Adventist Health System is no longer part of the talks.

By DIANE STEINLE and ROB FARLEY

© St. Petersburg Times, published March 29, 2000

TARPON SPRINGS -- Helen Ellis Memorial Hospital and private, non-profit University Community Hospital in Tampa on Tuesday announced they have signed a letter of intent to affiliate within 30 days.

UCH will rescue the foundering local hospital by contributing $24-million upfront to pay off Helen Ellis' 1988 and 1991 bond issues, according to a statement released Tuesday evening.

Out of the picture is Adventist Health System of Winter Park, which had been considered the big player among Helen Ellis' potential saviors.

Until this week, a company called Choice Health Alliance, a new partnership of Adventist and UCH, had been planning to affiliate with Helen Ellis. Choice Health would have refinanced rather than paid off Helen Ellis' bonds, according to a letter of intent signed in November.

But rising interest rates in the bond market made that scenario, and apparently Adventist's involvement, unfeasible.

"It no longer made good financial sense to refinance the bonds," said Norm Stein of Clearwater, president of UCH. "Our goal is to strengthen Helen Ellis' financial position. This wouldn't have been possible at today's interest rates."

While UCH's $24-million contribution will eliminate the hospital's debt from the two bond issues, and in turn the burden of annual $2.4-million interest payments on that debt, UCH is not offering upfront money for improvements at the 168-bed hospital.

The new letter of intent, signed Monday, states that UCH is committed to providing $20-million over the first 20 years to the hospital plant and equipment, but only "to the extent that adequate net operating revenues are available from the operations" at Helen Ellis.

Nevertheless, Lester Garner, president of the Tarpon Springs Hospital Foundation, which now leases and operates Helen Ellis, called the new deal a "substantial breakthrough."

"We believe this gives the hospital the fresh start we need," Garner said at an announcement of the new agreement at the beginning of Tuesday night's City Commission meeting. "Our bottom line would not have been strengthened at all" by the Choice Health agreement.

City officials seemed encouraged by the announcement. News of Helen Ellis' rapidly declining financial condition, combined with a rumored slowing of Helen Ellis' secret negotiations with Choice Health, had alarmed city commissioners to the point that they held an unusual special session Saturday to decide how to respond. Though Helen Ellis officials attended the Saturday meeting, they did not mention that a new agreement was in the offing.

"We've struggled with the change in the bond market and felt this was the best way to go," Stein of UCH told commissioners Tuesday. "We stand ready to work as hard as we can to get this transaction done and get past this."

"This is outstanding news. I'm thrilled to death," Commissioner Cindy Domino said.

"It looks like we're on the right track," added Commissioner Jim Archer.

The letter of intent, signed Monday, is just the first step toward a takeover of Helen Ellis by UCH.

The two sides next must negotiate and sign an affiliation agreement. Then a new lease of the hospital property will have to be negotiated with the city, and that proposed lease will have to be approved by Tarpon Springs voters.

Officials of both hospitals said Tuesday that they expect the affiliation agreement to be signed within 30 days and the referendum to be held by July 11.

The nine-page letter of intent, while not detailed, does provide some specifics about how the hospital would operate under UCH:

Helen Ellis would pay the city $250,000 in rent each year of a 40-year lease term.

The Tarpon Springs Hospital Foundation, now comprising a representative from each of more than 50 community groups, would be reconstituted and UCH would become its sole member.

A new hospital governing board would be created. It would have six members appointed by UCH and six members appointed by a new community foundation, as yet unnamed. The foundation's appointees would have to be approved by UCH.

Helen Ellis would remain a not-for-profit, acute-care hospital.

For the first six months under UCH, Helen Ellis employees would keep the same rate of pay and benefits. Staffing levels "shall remain consistent with community staffing levels of general acute-care, not-for-profit hospitals in the greater Tampa Bay area."

Helen Ellis "shall provide charity care consistent with its not-for-profit mission and historical levels of care."

Garner told commissioners that a series of public forums will be held before the referendum to explain the affiliation arrangement to voters.

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