Winchester bid for BRMC too late
Published on March 4th, 1998
STONEHAM, MA - "Too little, too late," was how Boston Regional Medical Center (BRMC) officials this past Thursday described Winchester Hospital's January offer to merge the two facilities.
At a mandated public hearing Thursday before the Attorney General's office at Stoneham Town Hall, representatives from BRMC were asked by state officials why they didn't explore the possibility of merging with a non-profit Winchester Hospital rather than proceed with the sale of 80 percent of the Stoneham hospital to Doctors Corporation of America, a for-profit group from Arizona.
David Spackman, counsel to BRMC, said Winchester Hospital reportedly submitted a 1 1/2 page proposal, detailing its offer to purchase the financially-troubled Stoneham 7th day Ad-ventist hospital, on January 27. According to published reports, Winchester Hospital offered to assume BRMC's estimated $34 million in long-term debt and also invest another $26 mil-lion to update the facility over the next five years. Winchester also promised to keep BRMC's emergency room open for at least three years, according to the reports.
In front of about 150 people during the afternoon session, Assistant Attorney General Jo-hanna Soris said their office would rather see two non-profit groups merge rather than have a for-profit group enter into the mix. She asked why BRMC did not begin discussions with Winchester earlier.
Spackman said at the outset Winchester Hospital was not sent a Request For Proposal" sheet because it was clear right from the start Winchester was not going to be a positive re-sponder.
"It was very clear to BRMC that there were certain hospitals that they compete against that were highly unlikely to make the commitments we were seeking," said Spackman. "The RFPs have very sensitive information and for us to send one out they have to be serious about meeting us on our terms."
The Board of Directors at BRMC had instructed hospital President Dr. Charles Ricks in March of 1997 to find a financial partner to keep the hospital afloat, but wanted a partner that would maintain the Adventist mission and maintain BRMC as an acute care, full service hos-pital.
"We were not interested in finding a partner that was likely going to downgrade the hospital to an outpatient facility," said Spackman.
Other criteria for a potential partner included maintaining the recently developed relationship with Lahey Hospital; continue to have a say in the hospital's future through the corporate structure; someone who would take care of the hospital's many creditors and a partner that could handle the hospital's short-term cash needs.
"BRMC needed cash and needed cash quickly," said Spackman.
Spackman said Ricks did call Winchester Hospital further along in the process, but Win-chester officials were "not interested in meeting their criteria."
Doctors Corporation of America in September agreed to purchase 80 percent of BRMC for over $52 million. Under the joint venture, which will be called Boston Regional Medical Cen-ter L.L.C., DCA will assume $19.5 million of BRMC's liabilities, $3.25 million of Boston Regional Medical Associates' liabilities, satisfy $30.25 million in long-term debt and provide $2 million in cash.
The sale does not include any of the hospital's additional real estate on the 40-acre property, the church or the private school facilities on the grounds.
To cover the cost of the acquisition DCA will receive a $37.5 million loan from National Century Financial Enterprise, whose representatives were present at Thursday's hearing.
"This joint venture is unique in the United States," said Ricks, who's been at BRMC since late 1994. "It's a win-win for our community. It maintains the not-for-profit mission and cul-ture of the Adventists that puts the needs of patients first while giving the community a larger tax base fusion of support."
When asked if the DCA purchase would force the closure of specific BRMC departments, Breckenridge was noncommittal.
"We haven't talked about that," said Breckenridge. "It's our priority to not close anything. We have evaluated every program and targeted certain programs that need to be more produc-tive like OB which will go through a major upgrade. We are looking to increase the number of births each year from 1,200 to 2,000."
At the two-hour testimony session in the late afternoon, over a dozen local officials gave their support of the DCA-BRMC merger. During the public input portion of the hearing later in the night, a majority of the speakers continued in support of the merger with only two audience members in opposition.
State Sen. Richard Tisei (D-Wakefield) said it is important for the consumers to have as many choices of hospitals as possible.
"DCA has been committed to keep open community hospitals," said Tisei. "This merger is good for the long-term health of the hospital."
Tisei expressed concern that if the Winchester merger were to take place and BRMC par-tially closed, it would reduce the number of acute care options in the area to two (Melrose-Wakefield and Winchester Hospitals).
Stoneham Board of Selectmen Vice Chairman Cosmo Ciccarello said his board "unanimously" supported the DCA venture and "that's unusual for this board to agree on any-thing."
Ciccarello said that by the hospital remaining partially non-profit "those who can't afford healthcare can still go to BRMC and receive care." Ciccarello and local attorney Charles Houghton each stressed the importance of additional tax money to the town derived from the for-profit corporation. Town officials have estimated the town's tax base could increase by as much as $500,000.
Other local officials who spoke in favor of the venture included former School Supt. Dr. El-len Bueschel, Senior Center Director Barbara Mahoney, local Realtor and Community Action Foundation President Laura Hogan, former Stoneham businessman and hospital board member Robert Skelley and former Selectman Jack Mahoney.
Written comments on the proposed transaction may be submitted to Richard Allen, Divi-sion of Public Charities, Office of the Attorney General, One Ashburton Place, Boston, MA 02180 on or before March 15.
Allen said a decision from his department would likely not occur until at least early April. The state's Department of Public Health must also review the transaction.
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