Town attempts to deal with BRMC rising debt
Published on November 25th, 1998
STONEHAM, MA - This is the first story in a series of two which focus on problems surrounding Boston Regional Medical Center which are being experienced by Stoneham residents and the town government.
Nine months ago, the horizon for Boston Regional Medical Center (BRMC) held promise and hope.
And, while the hospital's future may still prove to be fruitful for most of the involved parties, overwhelming tax bills and the slow-footed sale of the property have caused major difficulties in the day to day proceedings for the Town of Stoneham.
In response, the town has put a lien against the property and could assume control of the grounds in six months in the unlikely event that BRMC continues its indebtedness to the town.
In February of this year, the powers that be at BRMC announced to the public that the sale of the hospital to the Doctor's Community Health Corporation (DCHC) was imminent. On February 26, a hearing was held at Town Hall where residents as well as hospital personnel were informed that one of the only remaining hurdles for the sale was approval from the state's Attorney General's Office.
Nine months later, however, the sale has yet to come to fruition, leaving the Town of Stoneham and the hospital's many creditors waiting and wondering about their mounting bills.
According to published reports, the hospital has built up a debt in excess of $30 million and continues to run in the red as a non-profit organization. Of that total, the hospital has built up a debt of approximately $500,000 to the Town of Stoneham, mostly for unpaid water and sewer bills.
The sale
According to BRMC CEO Dr. Charles Ricks, the sale process is still ongoing.
"It's still pending and is in process," Ricks said when reached by the Independent. "They (lawyers for BRMC and DCHC) are now putting all their efforts in to get our deal closed."
Dr. Ricks explained that DCHC had proposed to buy BRMC as well as a Chicago-based hospital. With the sale of the Chicago hospital signed and sealed, Ricks explained, the town can now expect an acceleration of the negotiation process. This, added with the stack of paperwork involved in closing such a deal is said to have been the reason for the lengthy delay.
"We are still in the process of getting that done and we are looking forward to getting it done," the CEO maintained. "It's taken a lot longer than any of us expected."
One significant change in the negotiation between the two parties is the fact that DCHC will assume complete control over the hospital once the deal is settled. In February, the Attorney General's Office informed the Town Hall gathering that BRMC's parent company, Adventist Health, would maintain control over 20 percent of the hospital.
At that time, it was said that BRMC management would remain in control of much of the administration of the hospital's grounds and services while DCHC would pay off the $30+ million in debt and assume responsibility for the $22+ million in liabilities.
Apparently, this agreement proved to be impractical for DCHC which will likely assume 100 percent control of the facility if and when it is purchased by the group.
Stoneham's perspective on the sale
The sale of Boston Regional Medical Center has been eagerly awaited by those in charge of the budgetary reins in Stoneham.
The hospital has run as a non-profit organization throughout its existence and has, therefore, generated no real monetary income for the town's residents.
The 38+ acres of land located on the Fells which composes the hospital campus, however, would translate into big money for the town annually if the sale to the for-profit DCHC were finalized.
Although the town did not directly budget the estimated $800,000 which it would gain from the hospital's sale, Nutting explained to the Board of Selectmen and to residents that belts would have to be tightened severely in order to maintain school and municipal programs without the funding.
After being told of Ricks' assurance that the hospital's sale would soon be finalized, Nutting said, "That would be great news for everybody."
Debt to Stoneham
According to Stoneham Tax Collector Thomas Cicatelli, Boston Regional has compiled a debt of nearly $500,000 in MWRA charges over recent years.
"They've been in arrears for the past several years," Cicatelli said. "It was hoped when the sale went through that they'd pay off their bill, but that hasn't happened as of yet."
He explained that the town put a lien against the property on November 18 after several attempts to collect the debt. The lien, he explained, would allow the town to assume ownership of the property after six months time if the hospital failed to pay off its bill in full.
Cicatelli deemed the move a last gasp effort.
"We can't turn the water off there," he said, referring to an option sometimes used when residents fail to pay their bills. "That would be a health hazard and wouldn't be in the town's best interest."
Although the hospital has paid approximately $250,000 in the past year to the town for water usage, no payments have been made since March, the tax collector stated.
"It's a half a million dollars of the budget," he emphasized. "The figure's just astronomical."
Cicatelli said that the debt has forced the town to reach into its General Fund coffers in the past, thus causing a precarious financial situation in terms of other municipal needs.
In addition to this shortfall, the hospital has failed to give the town a portion of its in-lieu-of-taxes payment for Fiscal Year 1998.
Town Administrator Jeffrey Nutting explained that BRMC still owes approximately $27,000 in this non-binding agreement between the town and the medical center. The hospital had agreed in the past to pay $50,000 annually to the town since its non-profit status allows it to forego to town's real estate tax.
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