Care center to pursue lease negotiations with hospital
by Rudy Herndon
Staff Writer
Feb 27, 2014 | 3005 views | 0 0 comments | 95 95 recommendations | email to a friend | print
Canyonlands Care Center employee Jillian Fryer, right, assists resident Mary Ivan. The center’s board is now discussing options for the facility. Courtesy photo
Canyonlands Care Center employee Jillian Fryer, right, assists resident Mary Ivan. The center’s board is now discussing options for the facility. Courtesy photo
Canyonlands Care Center and Moab Regional Hospital have a long history together, and that history could serve as the foundation of a new partnership between the two entities.

The care center’s governing board is taking steps to negotiate a long-term lease or lease/purchase agreement with the hospital, based on its findings that MRH is the only entity that offers compatible services.

The Canyonlands Health Care Special Service District (CHCSSD) recently published a legal notice that allows it to pursue related discussions with the hospital’s board of directors.

District officials have already heard from three outside companies that voiced an interest in managing or leasing the care center, or buying it outright.

Each of those companies is totally capable of running the facility, according to new CHCSSD board chairman Doug Fix.

But the hospital has a unique relationship with the care center, and Fix believes the two entities would be better off as partners, instead of competitors.

“If we can work something out with the hospital … a coordinated effort to provide services seems like a better way to go,” he said Feb. 25.

Kyle Bailey, who sits on the hospital’s board of directors, said that discussions between the two entities are still in the very early stages.

“We’re looking at it and we’re working with the special service district at this time to explore the idea,” he said. “The consensus at this time is that we want to explore the possibilities.”

However, Bailey emphasized that he hasn’t seen a formal proposal, and he noted that the MRH board doesn’t know how the idea could affect the hospital’s Medicare reimbursement rate.

Canyonlands Care Center Administrator Roy Barraclough said he believes that Fix is relying on the two facilities’ shared history to make his case.

The 36-bed care center is an offshoot of an extended-care facility once operated by MRH’s predecessor, Allen Memorial Hospital, and Barraclough said it only split off from the facility’s portfolio after plans for a new hospital were drawn up.

Even then, the hospital and the care center went on to share the same new building on Williams Way.

Today, the care center remains tied into the hospital’s power system, as well as its emergency generator. Barraclough noted that the hospital also provides food service to the care center, does its laundry and provides it with a host of other services, including computer support, maintenance and engineering work.

If the care center cut its cord with the hospital, all of those services would likely have to be rebuilt from scratch, and Barraclough believes it would be cost prohibitive to do so.

“It clearly gives the hospital a leg up,” he said.

There’s also the sense that members of the CHCSSD and hospital boards understand each other, which could make for a much easier and less involved transition, Barraclough said.

CHCSSD’s decision to reach out to the hospital comes after its board considered various proposals over the past year to lease, manage or sell the care center to outside entities.

As the months wore on and Fix explored the issue in depth, he determined that changes to the state’s procurement laws created a highly convoluted bidding process.

In the past, the district could simply put its requests for proposals out to bid. But today, it has to go through much more detailed procedures before it can get to that point, according to Barraclough.

As an alternative, Fix came to the conclusion that the district could invoke “sole source” language that allows it to negotiate directly with the hospital’s board.

Moving forward, Fix said that members of both boards will have to come up with any possible terms they would like to discuss amongst themselves.

The ultimate goal, he said, is to come up with a letter of intent or a similar kind of agreement.

But that doesn’t mean that either board has committed to the idea in any way, shape or form at this point, Barraclough told the Grand County Council on Feb. 18.

Speaking as the hospital’s former administrator, Barraclough said it’s very unlikely that MRH would reincorporate the care center into its portfolio. But there is a possibility that the hospital’s governing board would be interested in leasing the care center as a separate facility, he said.

In the meantime, Barraclough remains hopeful that state lawmakers will approve legislation that would allow the care center to opt out of the Utah Retirement Systems (URS) program.

If approved, Barraclough estimates that the changes under Utah Senate Bill 204 could save the facility about $120,000 to $130,000 per year. Those savings, in turn, could go a long way in keeping the care center on the path to financial recovery, he said.

Although its financial situation has improved considerably in recent months, the district’s 2014 budget projects that its operating fund will end the year with a negative balance of $129,948.

Fix has estimated that about 16 percent of the district’s annual budget shortages can be traced to the required URS contributions. Yet Barraclough has noted that few of the care center’s employees actually benefit from them.

It takes employees four years to become vested in the URS program, yet a majority of the care center’s staffers move on to positions elsewhere after one year to 18 months, according to Barraclough.

As of press time, S.B. 204 had not moved out of the Utah Senate Retirement and Independent Entities Committee, but Barraclough expects that the full Senate will vote on the bill in the near future.

According to Barraclough, there hasn’t been any pushback against the bill to date.

URS Executive Director Dan Andersen said he understands the care center’s position on the issue, and he vowed to work with the facility, Barraclough said.

State lawmakers have said that local support will be critical to the bill’s passage, and to that end, the Grand County Council and the Moab City Council passed resolutions in favor of the bill.

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