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HomeMy WebLinkAbout08-21-1987 EMERGENCY AGENDA CITY OF DENTON CITY COUNCIL August 211 1987 Emergency Meeting of the City of Denton City Council on Friday, August 21, 19870 at 5:15 p.m. in the Cit/ Manager's Conference Room of the Municipal Building at wh1ch the following items will be considered: The emergency and urgent public necessity being the continued viability of Flow Memorial Hospital in light of the existinp litigation, 5:1S P.M. 1. Executive Session: A. Legal Matters Under Sec. 2(e), Art. 6252-17 V.A.T.S. j 1. Discuss settlement negotiations in the County of Denton vs. the City of Denton. 2. Consieer offer of sale and sale or lease/purchase of Flow Memorial Hospital as set forth in the County's letter of 8-17-87. B. Real Estate Under Sec. 2(f), Art. 6251-17 V.A.r.5. C. Personnel/Board Appointments Under Sec. 2(g), ' Art 6252-17 V.A.T.S. 1. Discuss various options available in response to the County's letter of 8-17-87 with respect to Flow Memorial Hospital. C E R T I F I C A T E f' f I certify that the above notice of meeting was posted on the bulletin oa at the City all of the City o Den on, Texas, i on th day of 1987 at ~d~ o'clock } (a.m. p.m. grty Cyn-SECRETART t 27300 a w. ?,1 5 S MUNICIPAL 8UlLOINO / DENTON, TEXAS 78201 / TELEPHONE (817) 686.8307 CITY of OFNTON, TEXAS Office of the WY Mene9ef MEMORANDUM w l a T0: Mayer and Members of the City Council FROM: Lloyd V. Harrell, City Manager , DATE: August 201 1987 a Si; et d ~y? f SUBJECT: Emergency Council Meeting of August 21, 1987 the The attached represents background informaBecausoooE the 1 3I~ emergency meeting to be held Friday evening. , ay;`'~~nkr, r' sensitive nature of our discussion, it is requested that you keep the contents of this memorandum confidential. Please call if you have any questions about which you world k S like more information. t. w rre , o a ( rv, r fk ~ i` 4 'Enclosure 3S86M tl .r^, 1 ,tY. t v ~u~ A a i 4 ~ 1 ~ k fy: , • ~ , 4 . .7 I p 4t J~. e r~ f wi 4 1, i~ e , 4 y CITYof DENTON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS 76201 /TELEPHONE (817) 668.8307 Office of the City Manager CONFIDENTIAL MEMORANDUM TO: Members of the City Council FROM: Mayor Ray Stephens Lloyd Harrell, City Manager Debra Drayovitch, City Attorney John McGrane, Executive Director for Finance DATE: August 20, 1987 SUBJECT: Summary of Meeting on August 19, 1987 with Vic Burgess, Don Hill and Jim Allison regarding Flow ;s, ,4. Hospital and the County's Offer to Transfer Such I Ownership to the City h• This memorandum summarizes our joint impressions of the positions taken by the County at a meeting on August 19 held to clarify their current offer to transfer ownership of Flow Hospital to the City of Denton. Also, discussed are options ri which are available to the Council to deal with the current situation. COUNTY POSITIONS TAKEN AT THE MEETING ' o The County formally requested that the City adopt a position that neither the City nor the County will 4• k henceforth issue independent statements about the Hospital situation but only joint statements would be issued. a Furthermore, the County requested that the City should announce that it shares the County's commitment to change the current situation of Flow Hospital, either by the City assuming ownership of the Hospital or Joining with the County in an attempt to sell or lease/purchase the Hospital to a third party. This should include the City 'r issuing a letter indicating that we would entertain proposals to sell the Hospita,. Lacking the ability to WA successfully conclude any of the above stated alternatives, we would join with the Count; to close Flow Memorial Hospital. • wy , V Flow Hospital August 20, 1987 Page 2 o The point was clearly and forcefully made that the County Commissioners do not want any further direct involvement with a public hospital, although a majority of the Commiss'Con feel it is in the County's best interest to keep a public hospital in the community If possible. Thus, there appears to be a willingness and desire by the { County Court majority for the City to assume ownership of the Hospital. E o The County seems to be willing to negotiate terms and conditions of the transfer to the City. They may be willing to talk about the percentage of support for indigent care, although it appeared the preference was to let that issue be decided by the current lawsuit (as they stated several times that the indigent cato issue could be put aside); underwriting current liabilities of the Hospital for a certain period of time; and possibly allocating the remaining $250,000 in this year's county budget to Flow Hospital. o The County seems open to a counter offer regarding conditions associated with the transfer of the ownership of Flow Hospital to the City. It was expressed that a majority of the Court would probably support reasonable conditions in order to retain a public hospital. o The County admitted that if a public hospital continues to exist and continues to service the same service area (all of the county) that Flow currently serves, then such public hospital will be the exclusive provider of indigent health care within the County to the extent Flow provides the necessary services, i CITY OPTIONS Option -I Accept the Hos ital Board's request for two cents ($.02) ?or TIOU valuation an con ton the allocation similarly to our prey ous payment (i.e., If a court later r-Finds us res onsi a or Indigent care this will FeeT- flfill u t at o as on . y i v> flow Hospital August 20, 1987 Page 3 County Reaction to this Option: During the meeting the County was asked what action it would take if the City adopted this stance, The County noted that they may bring legal action asking for the dissolutionment of the partnership and attempt to force the closure of the Hospital, Furthermore, they indicated that future indigent health care payments would be as limited as possible. f1 Advantages: + 1. This stance would clearly state to the community that the City has done all it could responsibly do to save the public hospital. If the Hospital closes, this option has the best opportunity to clearly attribute its closure to the County's action, 2. cased upon Flow's current financial performance, this level of subsA y might allow the Hospital to continue to operate A function for a substantial period of time, r 3. This stance would have the City assuming no more financial obligation for the Hospital than currently exists, and in fact, could offset future obligations if indigent health costs are later assigned to the City. r~ i 4. Timing ttfll permits the inclusion of funding for this alternative within the 1987/88 City budget; I thus, not permanently damaging other City programs by making mid-year reductions. Disadvantages: 1. This strategy could prompt the accounts payable creditors ($700,000 - $800,000), medical staff, and hospital staff to become impatient at not seeing any changes in the basic structure of the Hospital. These individuals could then take independent action which might force the closing of the Hospital irrespective of City action. r, I Flow Hospital August 20, 1987 Page 4 2. The City would be involved in prolonged litigation with the County to finally resolve this matter and relationships between the two parties would be negatively affected. This latter situation could have an affect on the County funding for joint services such as library, health unit, civil defense, and emergency medical. 3. This stance would allow the instability of Flow Hospital to continue. i Option 11 Join with the Count in assuming the sale or lease/purchase of tTe Hospital to a third party. ` Advantages: 1. If s,+ccessful, the City could remove itself from the y hospital business, greatly reduce or eliminate associated liabilities, and may get all or a portion of its indigent care obligations funded by the buyer. l r ` 2. The City and County could work in partnership and relationships between the two entities would be positively affected. i S. Obtaining sales offers could help the City in structuring an arrangement where we would assume ownership of the Hospital from the County if that is later decided to be the most advantageous course of action. 4. If a sale or lease/purchase is finally implemented, such would insure the continuation of the hospital with jobs and the current economic benefits to the community being retained. Disadvantages: 16 The community would lose fee and service advantages associated with a public hospital. 2. Health care services for the "medically" indigent could suffer with only private hospitals remaining in Denton. i " 31 Title problems could prevent a rapid sale or viable lease/purchase was the Hospical even if a received by the entities. proposal of purchase proposal p Y the Plow Hospital August 20, 1987 s page 5 Option I11 Enter into serious ne otiations with the Count 1n anan amt 11 : ;rzlz~e~ 03 to assume owners n o t Advanta es; the 1. The announcement of ty~al .intsu~h oseems only re,na i r I ng way P ulto bestore stability to flow Hospital ublic hospital :an be guaranteed to continue in the community for the oreseeable future. The City would be assuming a very substantial 1• selecting this option. If one financial risk by assumes the accuracy of the Hospital Board s budget which calls for a total subsidy of $2,000,000 ($1.2 million for indigents and $8009000 forin"imumra the City could be facing at a m subsidy), yearly S1•4 million payment if one assumes a Slit indigent health care split. Also, there would remain $700,000 - $800,000 accounts payable. the Council is aware, the hospital industry d 2. extremely unstable. Therefore, if the City di ;I assume ownership and despite our best efforts the Hospital was later forced to close, according t the would Delottte0 Haskins and Sells report, remain an estimated $10678,000 in accounts payable; 1 $339 000 accrued expenses; capital lease obligation of ~1,55400009 notes payable of $85,000, bonded indebtedness of $340,0000 and other contractual $ $125,000 (Total! commitments of approximately 4 141 ,000). The report aIsostates gn the t, "in ital would incur t s t , ~ addition, the Hop expenses during the phaseout fees and security personnel should be period. Outplacement counseling p retained to limit the Hospital's unemployment compensation liability". 3. Unless a SOIC-3 corporation atocrlate , bpressure would occur asking the provide the capital improvements needed to modernize and improve the Hospital. ~ l i i Flow Hospital August 20, 1987 Page 6 i In conclusion, it one appears to the negotiating group that the Council can take onne of two actions et this point. We can adopt Option I immediately and move forth by increasing the { City tax rate by two cents ($.02) at our earliest opportunity and earmark this allocation for Flow Hospital. vertures ftrategy E would call for us to reject the County s o demand in of vithe ew ofmours limited tax bases and ions pass that ownership uch would because s ji ball back to the County regarding the future of Flow Hospital. { On the other hand, we could adopt the County's philosophy and indicate that we will immediately join with them to further explore either Option 11 and/or III regarding the Hospital and pledge to change the current structure of Flow Hospital. Even under this option, however, it is felt that the Council should consider adopting a two cent ($.02) tax in order to help the Hospital continue. Such action is needed because implementation of Option II or III will not occur quickly r' because of title problems and/or required negotiations. . b , t t {'l 1 kn t I~' I If 4 ~ ~I { f F h C. 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