HomeMy WebLinkAbout1987 - 1991
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RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DENTON, TEXAS
RECOGNIZING THE PETITION OF FLAW REGIONAL MEDICAL CENTER, INC. TO
BE DESIGNATED AS THE RECIPIENT NON-PROFIT ORGANIZATION TO CONTINUE
EXISTENCE AND ADMINISTER ASSETS IN LIEU OF DISSOLUTION OF THE
FORMER FLOW MEMORIAL HOSPITAL; AND PROVIDING AN EFFECTIVE DATE.
s WHEREAS, last month, Flow Regional Medical Center, Inc. (the
"Center") filed with the District Court a plea in intervention and
a motion requesting that the Center be designated as the recipient
organization to continue existence and administer assets in lieu of
dissolution of the former Flow Memorial Hospitals and
WHEREAS, in the above-referenced motion, the Center advised
the Court that the assets presently consist of cash in excess of
$250,000 and a note receivable for $1,900,000 and that the Center
is the proper recipient organization to administer these assets and
carry out the intent of the H.E. Flow Will and provide insofar as
it can for the health care needs of all the people of the City of
Denton and Denton County, Texas regardless of their ability to pay
for such caret and
WHEREAS, the Council is advised that the Center also intends
to request that it be designated as the recipient organization of
the assets of the Flow Foundation, which presently consists of
approximately one million dollarst and
WHEREAS, over the years, the City receives, on an annual
basis, many requests for funding from agencies who provide health
related services in the City and there have been, and will continue
to be inadequate tax dollars to fulfill these requests; and
WHEREAS, the Council wishes to commend the Center for taking
steps to ensure that the above-mentioned funds will be distributed
to nonprofit agencies providing health care services located within
the City and the County and thus, establishing a significant
resource for agencies providing health care services to the
citizens of the Cityt and
WHEREAS, the Council wishes to express that it does not wish
to object to the Motion filed by the Center, and indeed, views the
requested designation as the commencement of a new era in health
care funding in Denton by the center's taking a lead role as the
primary funding resource for non-profit health care agencies; and
WHEREAS, by not pursuing an objection to the Center's Motion,
the City is relinquishing any right to claim a portion of the
assets of the Hospital, and the City Council believes it appropri-
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ate to also relinquish its role as a direct provider of funds for
health related services in the futures NOW, THEREFORE,
BE IT RESOLVED BY THE COUNCIL OF THE CITY OF DENTONt
SECTION I. That the City Council commends the Center for
taking positive steps to acquire funds to provide for the future
health care needs of the citizens of Denton, and relinquishes the
pursuit of claims to any of the assets of the Hospital.
That the City Council recognizes the center as
SECTION II.
taking over the role of the City in providing resources for non-
profit agencies providing health care to citizens of Denton.
SECTION 111. That this resolution shall become effective
immediately upon its passage and approval.
PASSED AND APPROVED this the + day of , 1991..
BOB CASTLEBERRY, MAYOR
ATTESTt
JENNIFER WALTERS, CITY SECRETARY
BY:
APPROVED AS TO LEGAL FORMt
DEBRA A. DRAYOVITCH, CITY ATTORNEY
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First Texas Medical, Inc. -
1larch 1, 1983
To: The Honorable Mayor & Members of the Denton City Council
The Honorable Judge & Members of the Commissioner's Court
County of Denton
Ladies & Gentlemen:
We appreciate this opportunity to discuss our proposal
to lease and operate Plow Memorial Hospital.
Like you, First Texas Aledical, Inc. is concerned about
Flow yemorial Hospital and we want to assure continued
delivery of quality health care for the citizens of
Denton County. We hope the county, city, and First Texas
Medical will be able to work together to that end.
Please feel free to ask questions at any time during our
presentation or to contact ns later once you have a further
opportunity to review the materials presented herewith.
Sincerely,
CCDa7rrell iJ. Lummus
President
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DEL,mis d
860 W. Mein • Suite 201 + Lewisville, Texas 76087 • (214} 221-2322
TABLE OF CONTENTS
Introduction
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Situation Analysis
The Need to Update 1
Capital Expenditures Required 2
The Proposal
An Investment in the Community 5
Management of Existing Facility 7
Development of a New Hospital 10
A Plan for Indigent Care 11
Economic Impact on County/City 11
Enter Negotiations 13
First Texas Medical
Experienced Hospital management 19
Innovative Treatment Facilities 15
Economic impact 19
First Texas Medical and Flow Hospital 20
Appendices
Addendum
Facilities Analysis
Proposed Agreements
INTRODUCTION
This proposal from First Texas Medical, Inc, concerns more
than the management of Flow Memorial Hospital. It encompasses
the broader perspective of long-term planning and provision
for the future of health care delivery in Denton County,
Denton County has tremendous potential for becoming a major
medical center, serving citizens with the most sophisticated
care available, Unlike many areas of its size, Denton County
already has a large, established medical community providing a
broad range of specialty care. But we must also continue
developing our hospital resources, expanding services and
improving capabilities. Most importantly, we must have the
foresight to plan today for a hospital that will allow us to
meet our full potential in the future.
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SITUATION ANALYSIS
The Need to Update Existing Facility
Flow Memorial Hospital has served citizens of Denton County
well fcr 35 years, providirnJ excellent hospital care and
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meeting the health care neels of the community. However, to
continue this level of excellence, Flow Memorial Hospital must
be able to grow, expanding its services and updating its
facilities.
Flow Memorial Hospital must keep pace with rapidly changing
t,%-nology and provide a physical plant which meets all life
sai.cy and licensure codes. It must also continue to assure
patient comfort and facilitate efficient delivery of care.
Denton County's population growth will place ever-increasing
demands on Flow Memorial Hospital, And we will experience
increased in-migration of patients from the north Dallas area
because of the relative accessibility of Denton as compared
with clogged Dallas freeways.
In a changing environment, Flow Memorial Hospital must also
change to remain viable.
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Major Capita l Ex enditures Re uired
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Even more pressing, however, are architectural code
deficiencies which must be corrected in order to continue
hospital operations. A recent survey of Flow Memorial
I+ Hospital by architects specializing in hospital architecture
and construction revealed several such deficiencies.l (The
full survey report is presented as an addendum to this
document.) These problems were identified as requiring
immediate attention:
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Lack of compartmentation for smokestop barriers and
fire-rated areas of refuge
Lack of complying fire exits
Lack of proper fire-resistive enclosures for
hazardous storage areas
Lack of sprinkling in hazardous storage areas
Inadequate electrical system
Renovation necessary to correct only these deficiencies will
coat an estimated $5,100,000, an amount which does not even
accou,)t for the loss of revenues due to closure of departments
during renovation.
The survey further cites design deficien^ies which, although
not ret,ulated by any code, affect delivery of care. Flow
Memorial Hospital's nursing units, for example, require
excessive travel by nursing personnel to visually monitor each
patient,
1 As outlined by Texas Licensure Standards, the Joint
Commission on Accreditation of Hospitals and the N,F.P,A,
Life Safety Code.
This sitration not only requires higher staffing levels, but
potentially affects patient care as well. Correction of such
design deficiencies would require additional renovation
k expenditures.
Flow Memorial Hospital must also anticipate major expenditures
within the next five years to replace worn and obsolete
equipment. Much existing equipment has been in service for
years and has become worn from normal use. Replacement is
required for continued as well as improved diagnostic and
treatment capabilities.
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The County and City of Denton are faced with needs for major
infusions of capital into Flow Memorial Hospital in the very
near future to simply maintain current levels of service
provided by the hospital. Yet, this investment will only
serve a stop-gap maintenance function, doing nothing to expand
the scope of the hospital's capabilities or provide for the
hospital's long-range future,
Alternatively, Flow Memorial Hospital can be replaced with a
new, modern facility which will allow tht- hospital to meet its
full ;otential as a major medical facility, This option,
however, requires an even greater investment of capital.
The County and C'ty must evaluate the financial feasibility of
improving or replacing the existing hospital and consider
whether taxpayers can and will support either option.
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Many government entities in the United States have found that
hospital care can be delivered more effectively and
efficiently by private enterprise while reducing the burden
placed on taxpayers. With such an approach in mind, First
Texas Medical, Inc. respectfully submits the following
proposal.
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THE PROPOSAL
A Ma or Investment in the Community
First Texas Medical, Inc, proposes to execute an agreement
with the County and City of Denton, which provides for lease
and operation of Flow Memorial Hospital for a period of five
years, during which time First Texas Medical will construct a
replacement hospital and purchase the assets of Flow Memorial
Hospital. Through this arrangement, First Texas Medical will
expend more than $30,000,000 in the community in the form of
lease/purchase payments for the hospital, capital expenditures
for hospital equipment and taxes paid into the treasuries of
city and county governments. As a result, residents of Denton
County will enjoy the benefits of an improved hospital medical
center without the outlay of tax dollars,
First Texas Medical, Inc, will pay the County and City
$2,900,818 upon completion of agreement negotiations,
representing purchase of current assets and pre-paid lease of
$10,000 per licensed bed.
In each year of the lease agreement, First Texas Medical will
pay the County and City $725,000 for lease of the existing
facility, totalling $3,625,000 over the five-year period.
Additionally, it will pay $348,834 over the lease period as
reimbursement for County hospital bond retirement payments.
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At the conclusion of the lease
period, the County and City can
retain rights to the hospital facility and site, either using
the property for other purposes or selling it. First Texas
Medical will also agree to purchase the existing facility ind
site for $1,500,000, at the option of the County and City.
In addition to direct payments, First Texas Medical will
invest approximately $21,000,000 in the development of a new
hospital complex expected to be completed by 1988. And, the
company will pay appropriate County, City and school taxes on
Flow Memorial Hospital during the lease period and thereafter,
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Figure 1
OUTLINE OF LEASE/PURCHASE PROPOSAL
LEASE PAYMENTSi
Assets
r i Current assets $3,534,782
Bond designated assets 330,942
Total assets $3,865,724
Liabilities
Current liabilities $1,592,280
Long-term debt
1975 series bond $270,000
1975 A series bond 160,000
Computer lease 81,699
Equipment note 5501927
11062,626
Total ...eb,lities 2,654,906
Net assets of liabilities $1,210,818
Additional Consideration
Prepaid lease ($10,000 per
licensed bed) 1,690,000
TOTAL AT CLOSING $2x900,818
LEASE PAYMENTS AND
BOND RETIREMENTi
Annual lease payments @ 725,000 $3,625,000
for five years
Additional payments for bond retirement
over lease term 348,834
3,973,834
OPTION TO PURCHASE REAL ESTATE
AT LEASE TERMINATIONi 1,,500,000
TOTAL PROPOSAL $8,374.652
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Management of the Existing Facility
As lessor of Flow Memorial Hospital, First Texas Medical
agrees to the following provisions regarding management of the
facility.
1. MAINTENANCE
The company will perform sufficient maintenance and
renovation to assure continued quality of care over the
lease period.
2. EQUIPMENT PURCHASES
First Texas Medical will incur expenditures for necessary
equipment purchases, estimated at $250,000 during the
first lease year and $500,000 annually thereafter for the
remaining lease period. Total investment is expected to
be approximately $2,250,000.
3. MAINTAIN COMPETITIVE CHARGES
First Texas Medical will operate Flow Memorial Hospital
efficiently, maintaining fees and charges which are
competitive with, or lower than, other hospitals in the
general service area, First Texas Medical has proven its
ability to maintain a schedule of charges and fees
comparable to those of other hospitals in their management
of Lewisville Memorial Hospital. (See Figures 2a and 2b,)
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Figure 2a
COMPARISON OF CHARGES
LEWISVILLE MEMORIAL VS. AREA HOSPITALS
LMH A B C
Private Room $145 140 175 166
Semi-Private Room 120 125 154 134
ICU 275 300 380 346
Labor & Delivery 150 195.25 N/A N/A
Nursery 80 95 N/A N/A
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These charges were effective 2/15/83, Not specifically identified, the
hospitals used for comparison are Flow Memorial Hospital, Dedman
Medical Center and Westgate Medical Center.
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Figure 2b
LEWISVILLE MEMORIAL HOSPITAL
PATIENT CHARGE COMPARISON FROM
SLUE CROSS COMBINED INPATIENT HOSPITAL EXPERIENCE REPORTI
LMH Hosp, A Hosp, B Hosp. C
All InPatients Blue Cross Blue Cross Slue Cross
Patient Days 8,607 81702 61598 71553
Average Length
Of Stay 4.5 9.5 6.3 8.0
Average Charge
Per Admission $2,428 $3,447 $2,211 $20969
Average Charge
Per Patient Day 436 362 352 371
Average Accommodation
Charge Per Patient Day 136 164 154 146
Charges Per Admissions
Drugs $305 $462 $302 $547
Laboratory 326 493 225 330
Operating Room 260 326 230 371
Radiology 198 246 N/A N/A
Inhalation Therapy N/A N/A N/A N/A
Physical Therapy 187 224 173 223
1 12 month average as of 12/62.
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The company expects to increase charges and fees at Flow
Memorial Hospital by approximately nine percent in 1983,
eased on data indicating the hospital's historic increase
in revenues per patient day, this increase will actually
be less than increases experienced in recent years (see
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Figure 3),
in an additional effort to control patient costs, First
Texas Medical will attempt to decrease bad debt at Flow
Memorial Hospital from its present level of ten percent to
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si:, percent. Bad debt has increased significantly at Flow
Memorial Hospital in recent years (see Figure 4), The
cause has not been patients classified as indigents, but
persons who have simply not paid their hospital bills.
The bad debt situation is partially due to a high
percentage (more than one-third) of "self-pay" patients
treated at Flow Memorial Hospital. Many of these patients
can afford to pay but have, perhaps, assumed that a
government-operated hospital "owes" them the care they
receive. As a result, paying patients must underwrite the
costs of those who avoid their responsibility to pay.
4, PROVIDE FOR INDIGENT CARE
First Texas Medical will, through an agreement with the
County, provide for hospital care of indigent residentu of
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Figure 3
FLAW MEMORIAL HOSPITAL
CALCULATION OF ESTIMATED PRICE INCREASES
(Based on Increased Revenues Per Patient Day)
1979 1900 1981 1982 1983
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(3 Month YTD)
Patient Days 29,802 34,657 34,628 33,830 8,505
Inpatient Revenue 61826,886 8,281,696 10,279,066 12,226,779 3,235,555
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Revenue Per Patient Day 229.07 238.96 296.84 361.42 380.43
f. Percent Increase Over
Previous Year (Revenue
Per Patient Day) 4.38 24.2% 21.7% 5.28
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Figure 4
BAD DEBT VS. INDIGENT CARE
FLOW MEMORIAL HOSPITAL
1979 1980 1981. 1982
Unpaid Accounts
4 (Bad Debt) $545,903 $567,018 $752,027 51,189,547
Charity Services
(Indigent Care) 382,058 370,288 358,843 449,251
Sourcer Audited Financial Statements
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Denton County. Details a
(Details are further outlined subsequently
in this section.)
5. ESTABLISH A CITIZENS ADVISORY BOARD
A Citizens Board will be established to help direct the
hospital, assuring continued community input into hospital
policy and direction. First Texas Medical recommends
' continuation of the existing hospital board to facilitate
transition.
6. GUARANTEE EMPLOYMENT AND BENEFITS FOR CURRENT EMPLOYEES.
All employees will be assured continued employment at
current level of seniority. First Texas Medical will also
continue employee pension and health insurance plans as
well as recognize all accrued vacation, sick leave and
other benefits.
7. MAINTAIN AN OPEN MEDICAL STAFF POLICY
Flow Memorial Hospital's current open medical staff policy
will be continued under First Texas Medical, and this same
policy will apply at the new hospital to be constructed.
As owner and manager of Lewisville Memorial Hospital,
First Texas Medical has developed an excellent
relationship with the Lewisville medical community. In
fact, the administration of Lewisville Memorial Hospital
often assists independent physicians in the community with
recruiting efforts to build their practices. (See
Appendix A.)
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Development of a New Hospital
First Texas Medical will construct a new hospital and medical
office building to be located at the intersection of
Interstate Highway 35 and Scripture Street in the city of
Denton with an expected completion date of 1988, The complex
will be developed with private investor capital at an
estimated cost of $21,000,000. This new hospital complex will
be named First Texas Medical Center Hospital - Denton, and it
will be owned and managed by First Texas Medical, Inc.
The Hospital Advisory Board will be utilized in developing
plans for the hospital, and all existing memorials at Flow
Memorial Hospital will be preserved in the new facility,
First Texas Medical, Inc, will continue a schedule of fees and
charges at the new hospital which is competitive with
hospitals in the general service area.
Toward the goal of further developing Denton as a major
medical center, First Texas Medical will concentrate on
developing Flow Memorial Hospital's existing medical delivery
strengths into regional capabilities, specifically including
obstetrical, neonatal, psychiatric, surgical and emergency
services.
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A Long-Term Plan for Indigent Care
First Texas Medical recommends the County and City use
proceeds of the lease and purchase of Flow Memorial Hospital
to establish a permanent trust fund providing for hospital
care for indigent Denton County residents, thereby assisting
local governments with their financial responsibility for such
care,
These funds can be invested and the earnings used to pay for
indigent care. This method of providing for indigent
assistance has been implemented in other communities to
successfully relieve the governing entities of financial
responsibility.
Projections indicate the level of indigent care provided by
Flow Memorial Hospital during the five-year lease period will
exceed revenues from the indigent care fund (see Figure 5).
First Texas Medical will absorb these additional costs.
Economic Impact on County/City
First Texas Medical, Inc,'s proposal offers a potential $38.6
million impact on the County and City over the next five years
and beyond.
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Figure 5
FLOW MEMORIAL HOSPITAL
INDIGENT CARE FUND/YEARS 1-5
YEAR I YEAR 2 YEAR 3 YEAR 4 YEAR 5
Cumulative Proceeds
From Lease/Purchase
Proposal $3,625,818 $4,350,818 $5,075,818 $50800,818 $8,025,818
108 Annual Return
On Investment 362,582 435,082 507,582 580,082 802,582 ,
Projected Indigent Care
Requirements For
Denton County 493,224 542,546 596,801 656,481 722,125
ASSUMPTIONS:
1) Per the proposal, all proceeds are invested in an interest-bearing fund,
2) A conservative annual rate of return of 108 on the cumulative proceeds is calculated as the
yearly reimbursement for indigent care.
3) Projected indigent care is based on a 108 annual increase using historical data from Flow
Memorial Hospital.
4) First Texas Medical will absorb indigent care costs above the rate of return on investment,
Years 1-5.
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The proposal provides for replacement of the existing facility
at no cost to County or City) direct payments of $8,374,652,
investment of which will relieve financial responsibilty for
indigent caret and assumption of hospital bond retirement by
First Texas Medical, making available $348,834 for other
community projects. Furthermore, the County and City will
bear no financial responsibility for maintenance or
replacement of the existing hospital facility nor for required
replacement of hospital equipment. And, as operator of Flow
Memorial Hospital, First Texas Medical, Inc. will pay an
additional $198,670 in local taxes over the next five years.
If, however, the County and City continue ownership of Flow
Memorial Hospital, they can expect to spend approximately
570463,517 over the next five years for required renovation of
the facility to meet regulatory codes, retirement of hospital
bonds and payment for indigent care. Even this large cost is
conservatively stated because it fails to account for the cost
of replacing any equipment or renovations to improve the
functional operations and appearance of the hospital (see
Figure 6).
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Figure 6
FLOW MEMOR: HOSPITAL
ANALYSIS OF ECONOMIC
IMPACT TO COUNTY, CITY
1982 1983 1984 1985 1986 1987 Five-Year
MF:THUD OF APPROACH Actual Pro toted Pro sated Pro toted Pro toted Pro toted Total
1) Continue on Current
Course or Action
Expenditures
A. Indigent Care (300,000) (330,000) (363,000) (399,300) (439,230) (483,153) (2,014,683)
B. Bond Retirement ! 21,961) ( 90,331) { 87,431) ( 84,531) ( 86,541) 0 ( 348,834)
C. Renovation Costs 0 0 0 (50100000) 0 0 (51100000)
Income
A. Proceeds From Lease 0 0 0 0 0 0 0
B. Increased Tax Revenue 0 0 0 0 0 0 0
NET IMPACT (321,961) (420,331) (450,431) (5,583,831) (525,771) (483,153) (7,463,517)
2) Lease Facility
Expenditures
A. Indigent Care (3009000) 0 0 0 0 0 0
B. Bond Retirement ( 21061) 90,331 87,431 84,531 86,541 0 3118,834
C, Construction Costs 0 0 0 0 20,000,000 0 20,000,000
D. Equipment Purchases 0 250,000 500,000 500,000 500000 500,000 21250,000
Income
A. Proceeds Lease/Puroh 0 3,71611119 812,1131 809,531 811,541 2,2250000 8,374,652
B. Increased Tax Revenue 0 25,670' 32,700 39,735 46,765 53,800 198,670
NET IMPACT (321,961) !1,082,150 1,1132,562 1,1133,797 21,448,847 2,778,800 319172,156
Annual Economic Difrerenoe 0 11,502,1181 1,882,993 7017,628 21,970,618 3,261053 38,635,673
Cumulative Economic
Difference 0 11,502,481 6,385,11711 13,1103,102 35,373,720 38,635,673
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Enter Negotiations
First Texas Medical, Inc. proposes the County and City enter
negotiations with the company at this time to develop a final
proposal to be considered by each government entity prior to
execution of a formal agreement. Attached are copies of the
proposed lease agreement, exchange agreement and indigent care
agreement (see Addendumi Proposed Agreements),
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ABOUT FIRST TEXAS MEDICAL INC,
First Texas Medical, Inc, is an active provider of health care
in Denton County, The company originated as a four-physician
medical practice in Lewisville 32 years ago and has grown to a
1 multi-facility system serving the medical needs of local
communities with a variety of health care services.
Incorporated in October of 19811 the company continues to be
locally awned and managed (see Appendix B).
Experienced Hospital Management
First Texas Medical, Inc, has gained valuable experience in
hospital management through its operation of Lewisville
Memorial Hospital. A 110-bed general acute care facility
opened in 1976, Lewii~ville Memorial Hospital is scheduled to
break ground on a $7,000,0001 42-bed expansion and renovation
project in late summer of 1983,
Lewisville Memorial Hospital has established an excellent
reputation, not only as Lewisville's primary health care
provider, but as an active partner in the community as well
(see Appendix C), The hospital is involved in a variety of
such community outreach programs as CPR training, prenatal
classes and babysitting skills training, in addition to
participation in such local projects as the annual United Way
campaign and sponsorship of
youth activity soccer and baseball
teams,
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Administrators of Lewisville Memorial Hospital have also
worked closely with the City of Lewisville to help establish
an emergency medical system (EMS). The hospital contributed
half of the tuition fees required to train nine emergency
medical technicians (EMTs) for the Lewisville Fire Department
and has subsequently cooperated in the instrucU on and testing
of special skill development for EMTs, Lewisville Memorial
Hospital also arranged to provide medicine and supplies needed
in the EMS ambulance, established and coordinated ambulance
protocols, and purchased approximately $30,000 of radio
equipment essential for paramedic training and communications,
Lewisville Memorial Hospital enjoys a good working
relationship with its local medical community, physicians
associated with First Texas Medical's Lewisville clinic work
cooperatively with other community physicians to continually
improve and expand medical services available to local
citizens,
Innovative Treatment Facilities
First Texas Medical, Inc.
provides a broad range of health
care services throughout Denton County, aggressively pursuing
delivery systems and treatment methods which serve patients'
needs more effectively and efficiently, In development of
these services, First Texas Medical's foremost concern has
been for the quality of care provided, but equally important
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are efforts to contain the cost of care to
patients,. As a
result, First Texas Medical, Inc, has developed numerous
outpatient treatment facilities which are both innovative and
cost-efficient in their treatment methods,
First Texas Medical's owned, managed and affiliated
organizations are as set out below.
DENTON i
1, First Texas Medical Center, Denton a 23-physician
multi-specialty practice (formerly Medical Surgical Clinic
Association), This clinic treats patients from 800 a.m. '
to 10:00 P.M. Monday through Saturday and from noon until
8:00 p.m. on Sunday, allowing patients greater ease in
scheduling appointments. The extended service schedule
also assures clinic patients access to a physician
throughout the week,
2, North Texas Diagnostic_12adioloav Center provides
outpatient diagnostic radiology services.
3. Denton Ambulatory Surgorv Center provides surgical
procedures for
patients not requiring overnight
hospitalization. Patients receive quality medical care in
a comfortable, safe, and non-institutional setting from a
staff especially trained in outpatient surgery. The
facility provides surgical services at a lower cost than a
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hospital setting,
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process many physicians believe the recovery
is accelerated when patients return home as soon
as safely possible, thus reducing time away from work and
other activities. '
f~ 4• North Texas Medcare
Inc. a state-certified health
maintenance organization providing care for approximately
1,500 members,
51 8rva-teaks a 106-bed intermediate care facility
providing services for severe and profoundly mentally
retarded patients, The state of Texas
care for pays $52 per day to
patients through this facility, as compared to
$70 per day at a state-operated hospital. Private
facilities such as Bryan Oaks also provide a less
restrictive environment for residents, and the facility
pays local taxes,
6, North ,Texas Radiation Therapy Center First Texas
Medical will break ground on this
outpatient canner
treatment center within the next 60 days,
LEWISVILLE:
1. First Texas Medical Center Lewisville a 26-physician
multi-specialty practice located adjacent to Lewisville
Memorial Hospital (formerly Doctor's Clinic). The clinic
observes extended office hours of 8:00 a,m, to 10:00
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Monday through Saturday and from noon until 8000
p.m, on
Sundays,
2. First Texas Medical, Inc, corporate offices are located
in the North Texas Medical Center Professional Building,
3. First Texas Medical Center Comouter_Center located in
Lakeland Plaza, the center provides the latest in computer
technology support for all First Texas Medical facilities.
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4. Lewisville Memoria2~ Hospital a 110-bed general acute
care hospital, scheduled to break ground on a $7 millioh,
42-bed expansion and renovation this summer.
5, Edmond Oaks a 166-bed intermediate care facility
providing services to the moderately mentally retarded.
The cost-per-day for a patient at Edmond Oaks is $44
compared to $64 at a state hospital,
6. Adult Da Care Center provides supervised care during
the day for geriatric, retarded and disabled individuals.
The center can accommodate 100 individuals and provides an
alternative to nursing homes for patients who can still
return to their homes at night. The center is open 14
hours per day, providing one hot meal and two snacks daily
(planned by a dietician), with drugs required by patients
administered by staff.
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7, Medcare Home Service a home health care agency
providing care for homebound individuals on a short-term
basis,
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8, Oak Grove Work Activity Center a sheltered workshop for
235 handicapped individuals,
CARROLLTONi
1, J:irat Texas Medical Center Carrollton a seven-
physician multi-specialty clinic which opened February 28,
1983,
Economic Impact on Denton County
Through its facilities, First Texas Medical, Inc, employs 803
individuals in Denton County with an annual payroll of
$12,583,519. These dollars are in turn spent in local
communities, creating a "ripple" effect in their general
economies. In 1982, First Texas Medical also paid $166,889 in
taxes to cities, schools and county treasuries in Lewisville
and Denton,
Since First Texas Medical, Inc, is locally owned and managed,
the company's profits are reinvested in the local communities
and in further expansion of services and facilities,
19
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First Texas Medical and Flow Memorial Hospital
First Texas Medical, Inc. Is a strong supporter of Flow
Hospital. The physicians of First Texas Medical Center,
Denton utilize the hospital heavily, admitting almost half of
its patients (see Figures 7a0b).
First Texas Medical, Inc. has worked cooperatively with Flow
Memorial Hospital to help develop its services and
capabilities. For example, First Texas Medical Center
physicians were instrumental in assisting Flow Memorial
Hospital in the establishment of its neonatal intensive care
unit. Mora recently, First Texas Medical's Denton Clinic
employed an anesthesiologist to work in the Flow Memorial
Hospital operating room, allowing the hospital to increase the
number of surgical procedures performed daily.
Flow Memorial Hospital and Lewisville Memorial Hospital have
also recently agreed to share services of a mobile CT Scanner,
increasing diagnostic capabilities of both hospitals at
reduced expense.
First Texas Medical wants Flow Memorial Hospital to remain a
viable member of the community's health care delivery system,
but doing so will require either extensive expense ut the
existing facility or construction of a new hospital,
First Texas Medical sees the need for a new hospital. to meet
the long-range medical needs of Denton County. In fact, the
1A
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Figure 7a
FIRST TEXAS MEDICAL, INC.
DISCHARGE. DAYS TO FLOW MEMORIAL IIOSVITAL
(1982)
June July ARa. 5_ept. Oct. Nov.
First Texas Medical 876 10218 11264 1,450 1 ,495 11254
Percent of Total 328 398 36% 46% 449 408
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Figure 7b
PHYSICIANS'iN SUPPORT OF FIRST TEXAS MEDICAL PROPOSALI AS
PERCENT OF TOTAL REVENUE
l~ (1982)
June Jul Aug. Sept, Oct. Nov.
Revenue by Support Group 382,789 546,380 613,223 609,382 578,195 573,174
B of Total Rcvenua 44% 528 554 578 53% 558
1 See Appendix D for physician listing
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company has considered construction of a third hospital in
Denton but is concerned with the potential negative impact
such a facility might have on Flow Memorial Hospital,
Therefore, First Texas Medical has developed this proposal,
which will provide a new hospital facility at no cost to
taxpayers while preserving Flow Memorial Hospital's tradition
of service to the community,
,
21
1
I
APPENDIX A
CALVIN T. SIMMONS, II, M.D.. P.A.
UIPLOMATE AMERICAN BOARD OR FAMILY PRACI ICU
February 25, 1983
,
TO WHOM IT MAY CONCERN:
I have been asked by the physicians at the Doctors Clinic in
Lewisville, Texas to describe my experiences in practice over the
past six years with both the Doctors Clinic and the Lewisville
Memorial Hospital, As you are probably aware, Lewisville Memorial
Hospital is a proprietary hospital owned primarily by the physicians
in the Doctors Clinic and the Medical Surgical Clinic in Denton,
In addition, this same group of physicians has made n bid to acquire
the Flow Memorial Hospital in Denton, Although I have no major 1
feelings in either direction on this particular subject, this
letter will address my experiences using a proprietary hospital
owned by a group of "competitors" in my past six years in practice.
When I first carne to Lewisville, I made the decision that my
practice would be confined to the Lewisville area and that I would
utilize the hospi als which were immediately available, Since
Lewisville Memori.,: +%4nital was located within two miles of my
office, I applied for privileges at that hospital and have used it
exclusively since'thht time, Although the hospital is owned by
a group of physicians which is in competition with me, I have
never had any difficulty obtaining privileges nor admitting patients
into the beds at Lewisville Memorial Hospital, Although there is
a healthy competition between the Doctors Clinic and my own prac-
tice, there has never been any interference with my abilities to
practice in the manner in which I am accustomed, Moreover, the
hospital has been generous in helping me to recruit additional
physicians for my practice. Over the years, they have been help-
ful in bringing recruits to this area who have expressed an inter-
est In-practicing in this general locale and have been financially
supportive of the travel expenses associated with these recruits,
I have an associate in my practice who has been here roughly one
and a half years who hns, likewise, found the hospital to be fair
in its dealings with him, Although I have no ability to foresee
the future, I can assure you that my dealings with the Lewisville
Memorial. Hospital have been cordial and fair in the pnat,
Since Denton already has two ho,ipitals, it would seem to me
that this would offer additional protection for those physicians
who fear a takeover with sinister consequences. However, since
my dealings with the hospital in Lewievilla,.which Ss owned by
my competitors, have always been acceptable, I have less fears
about substantial infringements upon my practice or its ability
to grow. During my training in medical school and residency
1122 WEST MAIN eTREET LEWISVILLE, TEXAS 71%067 TELEPHONE 4813,7091
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APP~NDIY A
Page 2
Programs, I was generally associated with both private hospitals
and the city- expecountyriences ho I spit had als, in these re has
n
setastibengs been very compared little with the difference
exper-
iences I have had at Lewisville Memorial Hospital in terms of fac-
ilities, bed availability or staffing.
If you have questions regarding my experiences with the pro-
prietary hospital in Lewisville, I will be happy to discuss t!iese
with you at length,
sincerely,
Calvin T. Simmons, M,D,
CTS/klh
s
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Appendix B
FIRST TEXAS MEDICAL (FTM)
Directors and Executive Officers
Thomas Blucker, M.D., Director a member of FTM since 1971
r
Harry M. Burgess, M.D., Vice Chairman as one of the
company's founding physicians, a member of FTM since
1951
Conrad M. Garcia, M.D., Director a member of FTM since 1978
David 0. Johnson, M.D., Director a member physician of FTM
since 1978
James Hollis Jones, M.D., Director, Chairman of the Board and
Chief Executive Officer as a founding physician of
the group, a member of FTM since 1951
James R. Jones, M.D., Director a member of FTM since 1973
James R. Long, M.D., Director a member of FTM since 1973
Darrell E. Lummus, Director, President and Chief Operating
Officer has served as president of FTM since 1981,
prior to which he was business manager for more than
five years
Harvard L. McBrayer, M.D., Director a member of FTM since
1969
Allen Pierce, Director, Senior Vice President and Treasurer has served as director of special projects for FTM
since 1979, and prior to which he was senior vice
president and senior loan officer of First Texas
Savings and Loan Association
David G. Purifoy, Director and Senior Vice President
administrator of Lewisville Memorial Hospital since
1976
Arvin D, Short, M.D., Director a member of FTM since 1974
Dale G. Swanholm, M.D., Director a member of FTM since 1975
Eugene M. Taylor, M.D., Director a member of FTM since 1969
Ownership
A total of 929,811 shares of First Texas Medical, Inc, common
stock are issued and outstanding, First Texas Medical, Denton
owna 377,223 shares, or 41 percentr individual physicians f
employed by the company own 435,637 shares, or 47 percentr
physicians not related to the company own 78,237, or 8
percent) and non-physician executives of the company own
38,714 shares, or 4 percent,
Financial
For the year ending August 31, 1982, the company had revenues
of 522,972,6001 reporting a pre-tax profit of 811291,500 and
net income after tax of $774,900. Outpatient clinic
operations accounted for 45 percent of revenues and hospital
operations yielded 55 percent of revenues, On August 31,
1982, the company had assets of 5111499,700, current
liabilities of 531601,600, and long term debt of 84,993,600,
For the 12 months ending August 31, 1983, the company is
forecasting profit before income tax of $2,013,600 and net
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income after tax of $1,208,000,
Through a subsidiary company, Triangle Management and
Investments, First Texas Medical has access to $2,000,000 in
cash and short-term investments. Banking relations are
maintained with major Denton County banks as well as
Inter First/Dallas and Citicorp USA of New York City.
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L city or APPENDIX C
lrwiW at
TrxA
151 West Church St. • tewisville, Texas 75067 .
2141436.2591
February 22, 1983
County Commissioners
City of Denton
C/o The Honorable R, L. Cole
401 W. Hickory S--reet
Denton, Texas 76201
Dear County Commissioners:
We have become aware of your plans to receive a proposal from
First Texas Medical, Inc, to operate Flow Memorial Hospital,
Because this company is a valued corporate member of our own
community, and in the hope that the information might be useful,
we want to tell you of our high regard for them.
The men and women who comprise First Texas Medical have been
closely involved with our community for many years. They have
" consistently demonstrated responsible citizenship, both through
their exemplary operation of our primary medical facility,
Lewisville Memorial Hospital, and through their active participation
in Lewisville community affairs,
Lewisville Memorial Hospital is an excellent facility which delivers
quality health care to our citizens, Moreover, the numerous out-
reach and community support programs delivered by the hospital
staff have served us particularly well. They have pra'vided "wellness"
education for our residents, have assisted our students in pursuing
health care careers and have helped our city establish an emergency
medical system (V-Is). Their involvement has been so wide ranging
that we are including a list of activities and achievements of
Lewisville Memorial/First Texas Medical.
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APPENDIX C
County Commissioners
City of Denton
February 22, 1983
Page 2
Through the hospital and other medical facilities they operate,
the people of First Texas Medical have had a major favorable
economic impact on our community. As private business people,
they support our city and our schools with substantial tax pay-
ments, And they directly support nearly 600 families by providing
good jobs whose substantial payroll has an even broader "ripple"
effect on our general economy.
We are proud to have the people of First Texas Medical as our
neighbors and fellow citizens.
Sincerely yours,
Wayne D. Ferguson
Mayor
WDF/ao
Enclosure
3
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ry
APPCVVrs C
William Hatton, M.D./Surgeon
Vice President, American Cancer Society-Lewisville Region
Director of Medical Education-American Cancer Society
Kenneth Goldberg, M,D,/Urologist
American Cancer Society-Lewisville Region
Emmanuel Desai, M,D./Cardiologist
Board of Directors-American Heart Association Lewisville Region
Governing Board-First United Methodist Church-Lewisville
Edward Kremer, M.D./Internist
Board of Directors-American Heart Association-Lewisville Region
Speaker for SPAN - Senior Citizens Group re CPR/8P Awareness Program
Richard C, Burgess, M,D./Pathology
United Way Director of Physician Campaign-Greater Lewisville Region 1982-83
Mark Holt, M.D,/pediatrician
President, Denton Co. Chapter, American Diabetis Association
Previous Coordinator of LMH Children's Breathing Club for Asthmatic..Children
Participant physician in Denton Co, Health Department Free Clinic through
Public Health Department '
Russell McDonald, M,D,/Pediatrician
Current Coordinator-LMH Breathing Club for Asthmatic Children
Public Health Department-Free Clinic for Children
James Conyers, M.D./General Surgeon
American Cancer Society
Dale Swanholm, M,D,/Family Practice Physician
Flower Mound Board for Parks & Recreation
YMCA Supporter
APPENDIX C
eOuf (2nd4xwn Youth Homes Foundation, Inc.
P.O. Box 61925 AC 811.450.6686 (57etro)
ARD OF TRUSTEES Dallas/h. Worth,'rexas 75261
t
JERRY CAMP6eLL
RO
gaf Staubacn, Cfrllfmgn EXECUTIVE DIRECTOR
Paul Artoafs00 Mrs, Paul Anoarton
OT
M. DOUylas AOkfns February 18, 1983
Mta. Tfusit Antlf*W
OOb Bryant
Obnale J. Carlef
Tom Lanbfy
Horan D, Schiff The Honorable Judge R. L. Cole
505 Pedigo Street
Pilot Point, Texas 75258
Dear Judge Cole,
It is my understanding that First Texas Medical,
In the process Inc. is
of making a proposal to the Cl.ty of Denton
and Der :on County to operate Flow Memorial. Hospital.
I
the Executive
Homes Director of the Paul Anderson Youth
Ho,, a director of the Greater Lewisville Chnmher of
Commerce, and trustee of Lhe Lewisville Independent School
District, please let this letter serve as a personal en-
dorsement for First Texas Medical,
During the past several years that Lewisville Memorial
Hospital has operated ir, Lewisville, 1 have highly re-
garded their value to our community. Those who make up
First Texas-Medical have demonstrated responsible citizen-
ship both through the operation of the medical facility
and their personal involvement in community affairs.
It is without reservation that I recommend those assoc-
toted with First Texas Medical for your consideration.
Sincerely,
0- 0- elP
Jar mpbeLl
Execuc'.ve Director
JClbm
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APPENDIX C r
CITY OF HIGHLAND VILLAGE _..i`
948 Highland Village Road, Lewlsville, Taxis 75087 (2i4) 221-3542
February 23, 1983
To; The Honorable Mayor Dick Stewart and City Council
From; Highland Village City Council
We have become cognisant of plans whereby you will receive a
proposal from First Texas Medical, Inc, to operate Flow Memorial
Hospital, This letter is a humble attempt to relate our regard
for them in our community,
Lewisville Memorial Hospital has definitely shown its concern
for, and ability to meet, the demands of a fast growing community,
This includes the constant recruitment of qualified physicians
and supportive specialists,
I The City of Highland Village has just taken on the task of pro-
viding ambulance service for its residents. This undertaking was
influenced and supported by First Texas Medical through training
of CMTs, provisions of supplies and the cooperative ambulance
training in conjunction with the staff.
In my personal capacity as Mayor of Highland Village I am also
involved with the United Way and the many service groups. I will
confirm the fact that many of the First Texas Medical men and
women are closely involved in the many community affairs. I also
know the men and women are actively involved in their churches.
In summary, we are proud and grateful to have this First Texas
Memorial influence in our area. We highly recommend your favor-
able consideration of their proposal to operate Flow Memorial
Hospital.
Sincerely,
Ray Wright
Mayor of Highland Village
RW/rb
cc; CormFissione1^ s Cour
Lew1sv11le Memorial ospital
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APPRNDIX C
the Town of FLOWEIt MOUND • 2121 Cross Timbers Rd, o Flower Mound, Texas 75028 - phone 214. 436 • 7511
TlowerTgoun j
February 28, 1983
The Honorable Judge 11, L. Cole & The Denton County Commissioners
The Honorable Richard O, Stewart & The Denton City Council
Denton
Texas
I understand that the corporation of First Texas Medical in
Lewisville has approached the City of Denton and the County
of Denton with a proposal to operate Flow Memorial Hospital,
As the Mayor of Flower Mound, r would like to recommend to
you this corporation,
Lewisville Memorial Hospital has operated in the community
of Lewisville and served the surrounding area for several
years now and I have been made aware of their many contributions
to this area during those years, The managers and employees
of the organization have contributed much to numerous community
activities and have demonstrated themselves to be 'good neighbors"
to the communities it serves as a medical facility as well as
in community involvement.
I recommend to you, therefore, very highly the organization and
thos ndJ;yiduals associated with it as you consider the offer
an proposal being made,
Gary P essra
Mayor
GPmis
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APPENDIX C
i
- GREATERLEW1SV1UX
CHAMBERciCOMMFRCE
February 15, 1983
Mr, David Purifoy
Lewisville Memorial Hospital
500 W. Main
Lewisville, Texas, 75067
Dear David;
Congratulations on being able to expand your facilities
here in the Greater Lewisville Area. The people of the
Greater Lewisville Area are blessed to have such an out- 1
standing medical facility such as yours in our community.
1 have always been impressed with the support your employees
have shown to the United Way Fund, YMCA Drives, and other
fund raising projects that are carried on in our area.
Your payroll is one of the largest in the area and stim-
ulates many, many returns for our businesses. Under your
direction, your adminstrntive staff and employees have
made many contributions to all areas of community deveop-
ment.
Congratulations once again on your new addition and con-
tinued good luck for an outstanding organization.
Sincerely,
Kipp Burnett
Executive Vice President
KB/mrh
i
P. O. BOX 416 LEWISVILLE, TEXAS 75067 (2}4) 436 - 9871
APPENDIX ~rC `
GREATERLIEwzsv ~l E
CHAMBER otCOMMFOCE
1
March 1, 1983
Denton County Commissioners
and Denton City Council
Denton, Texas
Ladies and Gentlement
I feel it very important to share with you my knowledge concerning the
Lewisville Memorial Hospital ataff's involvement in civic projects,
Lewisville Memorial Hospital became a member of the Greater Lewisville
Chamber of Commerce in 1975) and not only has been very cooperative and
active in the endeavors they have undertaken but have voluntarily increased
their membership dues. On a quick recollection let me list some of the
organizations and committees with which the staff has served.
Sponsored one Chamber of Commerce Quarterly breakfast in 1982.
The sponsor fee is $500.00, in addition arrangements for the
speaker and entertainment roust be made,
The hospital contributed to the Chamber of Commerce for the
addition to the Chamber building.
Darrell Lummas, President, First Texas Medical was a candidate
for City Council in 1982s
David Purifoy, Hospital Administrator, vary successful Chairman
of the United Way Fund Drive 1982 and is presently working with
the YMCA Building Fund Drive, and is a Director of the Greater
Lewisville Chamber of Commerce.
Dr, Jim Conyers is active with Lewisville Cancer Society and
conducts free seminars on cancer self-examination and treatment,
Dr. Emanuel DeSni serves as a director on the American Heart
Association Board,
Dr, Mark Holt is working to secure a cardiac rehabilitation center,
Dr. Edward Hremer is presently on the board of the American Heart
Association.
l Dr. Kenneth Goldberg is presently on the Board of Directors of the
Lewisville Cancer Society.
P, o, sox 416 LEWISVILLE, TEXAS 13067 (214 436 - 9571
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APPENDIX C
GREATERLEWISIVI i
CHAMBERo(CiOMM tCR
1
Page 2
Denton County Commissioners
and Denton City Council
March 1, 1983
The hospital sponsors an on-going education program for paramedics,
and a husband and wife program for baby care.
I know with research 1 can provide a longer list of achievements. The
community activities the staff has participated in Lewisville will surely
carry over to the Flow Memorial Hospital staff and management,
I certainly hope you will look with favor upon the purchase of Flow Hospital
by the First Texas Medical Group,
Sincerely,
Kenneth Shropshire
President
Greater Lewisville Chamber of Commerce
KPSJpf
P, O. BOX 416 I.EWISVILLE, TEXAS 75007 (214) 430 - 9571
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,,cc~~,,,,,,REDMAN APPENDIX C
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Building Products, Inc.
GEORGE S. THUMLEAT
t'resldenl
February 23, 1983
Denton County Commissioners
401 W
, Hickory
Room 612
Denton, TX 76201
Gentlemen;
I understand you will soon be receiving a proposal from First
operate Flow btemortal Hospital, Texas Medical to
In this connection, 1 am writing to provide
information about my experience with their employees,
111 1979 1 became acquainted with the personnel and operations of First Texas '
Medical white President of a company in Lewisville, Subsequently, I learned that the
hospital board of directors, administration and ko
human needs to the com»luntty. 'This support waseextendedUthroughpalmosto100%
outreach during the 1980 and 1981 United Way Campaigns. This experience came in my
position as Chairman of the fund raising effort for those years.
As a member of the Lewisville Chamber of Commerce, Board of Directors, I
witnessed the hospital support by providing volunteers for community activities and
financial support when needed.
r Later
President of tits served as campaign chairman for the 1983 t fund drive and also o served on the board. osp.~ :t
in 1981) our company was Interested in CPR training for employees and again the
hospital provided specialists and space.
Because of the above experience, 1 recommend the hospital group highly,
Sincerely,
George S. Thumlert
GT; km President
Redman Plaza east
2880 Walnut Hill Lane
Dallas, Texas 76229
(214) 363.3800
APPENDIX D
LETTER OF SUPPORT
2/9/83
As physicians in practice in Denton County, we are concerned
with the quality and cost of health care delivery in this
area. We care for approximately 75,000 patients and want to
ensure they have access to the best hospital care--today and
in the future.
We admit 55-60`,0 of Flow Hospital's patients, and thus, are
particularly interested in Flow's future. We care about
this hospital's ability to grow with the community's needs.
We also know that Flow must be tip-graded and modernized.
And, we believe it should contribute tax dollars rather than
drain them away.
We urge you to give full consideration to First Texas Medical's
proposal to operate Flow Hospital. We support this proposal
and believe a full examination of the facts will show its
benefits to the community and our patients,
Thank you for your consideration.
Robert J. Lee, M.D. 1. _
T. L. Moore, M.D. 2,
James V. Palermo, M.D. r 3 L?
Edward E. Velayos, M.D. q,
E. M, Taylor, M.D. 5.
Thomas 0. Blucker, M.D. 6,
William Hatton, M,D.
Mark Holt, M.D. 8 ~
H. M. Burgess, M.D. I
Charles Wahlert, M.D. 10
Thomas E. Grubb, M.D. 11. 144 ~_j
Harvard L. McBrayer, M.D. 12.
James Il. Jones, 1.1,D, 13'.
~r 'G sL
Douglas Hagen, M.D. 14 s!! a
B. A. Badie, M.D.
Suhas P. Mantra, h1. D. 16, f t M7
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APPENDIX D
PAGE TWO
LETTER Or SUPPORT
2/0/83
Richard C. Burgess, M.D.
17 , ✓ !f-G,~
Marc A. Armstrong, M,D,
Irene Tayem, M,D, /
(i
19,
J. R. Long, M,D,
Rebecca Walker, M,D, i
21,
Michael C. Burgess, M.D, ,
Tim Shepherd, M.D, 29
~.r ltitiVl
John Jehl, fI,D,
24,
Barry Sanders, M,D,
James A. Conyers, M.D.
2 (i ,
Kenneth A, Goldberg, hi, D,
27,
Emmanuel Desai, M.D. Richard Williamson, %D,
Rudy Tovar, M, D,
10.
Sender Groswirt, M.D. 31, CL
Eugene hunt, M.D.
Dale Swanholm, M,D, "
33, '
Albert Thibeaux, h1, D,
J. P. Albrite, M,D,
35. 1.
Conrad Garcia, MID, 3(i
Elizabeth Kondracka, hi,D.
v
3 7. 4" U
James R. Jones, M.D,
38,
Stanley S. Franklin, M.D, 39
Mary Sender, M,D. 40.
Roy Byrd, M,D, ti.
Edward Kremer, M.D,
92,
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APPENDIX A
PAGE THREE LETTER OF SUPPORT n/D/83
Greg Jackson, M,D, 43, f
T 2f~-A
John Anderson, M,D, _ 44. - ,
Nishendu Vasavada, M.D. 45. <`J^ y
Arvin Short, M.D. 46,~ 1-
F MCGehee,M.D. 47,
James R, Williams, M.D. 418
Richard Rivera, M.D, 99,
_ Kiran Harpavat, M. D. ,yp,
Russell McDonald, M.D. 51, 1114 )~c1-ito ~
`Joseph Phaneuf, M. D. 52. (`1
Arthur Terry, M.D. 53, / tiy1 ,Ii1/ /G~~
James A. Kendall, Mx. 54
issac Gans, ~t,D, 55~
John F, Cuchia, M,D.
5 (3
Jules P. Brown, M.D. 57,
J. 8hatt, M, D. 58. 52,
A3.
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FACILITIES ANALYSIS
WITH
COST ESTIMATES FOR
RENOVATION AND REPLACEMENT
FLOW MEMORIAL HOSPITAL
DENTON, TEXAS
COX/CROSLIN and ASSOCIATES
February 1963
1
,h
rABLI' Op Con~rf;N`PS
Sub ect
Introduction Pam
1
Codes and Standards Deficiencies
2
Functional Design Deficiencies
4
Operational Considerations
S
Site Considerations
6
Renovation Alternatives
7
Replacement Alternatives
8
Conclusions
9
Recommendations
to
Appendix A
11
Site Plan
36
i.
INTRODUCTION
The purpose of this facilities survey of the Flow Memorial
Hospitals Denton, Texas, is to evaluate the architectural,
structural, mechanical and electrical components of the
hospital with regard to the codes and standards promulgated
by controlling agencies and organizations.
In no way do these findings reflect upon the staff or opera-
tion of the hospital. There are no operational criteria in
these codes and standardsi therefore, no conclusions regard-
ing operations can be based on these findings,
The initial portion of the Flow Memorial Hospital was constructed
in 1946, thirty-five years ago. Two subsequent renovations and
expansions occurred in 1958 and 1966. During the intervening
years codes and standards have been revised.
The most recent revision is the adoption of the 1981 Life Safety
Code by the Joint Commission on Hospital Accreditation on 1 Janu-
ary 1983. Obviously, as a result of these revisions portions of
the facilities do not comply with these new codes and standards.
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CODE AND STANDARDS DEFICIENCIES
Architectural Deficienciesi
This initial survey of the existing facilities revealed the
following code deficiency categories. (Detailed listing of
code deficiencies is included in Appendix A.)
The code and agencies promulgating regulations includes
Texas Hospital Licensure Standards
Joint Commission on Accreditation of Hospitals
N.F.P.A. Life Safety Code 101
Lack of compartmentation for smokestop barriers and fire-
rated areas of refuge, Primarily in corridors in the
patient care areas.
Lack of complying fire exits.
Lack of proper fire-resistive enclosures for hazardous
storage areas.
Lack of sprinkling in hazardous storage areas.
Inadequate electrical system.
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Mechanical and Electrical Deficienciest
Codes and agencies promulgating regulatory standards:
Texas Hospital Licensure Standards
U.S, Department of Health and Human Services
NFPA 70 (National Electrical Code)
r
NFPA 90A (Air Conditioning)
NFPA 76A (Hospital Electrical Safety)
NFPA 101 (Life Safety Code)
4 Mechanicali
Sample ducts which penetrate rated walls do not have
automatic smoke dampers.
Fresh air intakes are recirculating air from exhaust ducts
and plumbing stacks.
Hazardous storage areas are not sprinkled.
Slectricalr
The existing electrical system does not have a complying
ground component (insulated green ground wire).
Emergency lighting in some r.atient care areas are nonconforming.
Major electrical switch gear is located in boiler rooms.
3
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A
FUNCTIONAL, DESIGN DEFICIENCIES
1. The Laboratory Department is bisected by a major public
circulation corridor.
2, The Departments of Surgery and Laboratory are located on the
third floor while the Department of Radiology and Emergency
are located on the second floor.
3. The layout of the dressing and lockers for surgery are
inadequate and do not contribute to good sterile technique.
4• The minor operating rooms are removed from the main surgical
suite center.
5. The nursing units require excessive travel by nursing per-
sonnel to visually see each patient,
6. The elevators do not adequately separate patients, visitors,
materials and staff,
These comments reflect current design standards, but are not
required by any code,
4
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OPERATIONAL CONSIDERATIONS
Energy Consumption=
Although energy consumption analysis has not been made, the
following u,)servations can be made
Since the hospital was constructed in phased 1998, 1958, 1968,
major portions of the heating, ventilating and air conditioning
systems are in excess of twenty years old. (Portions have been
renovated at later times.)
Within the last ten years extensive improvements in operational
efficeency have been made in systems which are now on the market,
It is reasonable to assume energy costs will continue to increase
in the future.
Code requirements have been altered to improve energy efficiency.
Hospital buildings are no longer designed around the necessity of
having long patient nursing wings and an excessive number of zones
for heating and cooling.
With these assumptions it is reasonable to surmize that energy
consumption within the existing facilities will be in excess of
the consumption of an entirely new facility with the same 166
bed capacity.
L:
SITE CONSIDERATIONS
The existing hospital facilities are centrally located in Denton
and have ample area for the present time,
The general hill top terrain does create problems for some who
must walk up hill to get from the parking area to the front
door. Further, ice and snow create a severe problem of access
to the Emergency Department and the hospital in general, due to
the hill.
Future expansion of the hospital on site and the commensurate
parking may be influenced by the terrain and the area available.
Specifically if the health care services are to include the
future potential for provid-ngi
Physician's Office Building
Long Term Care Facilities
Consolidated Community Health and Social Services
The existing site may eliminate some of the programs, simply
due to lack of useful area.
This is not to suggest these services ever will be desired.
However, if they should be considered the limitations of the
site may preclude some of them.
6
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RENOVATION COST ESTIMATE
The estimated cost of construction to renovate these areas which
are in violation have been estimated to bei
Electrical $ 825,000
Mechanical 2,325,000
Architectural 1,950,004
$5,100,000
These improvements are exclusively needed for patient safety.
They will have little perceived effect on patient comfort or
operational efficiency of the hospital.
Since a Certificate of Need will be required for this scope of
renovation, we have estimated renovation could begin in November
of 1983,
we have further estimated renovation will require phasing and
if perforrned consecutively will require approximately 29 months
to complete, If the novation schedule exceeds this time frame,
eccalat.ion of the construction cost estimate must be anticipated,
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PRELIMINARY BUDGET ESTIMATE
REPLACEMENT' HOSPITAL FACILITY
166 Bed Hospital
laid Point of Construction January 1985
Escalation at .55 of one percent per Month
`(rte
A. Building Cost 141,100 G.S.F,
f B. Fixed Equipment $13,060,000
C. Site Development 1,960,200
653,400
D. Construction Cost (A+B+C)
15,681,600
E. Site Acquisition
F. Mcvp,ble Equipment -0-
G. FroP2ssional Fees 2,195,424
097
56,712
H. Owner's Construction Expense 1,1
J. Owner's Reserve Contingency 156,816
1,254,528
K. Total Project Cost
$20,386,080
L. Physician's Office Building 25,000 G.S.F.
1,450,000
f
CONCLUSIONS
Due to time limitations this is a preliminary review of the
facilities conditions within the Flow Memorial Hospital. This
is not a complete list. The deficiencies which have been docu-
mented are accurate; huwever, theru may be considerable more
deficiencies which can be identified only by extensive survey
and system testing.
1 This report has not quantified energy consumption. When con-
sidering long range costs of providing patient care this will
be one of the mayor cost factors. Within the last few years
energy cost have been one of the fastest rising components of
health care costs.
The impact of renovation phasing has been taken into account
in estimating costs of construction. However, the lost reve-
nue due to renovation activities has not been taken into acoount,
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a
RECOMMENDATIONS
1. If additional detailed documentation is reguired,analytical
studies should be continued to specifically identify all of
then
A. Capital costs to renovate
H. Operational costs of renovation
C. Financing of renovation, as it may effect the amount
of renovation in each phase
2. Preliminary plane and space programs be developed to more
accurately define the services, capacities and costs of a
replacement hospital. j
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10
APPENDIX A
FIRE SAFETY LIFE SAFETY CODE (JCAH STANDARDS)
SMOKE PARTITIONS
1. Smoke Compartment in Corridor 1274
First Floor North
Check for door at junction of Corridor 1243 and 1250
A. L.S.C, 13-3.7.3 smoke barrier not constructed of a
minimum 30 minutes, due to numerous holes around
penetrations of duct conduit, etc. Texas Hospital
Licensing Standards 2.1 page 25,
B. Corridor Partitions - L.S.C. 13-3.6.4 transfer for
grilles in partition walls (Corridor. 1274). Check
more corr. for def,
C. HVAC ducts lack smoke dampers - NFPA 90A - 4.4
D. HVAC units lack duct type smoke or fire detectors in
both the main supply and return air ducts at air handler,
and installed per NFPA 72E. Activation of detectors
shall sound fire alarm and shut down unit. NFPA 90A
4-5.2
2. Corridor 1164 does not go through to Corridor 1141, dead end.
Dead end Corridor. T.H,L. "Building Exiting Code." NFPA
101 13-2.5.51 13-2,4,1 at least 2 exits from labor suite
and delivery suite. Exits through work room from exit.
Dead ends shall not exceed 30 feet. NFPA 12-2.5.8.
Travel distance is 741+. THL J.1 page 25,
3. Corridor 11.76 must be 8 feet wide.
8 foot corridor, THL J.1 page 26 requires 8 foot corridor
labor delivery corridor 1176,
4. Dead end Corridor 1234 (stair must be 8' wide at exit through)
Corridor width less than 8 feet exits through stairway No. 2,
T,H,L, Standards 3.1 page 26,
5, East wall of Corridor 1141 must be smoke partition (smoke damper)
L.S.C. 13-3,7.31 L.S.C. 13-3.6.4, NFPA 90A 4.4,
NFPA 90A 4-5.20 NFPA 72E
6. Pharmacy window needs smoke device.
Pharmacy pass-thru window in smoke partition. T.H,L.
J.1. Any glass opening shall be thick wire glass
steel frame (fixed). L.S.C. 13-3.6.2 and (doors shall
be self closing) 13-3.7.5 L,S.C, and wire glass - fixed
glass.
11
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Page 2
7. Smoke compartment at 2198 and elevator (Door B-106).
L.S.C. 13-3.7.3, L.S.C. 13-3.6.4, NFPA 90A 4.4,
LL~ NFPA 90A 4-5.2, NFPA 72E
Exit thru stair 03 exceeds 100'. L.S.C. 13-2,6.2(e),
L.S.C. 5-6.6.
8. Fire door 13-105 at deck.
Door to exterior not 1~ hour fire door. Location within
15' of stairway. NFPA 101 5-2.4.3.8 wall opening pro-
tected within 10' of stairway door B-105.
9, Corridor 2214 less than 8 feet wide.
THL J,1 page 26 requires 6 foot corridor.
10. Dead and corridor in Surgery 3:28.
THL J.1 page 26 requires 8' corridor.
11, Exit through ICU is nonconforming, exit through a use space,
L.S.C, 13-2,4,1 and exceeds 361. L.S.C. 12-2.5.8 and
THL Standards J.1 page 25,
12. Liquid oxygen with Bituminous paving.
NFPA 50 minimum distance 8' x 10' concrete ramp or pad
NFPA 50.
13. Exhaust riser ducts are not enclosed in 2-hour separation,
A. Enclosure of HVAC ducts (risers) must be enclosed by
2-hour fire rated construction, THL J,3 page 29,
NFPA 90A 3-3,3,1.
B. Fire dampers not installed in floors of shaft penetra-
tions 3-3,2,1.
14. Smoke dampers were not specified.
HVAC ducts lack smoke dampers - NFPA 90A 4.4.
15, Room 2193 is a fresh air supply without 2-hour separation.
Mechanical Room 2193 serves more than one floor, must
be enclosed by 2-hour walls. Equipment location NFPA
90A 2-5. 3,
16. All exit corridors must be c,•. emergency circuit,
Old "B" Wing] emergency corridor lighting switched,
NFPA 101 12-2.8,1 and Section 5-8.
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Page 3
.17. Emergency lighting does not comply with NFPA 76A and
NFPA 70, Other lighting is on same circuit,
Essential electrical systems for hospitals. Emergency
system must be separated into 4 separate branches -
Life Safety Branch, Critical Branch, Equipment Delayed
Auto and Equipment Auto or Manual Connection. NFPA 76A
4-3 and NFPA 70 517-44,
18. Entire electrical system has no ground component.
Grounding system use of conduit. F VA3 70 517-59 and
517-11 (a), 517-13, THL Q,9 page 52 page
19. Electrical wiring is #141 #12 is minimum,
Wire sizes minimum of #12 AWG condi)ctors - 200 amp.
circuits. NFPA 70, THL Q-6 page Facilities,
20. Laundry chutes are not sealed properly,
Laundry chutes 2-hour, THL J.3 page 29. Shaft enclosed
by 2-hour fire resistance rated construction.
13
1
FUNCTIONAL REQUIREMENTS TEXAS HOSPITAL LICENSING LAW
1. All roof top air intakes - drawing air from exhaust vents and
plumbing stacks.
Maximum exhaust and plumbing vent within 25' or 50' of laundry
or dietary, morgue to patient opening or air intake.
Outside air, intake must be 3' above roof deck to bottom of
grille opening.
Supplement Mechanial TDH, November 1, 1973.
2. Nursery must be on exterior wall.
THL 0-9 page 58,
3. T.iree nurseries with only one work room. (12 bassinets/nursery)
One work room for each 2 - nurseries. THL F-3 page 14,
4. Sgiled linen holding room not shown in patient nursing floors.
THL N page 47.
5. Isolation Room in ICU to small not 120 slf. (Room 3105)
Position Paper 5 and State Planning Manual (Texas Depart-
ment of Health, HHS Minimum Construction Standards, Plant
Evaluation Survey),
6, Corridor through ICU (Room 3103) is nonconforming.
8 foot corridor. THL J,1 page 26 requires 8 foot corridor,
7. O,R, Sterile Room 3212 should not be connected to 3215
Clean-up,
HHS Minimum Construction Standarda,
8, No scrub sink at Minor OR.
TDH F-5. Separate facilities for each 2 OR's.
9. ICS! HVAC nonconforming.
90# Filtering
loot Exhaust Fan coil units don't meet code
Humidity COntrol
See TDH Supplement November 1, 1973,
14
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Page 2
10, Gift Shop not separate from Lobby - 1-hour separation required
(Room 1115), Return air above corridor,
Corridor partitions - L.S.C. 13-3,6.4 transfer for grilles
in partition walls,
11, Medical Records file storage area is not sprinkled.
12. Electrical switch gear is located in each of the boiler rooms.
THL 0-2 page 51.
13, Newest boiler room is not enclosed in a 1-hour fire rated
structure.
H.H.S. Minimum Construction Standards Article B page 91
0-2 page 37.
14, Dishwashing area is not separated from the food preparation
area,
THL Section I.
16
1
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PROPOSED EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this "Agreement"), made and entered into this
day of , 1983, by and among FIRST TEXAS MEDICAL, INC.,
a Texas corporation (hereinafter called "FTM"), DENTON COUNTY, TEXAS
(hereinafter called "County") and idE CITY OF DENTON, TEXAS, (hereinafter called
"City") (County and City being sometimes hereinafter called collectively, the
"Operators").
WITNESSETH;
WHEREAS, City and County have entered Into an agreement dated July 27,
1971, Vitch pursuant to the provisions of Texas Revised Civil Statutes, Article
44941-1 obligated the panties to operate Flow Memorial Hospital, an acute-cart,
City/County hospital licensed for one hundred sixty-nine (169) beds and located
in Denton, Texas.
WHEREAS, FTM has been formed for the purpose of operating medical
facilities to include the operation of a-.ute-care hospitals; and
WHEREAS, FTM desires to purchase certain assets presently used in
conjl;nction with the operations of Flow Memorial Hospital; and
WHEREAS, FTM desires to lease Flow Memorial Hospital until such time as FTM
shall complete conatruction of a replacement hospital intended to serve the
residents of County and City.
I r„) NOW, THEREFORE, in consideration of the preTrliaes and of the mutual
covenants and agreements hereinafter set forth, FTM, County, and City do hereby
represent, warrant, covenant and agree as followsi
I
S
ARTICLE I
TRANSFER AND CONVEYANCE OF INTERESTS OF OPERATORS
1.1, Transfer and Conveyance of Interests. For the consideration
hereinafter set forth and upon the terms and subject to the conditions contained
in this Agreement, Operators hereby assign, transfer, convey and deliver to FTM
and FTM hereby accepts and receives from Operators all of the right and
interests of operators and into the following assets and properties of Operators
used in the operation of Flow Memorial Hospital (hereinafter called "Hospital"):
(a) cash on hand and investments; (b) inventory; (c) prepaid expeuses; (d)
Hospital's accounts receivables including patient, agency and other receivables,
whether recorded or unrecorded or referred, assigned or otherwise transferred to
third parties for collection, whether known or unknown; (e) patient and employee
records which pertain to the Hospital, including but not limited to, all medical
records, equipment records, patient billing records, all accounts receivable
records (including patient, agency and other receivables), tud medical and
administrative libraries; and (f) all of operators' rights, benefits and
interests in contracts, professional contracts or agreements between or among
Operators and third parties as set forth in Exhibit A attached hereto and made a
part hereof for all purposes.
1,2, Consideration. In consideration of the assignment, transfer,
conveyance and delivery to FTM of the right and interests of Operators in and to
the assets and properties desceibec', in Section 1,1 here'inabove, and In
consideration of the assignment and transfer to FTM of the rights, interests,
duties and obligations of Operators under contracts, professional contracts or
agreements between And among Operators and third parties as set forth in Exhibit
A, FTM shall pay to Operators the current book value of the Hospital'a cash on
hand and Investments, inventory, and prepaid expenses and Lhe book value of the
Hospital's aue --its receivables, and will deliver and pay over to Operators a
i eum equal to lass the book value of the Hospital's current
liabilities and FTM shall assume, and shall indemnify, save and hold harmless
Operators from and
M
against, each of the existing current liabilities, indebtedness, commitments or
obligations of Hospital to the extent such current liabilities are either
(a) fully and accurately reflected on the Financial Statements of Hospital;
(b) incurred by Hospital subsequent to the date of the Financial Statements in
the ordinary course of business and not in violation of this Agreement; (c)
created under any contract or agreement described in Exhibit A hereto; (d) any
1 potential Hill-Burton Act reimbursement arising as a result of this transaction;
(e) pension liabilities; (f) any assessments, refunds or required payments or
repayments by reason of or connected with Medicare or Medicaid payments or
insurance for periods prior to Closing; (g) employee benefits as described in
Section 3,/ hereto; (h) Workman'a Compensation or unemployment compensation
claims filed against Operators of`nr Closing,, (i) Workman's Compensation
premiums or unemployment compensation insurance payments disclosed in Exhibit
attached hereto and made a part hereof for all purposes; (j) now
unknown to Operators but Incurred for normal Hospital operations in the ordinary
course of business; or (k) listed or reflected herein or in any Exhibit attached
hereto and made a part hereof for all purposes,
1.3. Payment and Performance of Obligations. FTM understands and agrees
that, in paying, performing and discharging the valid and subsisting
indebtedness, obligations, liabilities and agreements of Operators assumed by
FTM as described in Section 1,2 heroinabove, FTX shall make such payments to the
c
persons, and perform and discharge such obligations, liabilities and agreeme~its
in the manner, that Operators may direct inc hiding without limitation making
payments with respect to the valid and subsisting indebtedness of Operators that
FTM has assumed to persona or entities that may not be the lender with respect
to such Indebtedness; subject, however, to the indemnification provisions of
Article V111 of this Agreement.
I
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1.4. Contractual Allowances. The parties agree that any contractual
allowances for Medicare and Medicaid for fiscal year 1981 and that portion of
Fiscal Year 1982 prior to the Closing Date shall be determined in a manner
consistent with that employed in prior years. Operators shall file or cause to
be filed, Medicare and Medicaid reports for Fiscal Year 1981 and any portion of
Fiscal Year 1982 prior to the Closing Date. After the Closing Date, FTM will
assist Operators in the prepartion of any of its cost reports not filed prior to
the Closing Date at no cost to Operators.
1
ARTICLF. It
RBPLACFMENT HOSPITAL
2.1. Replacement Hospital. The parties hereto agree to cooperate in the
development and construction of a new acute-care general hospital (hereinafter
called the "Replacement Hospital") that is to be constructed by FTM. The
development of Replacement Hospital shall include the following essential
commitments; (a) Operators agree to delicense the existing Hospital bode as of
the date of the opening of the Replacement Hospital. Operators acknowledge that
its commitment to close the existing Hospital la a material Inducement to FTM to
I
construct the Replacement Hospital; (b) FTM shall use Its beat efforts to obtain i
the necessary approvals from the appropriate Texas desi~natad health plannlug
agencies necessary for the construction, equipping and operation of the
Replacement 1ospital, Moreover, it to the intention of the parties to obtain
health planning approvals for at least one hundred sixty-nine (169) bode
together with all services and programs presently provided by Hoapital. FTM
shall apply for and assume all costs in obtaining such agency approvals,
Operators shaLl cooperate fully with FTM in obtaining the necessary agency
approvals. (c) Neither party shall be in breach of'this Agreement in material
..r
respect at the time before construction of the Replacement Hospital commences,
f
kF
(d) PTM agrees to use its best efforts to complete the foregoing steps and
w
to cause the Replacement Hospital to be constructed on a timely basis, (e) On
the date that the Replacement Hospital opens, F'TM agrees to submit a bid to
Operators for the purchase of the real estate equipment and structures presently
used by Hospital, Said bid shall not be leas than one Million Five Hundred
Thousand Dollars and No Cents ($1,500,000,00), At any time prior to the
delicensing by Operators of its existing beds, FTM and Operators may enter into
an Option Agreement providing for the purchase of said real estate 1 equipment
and
1 facilities,
2.2. Purchases of Replacement Hospital, D^ring a one (1) year peirod
commencing on the date that the Replacement Hospital opens, Operators may
purchase said Replacement Hospital from FTM for nn amount equal to FTM's
verified construction expense.
ARTICLE; III
REPRESENTATIONS AND WARRANTIES OF OPERATORS
Operators hereby represent and warrant to PTM AS fOLIOWS,
3,1, Organization n and hotity, Operators are political subdivisions
designated and existing undsr the laws of the State of Texas and have all
necessary power to enter, acting through the Commissioners' Court of Denton
County, Texas (hereinafter called "Court") and the City Council, Denton, Texas,
(hereinafter called "Council"), Into this Agreement and to consummate the
transactions contemplated hereby, The Agreement has boon duty and effectively
authorized by all necessary action on the part of the Court and Council required
by lawl this Agreement has been duty executed and delivered on behalf of
Operators and is a valld and binding agreement and is enforeeahta against it in
accordance with its tarma; and each of the documents to be executed by or on
behalf of Operators pursuant to this Agreement has been duly authorized by all
necessary action and when executed and delivered will constitute a valid,
binding and enforceable obligation.
t3.2. Financial Statements. The nudited financial statements and all, notes
thereto of Hospital for the fiscal years ending September 30, 1919, 1980, 1981,
and 1982, certified by peat Marwick and the audited financial statements for the
month prior to closing and year to date from end after September 30, 1982,
(hereinafter collectively called "Audited Financials"), copies of which have
been delivered to FTM prior to the date hereof, are true, correct and complete
in all material respects and fairly and accurately present the financial and
business condition of Hospital as of the dates thereof and results of the
operations of Hospital for the periods covered by such statements Audited
Financials; all such Audited Financials have been prepared in accordance with
generally accepted accounting principles and practices consistently maintained
and applied; all such Audited Financials reflect or adequately provide for all
claims against and all debts and liabilities of Hospital, fixed or contingent,
existing at the date thereof; and there has not been any change between the date
of the 1982 Audited Financials and the date of this Agreement which has
materially adversely affected the financial position or results of operation of
Hospital except as otherwise disclosed in writing to FTM.
3.3. Ownership and Condition of Hospital, Operators are the record and
beneficial owner of all of the assets comprising and being operated as Hospital
free and clear of all lions, encumberances and claims whatsoever and subject to
no options or rights of first fefueal or any other agreements or restrictions,
except as disclosed in Exhibit ` attached hereto and made a part hereof
for all purposes,
3,4, Contracts and Commitments, Except as set forth or described in
Exhibit attached hereto and part a part hereof for all purposes,
County does not have any material contracts or agreements relating to hoapital,
including, but without limiting the generality of the foregoing, any material
commitments or obligations, contingent or otherwise, under any contract or
agreement
ik
1
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(a) for the purchase or sale of inventory which is expensed and in excess
of One Thousand Dollars and No Cents ($1,000,00) in any one instance; (b) for
the purchase or sale of supplies, services or other items it excess of One
Thousand Dollars and No Cents ($1,000,00) in any one instance; (c) for the
purchase or sale of any equipment or machinery which is capitalized or which is
expensed and in excess of One Thousand Dollars and No Cents ($1,000.00); (d) for
the performance of services for others other than Hospital patients in excess of
One Thousand Dollars and No Cents ($1,000,00) to any one instance or extending
beyond the and of the current calendar year; or (e) with any County or City
officer or employee in excess of One Thousand Dollars and No Cents ($1,000,00)
in any one instance or incurred otherwise than in the ordinary course of
business, obligating it to sell or purchase or perform after the end of the then
currant fiscal year, other than as listed in the aforesaid Exhibit or as
consented to In writing by FTM. Operators have performed all obligations
required to be performed under any such contract or agreement and are not in
default or in arrears in any material respect under the terms thereof, Each
contract or agreement listed in Exhibit
la in full force and effect as of
the date hereof and true and correct copies of each thereof have been delivered
to FTM.
3.5. Litigation, There is no litigation or proceeding pending or, so far
as known to Operators, threatened against operators at law or in equity before
any court or other governmental agency which could hava'a materially adverse
effect upon Hospital except as disclosed in Exhibit
attached hereto and
made a part hereof for all purposes. A brief description of all ligation or
r
legal or other proceedings in which operators, to its knowledge is threatened in
connection with operators' business, affairs, properties or other assets in
regard to Hospital, an estimate of Operators' exposure with respect to all ouch
matters and a description with respect to each such matter of the coverage, if
y ~
any, of any inouvance are contained in Exhibit M Copies of all pleadings
or other significant documents relating to such litigation or legal or other
proceedings have been delivered to FTM.
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M. Insurance, Exhibit sets forth a complete and accurate list
of all insurance policies owned by Operators with respect to the operation of
Hospital, together with the names of the Issuers of such policies and a brief
description of the typo and amount of coverage afforded by each such policy,
True and correct copies of all such policies, and any endorsements thereto, have
been delivered to FTM,
3,7. Labor, Employment Contracts and Employee Benefit Programs., Operators
F
have no obligations, contingent or otherwise, written or oral, under any
employment contract, collective bargaining agreement, pension or retirement
plan, bonus plan, stock option or purchase plan or any other employee contract
or nontorminable agreement, group insurance, group hospitalization or other
employee benefit plan relating to Hospital other than those Listed in Exhibit _
attached hereto and made a part hereof for all purposes, true and correct
eoples, certificates or description of which have been delivered to FTM.
Operators have performed all obligations required to be performed under all such
agreements and plans and are not In default or arrears in any material respect
under any of the terms thereof, Except as set forth in Exhibit , County
has not within the past five years engaged in discussions with respect to any
collective bargaining agreement or has not been the subject of any election with
respect to the uniunization of any of its employees at gospital nor are any such
discussions or elections now pending, or in the beat of the knowledge of
Operators threatened or contemplated, Operators have complied with all
applicable federal and state laws relating to the employment of labor at
Hospital, Including but not Limited to the provisions thereof relating to wages,
hours and collecting bargaining, and to the beat of its knowledge, Operators are
not liable for any arraaragas of wages for failure to comply with any of the
foregoing laws, The names and current, compensation rates of each employee of
Hospital, as of __,1983, or as of the pay period immediately preceding such
it
r +i,
date, are set forth in Exhibit attached hereto and made a part hereof for
all purposes, There is no employee of Hospital whose employment is not
terminable at will, except an set forth in Exhibit attached hereto and
made a part hereof for all purposes,
3,8. Compliance with Laws, Operators are not in violation of or default
with reep.c t to any applicable statute, ordinance, rule, regulation, ,judgment,
writ, injunction or decree of any court or any federal, state, municipal or
other governmental department., commission, board, bureau, agency or
instrumentality, domestic or foreign, or any restrictive covenant or dead
restriction recorded or otherwise, affecting Hospital. Hospital has been
continuously for the last ten (10) years accredited by the Joint Commission on
Accreditation of Hospitals. Except as set forth in Exhibit , Operators
have not received any notice relating to Iloepital not heretofore complied with,
from any federal, state or other governmental authority or agency having
jurisdiction over its properties or activities, or any insurance or inspection
body, that its operations or any of its properties, facilities, equipment or
business procedures or practices failed to comply with any applicable law,
ordinance, regulation, building or zoning law, or requirement of any public
authority or body,
3,91 Permits and Licenses. Operators have all licensea, permits,
franchisee and other authorizations (both governmental and non-governmental)
which are required in conjunction with the ownership, use or operation of
Hospital, its respective business or its other assets and properties, Exhibit
attached hereto and made a part hereof for all purposes seta forth each
material license, permit, certificate or authorization, in the applicable
expiration date, if any, Operators have delivered to FTH true and correct
copies of such licenses, permits, certificates or authorizations as well As most
'14 I/
recent fire, safety and other inspection reports relating to Heapital.
3,10, No Other Liabilities or Adverse Conditions, With the exception of
the liabilities set forth on the Audited Financials referred to in Section 3.2
hereinabove, or as otherwise set forth herein or described in the Exhibits
attached hereto and the liabilities incurred in the ordinary course of the
business of Hospital since the date of such Audited Financials, there are no
liabilities of any nature, whether absolute, accrued, contingent or otherwise,
or whether due or to become due (including, without limitation, any liabilities
for federal, state or other taxes, any contractual adjustments relating to
Medicare, Medicaid, Blue Cross or other payments or receivables except prior
year contractual adjustments), now existing or asserted of Operators in regard
to Hospital, Except as set forth in Exhibit attached hereto and mode a
part hereof for all purposes, there are no conditions existing with respect to
any of Hospital's patients, facilities, properties, assets or personnel, which
might materially adversely eVect any of Hospital's properties, businena or
prospects,
3.11, Reports and Returns. Except as described in Exhibit
attached hereto and made a part hereof for all purposes, the Operators have
filed all significant reports and returns heretofore required by federal, state
or municipal authorities and all reports and returns to the various governmental
authorities which control, directly or indirectly, any of its activities, F1'M
agrees to assist in the proparation and filing of any such reports or returns
not heretofore flied, at no expense to Operators,
3.12, Defaults, Operators are not in default under, nor has any event
occurred which, with the lapse of time or action by a third party, could result
in a default under any outstanding indenture, mortgage, contract, or agreement
relating to Hospital, Except as provided In Exhibit attached hereto and
made a part hereof for all purposes,'tho execution and performance by Operators
of this Agreement and the transaetion,contemplated'hureby will not violate any
provision of, or result in the breach of or constitute a default under, or
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require any consent under any order, writ, injunction or decree of any court,
governmental agency or arbitration tribunal, or any contract, Agreement or
instrument by which Operators are bound, with the sole exception being the Texas
Health Facilities Commission (hereinafter called, "THFC").
3,13, Inventory, The inventory of Hospital reflected on the Audited
Financials which have been supplied to FTM, was valued for the purposes thereof
at: cost on the basis described in the notes to said Audited Financials. All
items as to which values are ascribed consist solely of items currently suitable
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! for use or sale in the normal course of Hospital's business and no value is
ascribed to any items (including pharmaceutical products) which are obsolete,
outdated or unusable,
3.14. Trademarks, Tradensmes, etc,. Exhibit attached hereto and
made a part hereof for all purposes, sets forth all, if any, of Operators'
trademarks, tvadanames, service marks, patents, copyrights, registrations with
respect to Hospital, and licensee or rights under which the same are presently
owned, used or intended to be acquired or used by Operators and to the extent
indicated in Exhibit the same have been duly registered In such
offices as are indicated therein,
3,15. Endorsements, Except for checks and drafts in the course of
collection and agreements disclosed in Exhibit attached hereto and
made a part hereof for all purposes, as respects Hospital, Operators have not
guaranteed, endorsed or indemnified the obligations of any third person, firm or
corporation,
3,16. Additional Documents Supplied by Operators. Operators have
delivered to FTH true and exact copies oft (a) all cost reports it has filed
with Medicare and Medicaid for the last three (3) years, (b) all correspondence
it has sent to or received from Medicare or Medicaid pertaining to these three
(3) years, concerning disputes with, audits by or settlements with such
entitiea{ (c) ail Hospital appraisal reports, surveys or other documents which
1
evaluate or describe any of the Hospital's assets; and (d) a copy of Hospital's
equipment ledger or list, the date of its purchase by Operators, its cost to
Operators, its estimated life, the amount of depreciation accrued thereon by
Operators, and any other material information with respect thereto.
3.17. Brokers. Operators have not employed or retained any broker, agent
or finder or paid or agreed to pay any brokerage fee, finder's fee, commission
or other similar payment to any broker, agent or finder and no broker, agent or
r`1 finder is entitled to any such brokerage fee, finder's fee, commission or other
similar payment on account of this Agreement or any matters contemplated hereby
of any agreement, arrangement or understanding made by any Operators and M.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FTM
FTM hereby represents and warrants to Operator as follows;
4.1. Corporate Stntua. FTM is a corporation duly incorporated, validly
existing in good standing under the laws of the State of Texas.
4.2. Legal proceedings. No litigation or other legal or administrative
proceedings are presently pending (or, to the beet of FTM's knowledge
threatened) against FTM relating to this Agreement or to the transaction
contemplated hereby.
4.3, Authority. The execution and delivery of this Agreement, the
consummation of the transaction contemplated hereby and the performance by FTM
of all of its obligations hereunder have been duly and validly authorized by all
necessary corporate action on the part of FTM and FTM has full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. No consent, approval, permit or licease from any
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governmental authority or third party is required in connection with the
execution and delivery of this Agreement by FTM or in connection with the
consummation of the transaction contemplated hereby other than that es may be
required by TNFC.
4.4. Binding Agreement. This Agreement constitutes a valid and binding
agreement of FTM, enforceable against FTM in accordance with the terms hereof,
except as the enforceability and binding effect of this Agreement are limited by
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally, and subject to the
qualification that general equitable principles may limit the enforcement of
certain remedies (including the remedy of specific performance).
4.5. Conflicts. Neither the execution and delivery of this Agreement by
FTM and its compliance with the terms and conditions hereof nor the consummation
of the transactions contemplated hereby will (1) conflict with or result in a
breach of any provision of the Articles of incorporation or the Bylaws of FTM,
(li) constitute a breach or, default or give to others any right of termination,
cancellation or acceleration under any agreement or instrument to which FTM is a
party or by which it or any of its assets is bound, (iii) result In the creation
or Imposition of any material lien, charge or encumbers nee of any nature
whatsoever upon or give to others any material interest or right in or with
respect to any of the assets, contracts or business of FTM, or (iv) violate any
order, decree, rule or regulation of any court or governmental authority, which
order, decree, rule or regulation is applicable to FTM or any of its assets or
business.
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4.6. Brokers. FTM has not employed or retained any broker, agent or
finder or paid or agreed to pay any brokerage fee, finder's fee, commission or
other similar payment to any broker, agent or finder and no broker, agent or
finder is entitled to any such brokerage fee, finder's fee, commission or other
similar payment on account of this Agreeu.-nt or any matters contemplated hereby
or any agreement, arrangement or other understanding made by FTM and Operators,
1 ARTICLE V
CONDITIONS TO OBLIGATIONS OF FTM
The obligations of FTM to consummate the transaction contemplated by this
Agreement are subject to the satisfaction of the following conditions:
5.1. Representations and Warranties. The representations and warranties
made by Operators and set forth in Article III hereof shall be true and correct
in all material respects on the date of this Agreement.
5.2. Performance of Obligations. Operators shall have performed in all
material respects all covenants and agreements required to be performed by it
under this Agreement.
5.3. Authorization. All actions, approvals, consents, permits and
authorizations necessary to authorize the execution, delivery and' performance of
this Agreement by Operators and the consummation of the transactions
contemplated hereby shall have been duly and validly taken or obtained by
Operators.
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5,4. Exa1mination by FTM. Operators will accord to FTM, its legal counsel,
accountants and other representatives full access throughout the period prior to
the Closing hereunder to all of the properties, books, contracts, commitments
and records of Operators and will furnish FTM during such period, with all such
information concerning the business and properties of Operators as FTM
reasonably may request,
5,5. Delivery of Property. Operators shall have transferred to FTM its
property and its other assets and properties covered by this Agreement.
5.6. Legal Proceedings, No action, suit or other proceeding shall have
been Instituted by any governmental authority or any other person or entity, or
threatened by any governmental authority to restrain or prohibit the
consummation of the transaction contemplated hereby or to recovery title to the
Property, or any part thereof or any interest therein, or attacking the validity
of such transaction, or seeking to collect such damages or other relief in
connection with this Agreement.
5,7, Conduct Prior to Closing, Prior to the Closing Date, and except as
` otherwise consented to or approved by FTM in writing, with respect to Hospital,
Operators shall not; (a) enter into, renew, amend or terminate any contract or
agreement to which it is a party relating to Hospital without the written
approval of FTM; (b) fail to use reasonable efforts to obtain the consents of
the third parties to the assignment to FTM of the contracts described in Exhibit
and all licenses or permits under which Operators operate Hospital in
order that FTM shall be able to carry on the business of operators as heretofore
conducted; (c) increase the salary of any Hospital emploYie except in the
N ordinary course of business; (d) pay any bonuses to any employee or other person
or entity involved in the operation and management of Hospital; (e) cause
Hospital to suffer any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting its business and prospects; (f)
w.,
cause Hospital to suffer any labor trouble or any other event or condition of
character which has adversely affected the financial condition, assets,
liabilities or business of Hospital; (g) sell, lease or transfer any of the
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assets or subject same to a mortgage, pledge, lien or other encumberance; or
(h) cause Hospital to Incur any other obligation or liability, absolute or
contingent other than current liabilities incurred in the ordinary course of
business or make any loans or advances to any person, firm or corporation, or
assume, guarantee, endorse or otherwise become liable for the obligations of any
person, firm or corporation, other than for legal and accounting expenses of
operators in connection with these transactions,
3.8. Status of Froparty, On the Closing Date, the property or any
material part thereof, shall not be threatened to be materially adversely
affected in any way as a result of fire, explosion, earthquake, disaster,
accident, any action by the United States or any other governmental authority,
flood, embargo, riot, civil disturbance, uprising, activity of armed forces, or
act of Cod or public enemy,
5,9. Status of Improvements, On the Closing bate, the improvements and
the fixtures forming a part of Hospital shall be in
good condition and repair,
ordinary wear and tear due to normal conditions accepted,
5,10, Licensing Applications, Operators will cooperate in all reasonable
respects with FTM in its application to obtain such licenses, permits, and
governmental approvals as may be necessary in order for FTM to operate Hospital
as an acute-care general hospital. to connection with each such application on
1 the part of FTM, Operators shall furnish FTM with such information and date as
may be neceas:,,y or desirable and shell otherwise assist FTM in any reasonable
way requested.
F,
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5.11, Remedies, The sole remedy of FTM for any failure of Operators to
perform as called for herein and for the breach of any covenant or warranty or
representation herein made by Operators shall be to elect not to close
hereunder, and in the event PTM so elects, Operators shall be relieved of all
obligations hereunder, However, promises and agreements made herein by
Operators for acts and/or cooperation to be provided or performed after closing
shall, if Cloaing occurs hereunder, be fully binding on Operators, and FTM may
obtain specific performance of such future obligations if breached as its
exclusive remedy,
5.12, Related Agreements. Operators shall have executed a Lease Agreement
to lease the land, building and equipment comprising the hospital on or before
the Closing Date.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF OPERATORS
The obligations of Operators to consummate the transaction contemplated by this
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Agreement are subject to the satisfaction of the following conditional
6•L• Representations and IJarra~ The representations and warranties
of FTM set forth in Article IV hereof shall be true and correct in all material
respects on the date of this Agreement,
Performance of Obligations. FTM shall have performed in all material
respects 811 covenants and agreements required to be performed by it under this
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Agreement,
6,3, Author rion, All actions, approvals, consenta, permits and
authorizations necessary to authorize the execution, delivery and performance of
this Agreement by FTM and the consummation of the transactions contemplated
hereby shall have been duly and validly taken or obtained by M4.
6,4, Pa ment of Consideration, FTM shall have issued and delivered to
Operators any and all consideration as required by it under Article 1,
6,5, L-ogal Proceedings, No action, suit or other proceeding shall have
been instituted b
y any governmental authority or any other person or entity or
threatened by any governmental authority to restrain or prohibit the
consummation of the transactions contemplated hereby, or attacking the validity
of such transactions or seeking to collect damages or other relief in connection
with this Agreement.
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6,6, Opinion of Counsel. FTM shall have delivered to Operators an opinion
dated the Closing Date, of Legal Counsel of FTM, in a form acceptable to
Operators, to the effect that; (a) FTM is•a corporation duly organized and
validly existing in good standing under the laws of the State of Texas; (b) this
Agreement constitutes the valid and binding obligation of. FTM; (c) there are no
legal Impediments to the performance of this Agreement or any other agreements
i of even date herewith by Operators known to such Legal Counsel; (d) there are no
present or future liabilities, contingent or otherwise, of Operators not being
assumed by FTM, in any way connected with Operators' operation of Hospital or
with this Agreement, so far as it known by such Legal Counsel.
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6.7, Legal Matters, All actions, proceedings, instruments and documents
required to carry out this Agreement or incidental hereto and all other related
legal matters shall have been approved by Legal Counsel of Operators, which
approval shall not be unreasonably withheld and such Legal Counsel shall have
been provided with ouch documents and instruments as they shall have reasonably
requested in connection with the transactions contemplated herein,
ARTICLE VII
THF. CLOSING
7.1. Time and Place of Closing, The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at
(location, day, date and time), or on ouch other date and at such other rime and
place as the parties hereto shall mutually agree upon in writing (the date and
time of the Closing is herein called tha "Closing Date").
7,2. Action to be Taken aeing, At the Closing, the parties hereto
shall deliver or cause to be delivered all items provided for in this Agreement
to be delivered on the Closing Date or at the Closing or necessary to perform or
satisfy any covenant or condition contained herein which is required to be
performed or satisfied on or prior to the Closing Data,
ARTICLE VIII
r - INDEMNIFICATION
8.11 Indemnnifi~ion of Operators, FTM shall indemnify and save harmless
Operators and any of its agents or employees from any and all suits, claims,
demands, damages, coats and expenses, including reasonable attorneys' fees for
the defense or settlement of such suits, claims or demands arising from or on
account of (a) any failure of FTM to
pay, discharge or perform any of the
indebtedness, liabilities, obligations or agreements of Operators assumed by FTM
pursuant to this Agreement or (b) any claim for a brokerage fee, finder'a fee,
commission or other similar payment based upon any agreement, arrangement or
understanding made or alleged to have been made by FTM.
8.21 Indemnification n o~TM, Operators shall Indemnify and save harmless
FTM and any of Its directors, officers, agents or employees from any and all
suits, claims, demands, damages, costs and expenses, including reasonable
attorneys' fees for the defense or settlement of such suits, claims or demands,
arising from or on account of (a) any claim for a brokerage fee, finder's fee,
commission or other similar payment based upon any agreement, arrangement or
understanding made or alleged to have been made by Operators, b) any
indebtedness, obligation, liability, agreement, lien or sncumbarance relating to
the property, the fACilLtLea or any other assets or properties of Operators
which has not been and is not disclosed by Operators to FTM and specifically
accepted and assumed by FTM or (c) any payment by FTM of the valid and
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subsisting indebtedness of Operstore, and any performance or discharge by FTM of
the valid and subsisting obligations, liabilities and agreements of Operators,
assumed by FTM pursuant to Section 1,2 of this Agreement and paid, performed or
discharged by FTM in the manner that Operators shall have directed,
ARTICLE IX
MISCELLANEOUS
9.1, Ex enses. Whether or not the transactions contemplated by this
Agreement are consummated, each of the parties to this Agreement shall bear all
expenses incurred by it in connection with this Agreement and the transactions
connected herewith,
9,2. Survival of Representations, Warranties and ants, The
respective representations, warranties and agreements of FTM and Operators
contained in this Agreement shall survive the Closing Date and shall be
effective regardless of any investigation that may have been made or may be made
at the time by or on behalf uf the party to or with whom such representations,
warranties and agreement were made,
9,3. Waivers and Consents, No waiver of compliance with any term,
provision or condition of this Agreement and no consent provided for in this
Agreement shall be effective unless evidenced by instrument in writing duly
executed by the party sought to be charged with such waiver of consent. No
waiver of any breach of any representation, warranty or covenant or other term
or provision of this Agreement shall be deemed to be a waiver of any proceeding
or succeeding breach of the same or any other representation, warranty,
covenant, term or provision. No extension of time for or consent to the
»a performance of any obligation or act shall be deemed to be an eutension of time
for or consent to the performance of any other obligation or act,
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9.4. Entire Agreement. This Agreement, together with the Exhibits
attached hereto, constitutes the entire agreement among the parties to this
Agreement with respect to the transactions contemplated hereby and supercedes
all prior agreements, arrangements and understandings, whether oral or written,
among them with respect to the subject matter hereof.
9.5. Governing Law. This Agreement and the rights and duties of the
7 parties hereunder shall be governed by and construed In accordance with the laws
of the State of Texas.
916. Amendments. This Agreement may not be amended, modified or changed
except by instrument in writing signed by the parties hereto.
9.7. Notices. Any notice or communication required by or given pursuant
to this Agreement by any party hereto to any other party shall be in writing and
shall be de!ivered in person or sent by certified or registered United States
mail, postage prepaid, or prepaid telegram or addressed to such other party at
its address set forth below or at such other address as it shall have
theretofore designated by written notice:
(a) If to FTM.,
560 W. Main, Suite 201
Lewisville, Texas 75067
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(b) If to County;
(c) If to city;
(d) If to Operatorsi
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4,8, Successors and Assi ne, This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns,
9,9, HeatiI njzs The descriptive headings of the various articles, sections
and paragraphs of this Agreement have been inserted for convenient reference
only and shall not be construed to enlarge, diminish or otherwise change or
affect the meaning or construction of any provision of this Agreement.
9,10. Co. unter arts, This Agreement may be executed in any number of
countarparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument,
9.11. Invity of any provisions. It is the intention of the parties
hereto that the provisions of this Agreement shall be enforced to the fullest
extent permissible under the laws and
public policies of the State of Texas, and
that the unenforceability (or the modification to conform with such laws or
public policies) of any provision hereof shell not render unanforceable, or
impair, the remainder of this Agreement,
IN WITNESS WHRREOF, each of the parties to this Agreement has caused this
Agreement to be executed and delivered by its duly authorized officer or
representative, as of the day and year first written above,
f
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FIRST TEXAS MEDICAL, INC,
By
Darrell E, Lummus
President
,
THE CITY OF DENTON, TEXAS
By
c
COUNTY OF DENTON, TEXAS
By
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PROPOSED LEASE
THIS LEASE, made and entered into this _ day of ,
1983, by and among DENTON COUNTY, TEXAS, and THE CITY OF DENTON, TEXAS
(hereinafter collectively called "Lessors"), and FIRST TEXAS MEDICAL, INC., a
Texas corporation (hereinafter called "Lessee").
W I T N E S S E T H
WHEREAS, City and County have entered into an agreement dated July 27,
1971, which pursuant to the provisions of Texas Revised Civil Statutes, Article
449411 obligated the parties to operate Flow Memorial Hospital, an acute-care
City/County hospital licensed for one hundred sixty-nine (169) beds and located
in Denton, Texas,
WHEREAS, FTM has been formed for thu purpose of operating medical
facilities to include the operation of acute-care hospitals; and
WHEREAS, FTM desires to lease Flow Memorial Hospittl from the City and
County until such time as FTM shall complete construction of a replacement
hoapital intended to serve the residents of County and N ty,
NOW, TH":RSPORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, FTM, County, and City do hereby
reirasert, warrant, covenant and agree as followai
G~
ARTICLE I
LEASE
Operations Leased, Upon and subject to the terms, provisions and
conditions contained herein, Lessors hereby lease to Lessee and Lessee hereby
lasses from Lessors, all right and interest of Lessors in and to the business
operations of Flow Memorial Hospital (the "Hospital"), and the real property
upon which the Hospital is located as more fully described in Exhibit A attached
hereto and made a part hereof for all purposes and all of the Lessors' equipment
and other furniture, furnishings and fixtures (the "property") located in the
Hospital on the Effective Date (no hereinafter defined), whether owned by
Lessors or leased from third parties,
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ARTICLE II
DURATION
2.1. Term, The initial term of this Lease respecting such business and
operations shall commence on the first day of the calendar month of the date of
execution hereof (the "Effective C.gte"), and shall continuo and extend for e
period of five (5) years from such Effective Date unless this 1.3aae is
terminated at an earlier date as provided for herein,
2,2, Renewal, At the conclusion of the initial five-year term of this
Lease, in the event Lessee has not completed construction of a new acute-care
general hospital (the "Replacement Hospital") which will serve the community in
a similar capacity as the Hospital presently does, this Lease shall continue on
a month-to-month basis at the option of Lessee up to a maximum of three (3)
additional years on and subject to the, same terms, 7rovisions and conditions as
are contained herein, for an additional month-to-month period commencing on the
date the preceding term expires.
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2.3. Construction of Replacement Hospital, in the event the Replacement
Hospital is completed prior to the end of the initial five-year term, Lessee may
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vacate Hoepital; provided, however, that Lessee, pays in full the remaining
portion of rent due during the initial five-year term of the Lease.
ARTICLE III
RENT
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3.1. Amount, (a) On the Effective Date of this Lease, Lessee shall pay
Lessors One Million, Six Hundred Ninety Thousand Dollars and No Cents
($1,690,000,00) in cash.
(b) Lessee shall pay Lessors as annual rental during the initial five-year
term hereof for the business and operations of the Hospital, an amount equal to
deven Hundred Twenty-Five Thousand Dollars and No Cents ($725,000,00) per year,
(c) In the event this Lease continues on a month-to--nonth basis as provided
in Section 2.2 hereinabove, Lessee shall pay Lessors rent in the amount of Sixty
Thousand Five Hundred Dollars and No Cents ($60,500,00) per month, payable in
advance on the first day of each calendar month,
3.2. Method of Payment, The annual payment of Seven Hundred Twenty-Five
Thousand Dollars and No Cents ($725,000,00) per year as required to be payed by
Lessee to Lessors, shall be payed on a quarterly basis, Said quarterly payments
shall be made no later than the fifteenth (15) day of the first month of any
calendar year quarter (January, April, July and October) and shall be payed to
Lessors in such amount and at such location ae Lessors shall designate In
writing.
P:
ARTICLE IV
PERSONNEL
4,1, Employees, All employees of Lessors, with the exception of
physicians shall become employees of Lessee on the date of the Effective Date of
this Lease. Lessors hereby assign to Lessee, and Lessee hereby accepts and
assumes from Lessors, all of Lessors' rights, duties, liabilities, obligations
and agreements relating to such employees, including, but not limited to, all
liabilities and obligations for compensation of such employees,
ARTICLE V
COVENANTS OF LESSEE
5,1. Condition of Lease Property. Lessee shall make or cause to be made,
at its expense, all needed repairs, replacements or reconditioning of said
Property. At the termination or expiration of the Lease, Lessee shall return
the Property to Lessors in as good condition and repair as at the Effective Date
of this Lease, ordinary wear and tear accepted. If material structure. damage
is caused by the removal of equipment from the Hospital at the direction of
Lessee, Lessee shall restore Property to its previous condition,
5,2. Utilities, Lessee shall pay when due all charges for electricity,
gas, water and other utilities used or consumed by Lessee upon the Property
during the term hereof. In the event that charges are assessed during any
period which Lessee is not in possession of the Property for such full period,
such charges shall be apportioned between Lessors and Lessee.
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5.3, Insurance, (a) Lessee shall obtain and keep in force and effect
during the initial term of this Lease and each succeeding term, if any, adequate
and appropriate liability insurance policies. All such insurance shall be in
the form and amount and with companies approved by Lessors and shall be in the
joint names of Lessee and Lessors; provided, however, that insurance covering
equipment and other personal property owned by Lessee, need not carry such
endorsements,
(b) In the event of damage by fire or other casualty to the Property, which
is covered by insurance, subsequent to the delivery of possession to Lessee, the
proceeds shall be paid into an escrow account with a bank mutually agreeable to
Lessee and Lessors; provided, however, that all proceeds of insurance policies
insuring equipment or personal property owned by tha Lessee shall be paid
directly to it, Thereafter, Lessee, at its option, may use any insurance monies t
received as a result of such damage to rebuild the improvements or repair the
damages, If Lessee should elect not to exercise its option to restore the
' Improvements, Lessee may give Lessors written notice and the insurance proceeds
shell be paid to the Lessee and Lessors to the extent of their respective
interests therein, provided, however, that in no event shall Lessors receive
less than in the event of full lose, or the proper
portion thereby in the event of partial lose and Lessee's interest in such
policy shall only be to the extent coverage exceeds ouch amount. Anythins;
herein to the contrary notwithstanding, it is agreed that, to the extent any
damage to the Property is covered by insurance, neither party shall be liable to
the other in the absence of willful misconduct causing such Loss or damage,
During any period of reconstruction of or repair to the Property following the
original term hereunder, Lessors shall pay Lessees rent, Said rent shall be
abated according to the unusable portion of the buildings, but not to exceed the
total holdover rent, until the expiration of this Lease, completion of the
Replacement Hospital, or completion of repair of reconstruction, whichever
occurs first,
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5.4. Taxes. Lessee shall pay and discharge all taxes, general and special
assessments and other charges of every description which during the term of this
Lease may be levied on or assessed against the Property and all Lessee's
interests therein and all improvements and other property thereon,
5.5. Use of Premises. It is agreed that the use of the Property is and
shall be limited to the operation and maintenance of a public acute-ca.e general
hospital, nursing care facilities, outpatient facilities, and related facilities
Incidental thereto, including but not limited to adequate parking facilities.
5.6. Organization and Standing. Lessee, is a corporation duly organized
and validly existing in good standing under the laws of the State of Texas, with
full corporate power to carry on its business as now conducted,
5.7, Authority for Agreement. Lessee is authorized to perform the
obligations hereunder and no approval is required by any governmental agency or
regulatory body other than what may be required by the Texas Health Facilities
Commission.
5,8. Consents, The execution and performance of this Lease will not
violate any provision of, or result in the breach, or conatitute a default
under, or require any consent under any law, or any order, writ, injunction or
decree of court, governmental agency or arbitration tribunal, or any contract,
agreement or instrument by which Lessee or its Assets and properties may be
bound,
,
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ARTICLE VI
COVENANTS OF LESSORS
6.1. Organization and Authority, The Lessors are political subdivisions
designated and existing under the laws of the State of Texas and have all
necessary powers to enter, acting through the Denton County, Texas,
Commissioners' Court (County) and City Council of Denton, Texas, (City), into
this Lease and to consummate the transactions contemplated hereby, 1"he Lease
has been duly and effectively authorized by all necessary action on the part of
the Commissioners' Court end City Council required by law; this Lease has baen
duly executed and delivered on behalf of the County and City and is a valid and
binding agreement and is enforceable against both the County and City in
accordance with its terms; and any document to be executed by or on behalf of
the County and City pursuant to this Lease has been duly authorized by all
necessary actions and when executed and delivered will constitute a valid,
binding and enforceable obligation,
6,2. Ownership and Condltion of the Hospital, Lessors are the record and
beneficial lease holders of all of the equipment, facilities and properties
comprising and being operated as the Hospital free and clear of all liens,
encumberances and claims whatsoever and subject to no options or rights of first
refusal or any other agreements or restrictions, except as disclosed in Exhibit
H attached hereto and made a part hereof for all purpoe6s, Lessors have the
right and power to lease the Hospital in accordance with the terms of this
Lease.
Except as has been disclosed in writing to Lessee prior to the Effective Date,
none of the assets or properties constituting the Hospital, nor the occupancy or
operations of the Hospital is, or operation thereof by the Lessee, will be in
violation of any law or any building zoning ordinance, code or regulation.
Except as disclosed in Exhibit 6 hereto, the Hospital is in good condition and
repair in all material respects, free of defects of materials or workmanship,
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and is suitable for the use for which they are being used, without the present
need for any major additional equipment, repairs, construction or reconditioning
being required by Le a,,re, The warranties of this section are only to the best
of Lessors' knowledge and belief.
6,3, Quiet Enjoyment, Lessors covenant and agree that Lessee on
paying
the rent and other charges herein provided for, and observing and keeping the
covenants, conditions and terms of this Lease on Lessee's part to be kept or
performed shall lawfully and quietly hold, occupy and enjoy the leased premises
during the term of this Lease and any extensions thereof without any hinderance,
disturbance or ejectment by Leasora, their successors or aasigns, or by any
other person or persona lawfully claiming the same except such portion of the
Property, if any, as shall be taken under the power of eminent domain, The
warranties in this section are only to the best of Lessors' knowledge and
belief,
ARTICLE V11
DEFAULT
7.1. Events et Default,
The following events shall be deemed to be and
shall constitute events of default by Lessee under this Lease;
(a) Lessee shall fail to pay any amount of rent due hereunder and such
failure shall continue for a period of thirty (30) days'from the date the same
is due and payable;
(b) Lessee shall, in the sole and absolute discretion and judgment of
Lessors, mismanage the business and operations of the property, professionally
or financially, such that the business and operations of the Property are
detrimentally affected thereby;
(c) Lessee shall file a petition under the Federal Bankruptcy Law or under
any similar law or statute of any state, or Lessee shall be adjudicated bankrupt
1
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or insolvent in any proceeding filed against Lessee and such adjudication Shall
not be vacated or stayed within the time permitted by law;
(d) Lessee shall make an assignment for the benefit of creditors;
(a) A receiver or trustee shall be appointed for all or substantially all
of the assets of Lessee and such receivership shall not be terminated or stayed
within the time permitted by law;
(f) Lessee shell desert or vacate or cause the desertion or vacation of any
substantial portion of the Property for a period of ten (10) days or more; other
than as provided for in section 2,3 hereinabove; or
(g) Lessee shall fail to comply with any term, condition or covenant of
this Lease, and such failure shall continue for a period of thirty (30) days
from the date Lessee receives written notice of such failure from Lessors,
5.2. Remedy, Upon the occurrence of any event of default specified in
Section 5,1 hereinabove, Lessors shall have the right to terminate this Lease
upon fifteen (15) days prior written notice to Lessee in which event Leases
shall lntmadiately surrender all Lessee'a right and interest in and to the
business and operations of the Property. Lessors, their agents or attorneys,
may resume possession of the Property and relet the game for the remainder of
the term at the beat rent, Lessors, their agents or attorneys, may obtain for
the account of Lessee, who shall make good any deficiency.
ARTICLE M1
I uivrPICATION
8.1. Indemnification of Lessors, Lessee shall indeminlfy and hold
harmless Lessors against any and all claims, demands, damages, costs and
expenses, including reasonable attorneys' fees for the defense or settlement of
such claims or demands, arising from the conduct of business or operations of
the Property by Lessee or from any breach by Lessee of any of the conditions of
this Lease or from any act or negligence of Leases, its agents,
IN
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Contractors, employees, guests or invitees in or about the Property, In case of
any action or proceeding brought against Lessors by reason of such claim,
Lessee, upon written notice from Lessors, shall defend such action or proceeding
by Legal Counsel acceptable to Lessors,
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ARTICLE IX
MISCELLANEOUS
9,1, Entire Agreement, This Lease conatitutne the sole, only and entire
agreement between Lessors and Lessee with respect to the subject matter hereof
and supercedes all prior agreements, arrangements or understandings, written or
oral, between Lessors and Lessee with respect to such subject matter,
9.2, Amendment, No amendment, modification or alteration of the terms,
provisions and conditioue of this Lease shall be binding unless the same shall
be in writing and duly executed by Lesaore and Lessee,
9,3. Notices, Any notice or other communication required by or given
pursuant to this Lease shall be in writing and shall be delivered in person or
sent by certified or registered United States mail, postage prepaid, addressed
to the other party to this Lease at its address set forib below or at such other
address as such other party shall have theretofore designated by written notice;
If to Lessors,
t
j If to Lessee; 560.W, Main, Suite 201
Lewisville, Texas 75067
ti
9.4. Construction. Should any one or more of the provisions contained in
this Lease be held for any reason to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision hereof and this Lease shall be construed as if such provision
had never been contained herein.
9.5. Time of Essence, Time shall be of the essence of this Lease.
9.6. Governing Law. 'this Lease and the rights and duties of the parties
hereunder shall be governed by and construed in accordance with the laws of the
State of Texas.
9.7. Parties Bound. This Lease shall be binding upon and inure to the
benefit of Lessors and Lessee and their respective legal representatives,
successors and assigns.
9.8, Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one an.i the same instrument.
IN WITNESS WHEREOF, the parties h^reto have executed this Lease as of the
day and year first written above.
DENTON COUNTY, TEXAS
By
THE CITY OP DENTON, TEXAS
By
I
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FIRST TEXAS MEDICAL, INC.
DY
Darrell E. Lummus
President
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r PROPOSED INDIGENT CARE AGREEMENT
THIS INDIGENT CARE AGREEMENT (this "Agreement"), made and entered into this
/h
day of , 1983, by and among FIRST TEXAS MEDICAL,
INC., a Texas corporation (hereinafter called "FTM"), FLOW MEMORIAL HOSPITAL
FOUNDATION, INC., a Texas non-profit corporation (hereinafter called
"Foundation"), FLOW MEMORIAL FOUNDATION, INC., a Texas non-profit corporation
(hereinafter called "New Foundation"), DENTON COUNTY, TEXAS, (hereinafter called
"County") and THE CITY OF DENTON$ TEXAS, (hereinafter called "City"),
W I T N E S S E T Hr
WHEREAS, the parties have entered into various Agreements among VTM, County
and City dated the lay of , 1983; and,
WHEREAS, pursuant to one Agreement, County and City have leased Flow
Memorial Hospital (hereinafter called "Hospital") to FTM; and
WHEREAS, the Hoard of Directors of the Foundation, pursuant to Article X of
the Articles of Incorporation, as amended on January 28, 1970, have dissolved
the Foundation and transferred its assets to the New Foundation.
WHEREAS, FTM intends to provide for medical care to indigents of Denton
County, Texas, and tho New Foundation intends to partially reimburse FTM for
such indigent care.
NOW, THEREFORE, in consideration of the promisee and of the mutual
covenants and agreements hereinafter set forth, the parties do hereby represent,
warrant, evvenent and agree as follows.
i
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ARTICLE 1
INDIGENT CARE SERVICES
I.I. Services Provided. Upon and subject to the terms, provisions and
conditions contained herein, FTM hereby agrees to provide indigent care medical
services to the residents c£ Denton County, and the County hereby agrees to
reimburse FTM through the New Foundation for ouch indigent care medical services
provided by FT,-!.
ARTICLE It
DURATION
2.1, Term. The initial term of this Agreement shall, commence on the date
hereof and shall continue and extend for a period of five (S) years from such
date unless this Agreement is terminated at an earlier date as provided for
herein.
2.2. Renewal. At the conclusion of the initial five-year term of this
Agreement, this Agreement may be renewed by mutual consent of County and FTM;
provided, however, that new amounts of reimbursement for indigent -.aie costs
shall be siegotiated by the parties. Notice of an inteniion to renew this
Agreement shall be provided to the other party six (6) months prior to the
expiration of this Agreement.
2,3, Termination. This Agreement shall terminate in the event the Lease
Agreement of even date herewith (the "Lease") by and among County, City and FTM
shall terminate t,y any provision of Article VII of said Lease, In the event
this Agreement shall so terminate, FTM. will have no additional obligation to
provide Indigent care,
I
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ARTICLE III
PAYMENT FOR INDIGENT CARE SERVICES
3,1, Amount, New Foundation shall pay pTM for indigent care services as
provided by FTM an annual amount equal to the New Foundation's return on
investments but in no event less than ten
percent (10x) of its total assets or
more than the total co*,t to FTM for Indigent care services,
3.2. Method of Pa me nt. FTM shall, on or before the tenth day of each
month, notify the New Foundation in writing of the total amount of indigent care
aervicea (as hereinafter defined) provided by it for the Immediately preceding
month calculated in the manner set forth in Section 3,1 above, New Foundation
shall have ten (10) days from the date of receipt of such notice by FTM to
reimburse the amount set forth in such notice at the principal office of FTM or
at such other place as FTH may from i;ime to time designate In writing,
3,3. Monthly Indigent Care Services, As used herein, the term "monthly
indigent care services" shall mean tho amount of all eligible indigent care
serviceh (any cost or expense reimbursable by the Medicare Program) provided by
FTM less any reimbursement for such care paid to FTM by Medicaid and/or third
party health insurance carriers. The total amount of reimbursement for indigent
care aervicea over any twelve (12) calendar months shall not exceed the amount
due as required by Section 3,1 hereinabove.
3,4 BooW k~and Records, For the purpose of ascertaining the amount of
indigent care services reimbursable hereinunder, FTM shall prepare and maintain
adequate books and records which will accurately reflect all revenues and
expenses of such services, New Foundation and/or Coointy and any authorized
representatives of either shall have the r1Fht to examine such books and records
of FTM during the regular business hours of FTM.
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ARTICLE IV
COVENANTS OF FTM
4,1, 5nrvicea Provided. FTM Agrees to provide for and care for all
persons who are residents of Denton County, Texas, and their respective family
members without regard for the ability of such individuals to pay for services
rendered. The following services shall be providedi (a) emergency services in
FTM's emergency room; (b) the delivery of babies, either through FCM's emergency
room physician(s) or through the medical staff of M's hospital and the
Replacement Hospital; and (c) hospitalization care for patients diagnosed by a
Hospital staff physician(s) as requiring such care.
To effectuate the purpose and intent of section 4.1(a), (b), and (c)
hereinabove, FT44 shall ascertain the ability of such patients to pay for
services rendered by requiring each patient to complete the form as set forth in
Exhibit A attached hereto and made a part hereof for all. purposes. In addition
to those patients that qualify for indigent care services by meeting the
qualifications found In Exhibit A and as verified by the completion of the form
as set forth in Exhibit F;, attached hereto and made a part hereof for all
purposes, indigent care shall also cover any patients who are in the custody of
law enforcement officials for purposes of detention in Lounty adult or juvenile
facilities as well as infanta under the age of two (2) years old who are in the
protective custody of County because of neglect, abuse, parental desertion,
birch defects, or for any other reason,
ARTICLE V
COVENANTS OF NEW FOUNDATION
5.1, Reservation of Funds, The New Foundation agrees to annually set
aside funds which will be applied to reimburse FTM for indigent care services
provided pursuant to Article III.
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5.2. Investment of Assets, New Foundation agrees to establish a Board of
Directors of at least five (5) members and which includes at least one (1)
Certified Public Accountant and one (1) Attorney-at-Law, The primary function
of this Board of Directors shall be for the purpose of investing the assets of
New Foundation.
f ARTICLE VI
COVENANTS OF COUNTY
6,1. Contributions to New Foundation. The County agrees to contribute the
entire amount of the proceeds it receives upon dissolution of the Foundation to
New Foundation. The County further agrees to contribute all of the proceeds it
receives from the Lease Agreement dated , 1983, by and
among the City, County, and FTM to the New Foundation.
ARTICLE VII
COVENANTS OF CITY
7.1. Contributions to New Foundation. The City hereby agrees to
contribute the entire amount of the proceeds It receives upon dissolution of the
Foun6&~ion to New Foundation.
ARTICLE VIII
COVENANTS OF FOUNDATION
8.1. Dissolution. The Foundation hereby agrees to dissolve upon the
consummation of the Lease Agreement by and among the City, the County, and FTM.
The Foundation further agrees to distribute its assets pursuant to Article X of
the Articles of Incorporation as amended by the Board of Directors on January
4,~,,? 28, 1970, such distrioution being fifty percent (90x) to both City and County.
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ARTICLE IX
DISPUTES
9.1. Resolution of Disputae. In the event of any dispute arising under
this Agreement among the parties as to a patient's eligibility for financial
responsibility and if the parties shall fall to resolve such dispute within
fifteen (15) days following written notice thereby from any party to the other
parties concerning the existence of such dispute, any party by written notie^
thereof to the other party may request in writing resolution of the dispute by
a Resolution Committee. The Resolution Committee shell be composed of a
representative chosen by the New Foundation, a representative chosen by 1:TM and
a representative chosen by the County. The Resolution Committee shall decide
the dispute within fifteen (15) days of its receipt of the written request for
resolution of the dispute. The decision shall be binding in the parties and
shall be implemented within fifteen (15) days of the Resolution Committee's
decision.
ARTICLE X
MISCELLANEOUS
10.1. Entire Agreement. This Agreement constitutes the sole, only and
entire agreement among the parties with respect to the subject matter hereof and
supercedes all prior agreements, arrangements or understandings, written or
I
oral, between the parties with respect to such subject matter.
10.2, Amendment. No amendment, modification or alteration of the terms,
provisions and conditions of this Agreement shall be binding unless the same
shall be in writing and duly executed by the parties hereto. It is the intent
of the parties hereto that the attached Exhibits,.A and H, will be reviewed
annually. If any any time the present Medicare or Medicaid laws are amended,
the parties agree to review this Agreement including Exhibits A and R in its
entir„ ty.
u
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as
10.3. Notices. Any notice or other communication required by or given
pursuant to this Agreement shall be in writing and shall be delivered in person
or sent by certified or registered United States mall, postage prepaid,
addressed to the other parties to this agreement at the addresses set forth
below or at such other address as such other party shall have theretofore
designated by written notice:
If to FTM; 560 W. Main, Suite 201
Lewisville, Texas 75067
If to the County:
If to the City:
If to the New Foundation:
I If to the Foundation:
10.4. Construction. Should any one or more of the provisions contained in
this Agreement be held for any reason to be invalid, illegal or unenforceable in
any respect, such invalidity, Illegality or unenforceability shall not affect
any other provision hereof and this Agreement shell be construed as if such
provision had never been contained herein.
10.5. Governing Law. This Agreement and the rights and duties of the
parties hereunder shall be governed and construed in accordance with the laws of
the State of Texas.
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10.6, Parties Bound, This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective Legal representatives,
successors and assigns, ,
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first written above.
FIRST TEXAS MEDICAL, INC.
By
Darrell E, Lummus
President
DENTON, COUNTY, TEXAS
By
THE CITI OF DENTON, TEXAS
By
FLOW MEMORIAL HOSPITAL
FOUNDATION, INC.
By
FLOW MEMORIAL FOUNDATION, INC.
By
y
{
EXHIBIT A
INDIVIDUAL WRITTEN NOTICE TO ALL PATIENTS
NOTICE OF AVAILABILITY OF CHARITY CARS
Patient eligibility for charity care is determined by measuring family income
against the Income Poverty Guidelines established by tho Community Services
Administration. The current income requirements are:
Poverty Income Guidelines for Denton County
Family Size Nonfarm family Farm family
1 $4,690 $4,010
2 6,220 5,310
3 7,760 6,610
4 9,300 7,910
5 10,840 91210
6 12,380 10,510
For family units with more than six members, add $1,380 for each additional
member in a nonfarm family and $1,170 for each additional member in a farm
family.
EXHIBIT B
General Hospital
A. REQUEST FOR DETERMINATION OF ELIGIBILITY FOR UNCOMPENSATED S8RVICES
Date of Request:
As provided for in Federal Law, I hereby request that
(name of il
make a written determination of my eligibility for uncompensated servaceslAt)
(name of facility} I understand that the information which I submit
concern ng my annual income and _°amily size is subject to verification by (name
of facility) I also understand that if the information which I submit is _
determined to be false, such a determination will result in a denial of
providing services as uncompensated services, and that I will be liable for
charges for services provided,
1. NAME;
First Middle
Leek
ADDRESS:
Number and Street City State
2p Coe
TELEPHONE NO,: ( )
2. OCCUPATION:
EMPLOYER:
3, INCOME: List income for family from:
Total for Total for
Last 3 months_ Last 12 months
Wages ...........................................W
Farm or ael£-employment:,....,,,,,
Public Assistance,,,....,.......
Social Security......
Unemployment Compensation.....,
Workman's Compensation
Strike Benefits,,,,,,,,,,,,,,,,,,, ,
Alimony..., 11.1
Child Support
Military Family Allotments,,,,,,,,,,,,,,,,,,, ,
Pensions
tncome from Dividends, IntorAt,
4. FAMILY SIZE:
Name Relationahln
5. Type of Service required: _
I affirm that the following information is true and correct to the best of my
knowledge,
Date Sign Cure Parson making Request
'a
5Exhibit B, Page 2
B. DETERMINATION OF ELIGIBILITY
1. Income
a. Total income for last 3 mos. $ " X 4 $
b. Total income for last 12 mos. $
2. If the patient's statement of income was verified by the time the
determination was made, stipulate exactly what information was used, the
content of the Information, and the source (name and phone number) of
the person providing verification.
3. The applicant iss Eligible For, No-Pay - Part-pay - care.
Ineligible
if part-pay, indicate the percent of the charges or the dollar amount
which will be charged to the patient
I
4. The type of service requested; is
will be
was
available to the patient (date).
5. If uncompensated or part-pay care is denied, state the reasons for the
I denial;
k
Date of determination of eligibility or denial or uncompensated aervicess
Signed;
a gnature o person making
eligibility determination)
Date Applicant was provided with a copy of determinations
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BYLR1ti'Sy
W
OP I
FI,O.-_ f~1'~_~~ttJ'Al HOSI~IT1r~ F'GIJ'Dr17'T.Q:~ nrC. f
i
RTICt4f I
I~i~ TIRPO RP;
anallTbe purpose
of Flow bfemor.tal Hospital Foundation, Inc.
sh: To take, hold, receive and manage all property
ordtransferred toyite andoto holds usedandemanage conveyed
as well as the profits, rents and income therefrom, forathe the s,
use and benflt of Flow Memorial Hospital of Denton, Texas,
and to thereby preserve, stimulate and perpetuate high
quality hospital and medical care for the inhabitants of
Denton County, Texas.
i
ARTICL , rr
4FFICRS
The offices of the corporation shall be at Flow Memorial
Hospital, 1310 scripture street, Denton, Texas, or at -such
other place as the Board of Directors may hereafter designate.
+ ARTY, RLF Iix .
BOARD OF DIRCCq,CRs
SECT Oid 1. umber and perm o£ OfFic Tl~a business
anc, affairs of the corporation shall be managed and property
by its Board of Directors. The Board of Directors shall consist
of nine (9) membors. The Board of Directors named in the
Articles of incorporation shall constitute the initial Board
of Directors. The terms of the initial Board of Directors shall
be determined 'by the e -awing of lots, and it shall be so
determined that the, terms of three (3) of such Directors shall
expire on January 1, 1969; the terms of an adQitional three (3)
of such Directors shall expire on aanuary 1, 19701 and the terms
of the remaining three (3) of such Directors shall w-pire on
January 1, 1971. All subsequont• members of the Board of
Directors shall be appointed for three (3),year terms.
.wM. v
S Ci'70f1 111~noilltmcnt cif T)ircr.i;or. All Dir.cct:ors shc.J..l
be appointed to such office by the rD.zrd Of'. idan.zcJers of P1 c,,,;
Memorial 110spi.tal of Denton, Texas, At all times, t:hu Boarcl
of Directors shall be compor3ed of three (3) members t•111o are
members of the Board of Tanagers of I'low Memorial hospital,
and not members of the medical staff of Flow Memorial Hospital
in any capacity: three (3) m^mbers who are members of the
active, consulting, or honorary medical staff of rlow I-lemorial
hospital, and not mn.nbers of the Board of Managers of Flo-vi
. Memorial Hospital: and three (3) members who are reputable
r residents of Denton County, Texas, who are not members of the
Board of Managers of Flow Memorial hospital. or members of t11e
medical staff of Flow memorial Hospital in any capacity,
ECTTOLT 3. Vacancies,. In the case of any vacancy in the
Board of Directors through do^th, resignation, or other cause
whatsoever, the chairman of the Board of Directors shall p1.dmptly
notify the Chairman of the Board of Managers of Flog! Memorial
Hospital of such vacancy, and request that an appointment be
made immediately to fill such vacancy for the unexpired portion
of the term.
SECTION 4. Meetin s, Meetings of the Board of Directors
shall be hold whenever called by the Chairman, or by a majority
of,the Directors, but in any event not less often than once
C each quarter-year. Any Director ~:ho shall fail to attend
three (3) consecutive meetings of the Board of Directors,
and shall fail to show good cause for such absence, shall be
disqualified to serve further as a Director, and a vacancy
shall be deemed to have occurred.
SECTION 5. Notice of Meetings. The secretary shall causm
notice t; -be made to each Director of the time and place of
each meeting of the Board of Directors, such notice may be in
writing, in person, or by telephone.
ECTION 6. UORIJ%1. A majority of the Board of Directors
shall constitute a quorum for the transaction of any business
of,the corporation,
SECTION 7,S Order of Business. At meetings of the Board of
Directors, business shall be transacted in such order as from
time to time the Board of Directors may dote-.-nlne. At all
meetings of the Board of Directors, the Chairman or in his
absence the Vice,-Chairman, shall preside, The: Sccre;.ary of
the corporation shall act; as Secretary at all meetings of the
Board of Directors, and in case of his absence, the Chairman
shall designate any person to act as Secretary,,
Si.C'i'1'<,'t FT^ Advisnrt V('7• rd. The Ilvxlyd of Directors shall
be autthori::ed~to appoint an i\clvi:,ory roard of Dircctors fo2•
such te111100 as may ))a prescribed by ilia Board c ° Directors.
The Advisory Board of Dircctors, at the discretio7 of the
Board of Directors, may be c:cl.lcd Open to assist, advi';o
and consult with the I30a1•cl of Dircctors concerning the
business, propc?ty and ,ffairr, of the corporation. only
those persons deemed to be leaders in their community,
interested in the objectives and purpose:; of the corporation,
and who make continuing contributions, financially or othenvise,
directly or in:lS,roctly, shall be qualified for membership oil the
Advisory Board of Directors.
SECCTJO,v 9. Voti.ncf. All acticn of the Board of Directors
shall occur upon the vote of a simple majority of the Board
I of Directors, except as may ba othe n:,ise prescribed herein.
SCCTIOi1 20. Parliamentarv Procedures Any question of
parliamentary procedure shall bo decided according to Robert's
Rules of Order.
SECTION 11. Committees. The Board of Directors shall name
and select various committees for such purposes and tenures
as may be specified by the board of Directors.
SrCTIO~ 12. Acluit. It shall ba the duty of the Board of
Directors to have an aduit made of the business, property
and affairs of the corporation by some certified public acccunt-
ant, not less often than annually, at the end of each accounting
year. A copy of said completed audit shall be delivered
to the Board of Managers of Flow Memorial Ilospital, and to sllch
other persons, groups, bodies and organizations as the Board
of Directors in their discretion shall deem best and wise.
ARTICLE IV
OFE`IMS AND DUTIES
,
SFCT:COP1 1. General.. Officers of the corporation shall, consist
of a President, Vice President, Secretary, and Treasurer, each
of whom shall be a member of On Board of Directors, Officers
shall be elected by the Board of Directors at the initial
organizational meeting of the Board of Directors in 1968, and
during the month oi',Fanuary of each year thereafter.
SBCT2ot_1 9, President. The president nhill also serve as Chair-
man of the Board of Directors and shall preside at all meetings.
Ho shall perform all duties incident thoroto, and recommend
such action as he believes will increane the effectiveness of
I
the corporation. The presio lit z3hall be
the
officer of the corporation, and shall be Chie£ F.-e
authority as ma vestec; urith sushi✓e
E3oi,rd of D'arector.os, he conferred upon biro by Resolution of the
SC__C'rIOi1 3. Vice Pros dent, The vio-sid
e es Vice-Chairmw-n of the Bo~Zr icofrDirecent Shall also tors, serve
in t}ze absence of the Chairman, preside at all me,
He shall assur.,e and shall,
assi nod to him such responsibilities and duties asim. *be
g by the president.
-SCCT20N ¢
Se ere t a rv
true and accurate minutes }~o£Seachtmee shall cause '.-p
Directors, and he s}fting of the Boaordeor. t
of Managers of Flow Alemoralalos piat calopy thereof
any such meeting of within tcnod~ys aBoard
fter
notice of all meotig the i Board accord cDir 'ect lors, He Shall 91110
the corporation, and he shall have charge ohetlBie sealaws of
corporation, e s of
£ the
SECTION 5• Treasurer.
for receiving nisburThe Treasurer shall. be
shall kee 1 forpo of on coxporatponsiblo
name, nLp roall monies of the corporation deposited t and
requested bg intervals, and at such ot as is
make re by the e Board of Directors her times
, the Treasurer shall ,
financial condition t1~o Board of D
dition of the irectors, concerning the
official custodian of all fcorporat.ion• He shall be the
Corporation, and unds and securities of the
other depositand shall tecosit the same in such banks or
or approve. He s}~a].Z sin Board ors
f Directors may designate urs
of the funds of the cosgn all chucks Cover.in
counter-s,igned
t the Pporation,and such checksishallebenL
by sident or
Board of Directors shal
a fidelity l require theiCe president. The
bond, issued l Treasurer to furnish
amount as the Board of y a corporate .surety, in such
y from time to Lime determine,
conditioned that the Treasurerrsill well and faithfully
S per-
bond she duties of his office. The premium expense for
. paid by the corporation, such
ART CLE V
CCr~ .p___T_S _ATID DTsBURS rbjr iTS
SEC2'ION l
in'discretion, ` t" r CoVQ--d The Board of
personal and accept Directors may,
wise, Promo 71mixed, b Way of property, vil r real,
Y peroony fir, i' bequest, or de devise,or other-
trust, or corporation, to be hold,
I
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administered and disposed of
wishes, directions and condition s cofrth"ce with , ho,vevcr kh desires,
sprucovih properted
d y Lhat gift, bequest; Or,ldevise co f
conditioned orslnal.1 be received and acc, f any
limited in such rnanner. ptecl if it be
disposition of the as'
s sh
or organization Other thanal or income h eof all to an require
s
charitable organization" l'loa, PlemorialNo
spital, of per on
purposes" within the meaninoi for other than 11
r ternal Revenue g Of such tc charitable
Inboard of Directors ode; or as shall, in the oop defined by
exemption of this corporation: or federal incomentay the tile
of the board of Directors °r as shall
be, in conflict with the opinion
-SECTION E- 2 bisbursement2, these 8Y_Laws
Payments and distributions The board of Directo
to or for the use and from income or p l, shal2 malt:
such time as the u rffit of l'loty Memor.ial ncl or both
,
best and wish a board of Directors in its discretion2` at
purposes for which tneconnection therewith, d
and deem;
expended payments oss
, or the use to which the disbursementsnate the
provided, however, in no event property all beshatl be
bursements ever be used for theshall the put,
expenses of Plow Memorial payment of the and dis-
Hospital, of the operating
C SEC 41
T- 3 Accumulation of
shad at least annua22 Income, The board of D
Income or past act Y distribute such Directors
avoid " umulation of income part of the current
unreasonable accumulation of incasomeis necessary the
sary to
meaning of 'such terms as defined b
Code, Y the Internal Revenue
SECN Prohibit:a
or property of th- o Disbursements, No part of the
or for the benefit of aporation shall inure or be funds
organization, exce t private individual or a non-charitable
for services rende .
redf or authorized salaries or compensation
labor performed.
_ ARTICLE vj
Q SECTION 1. Distribution
the corporation o Assess` Upon the
, a
paying_.or..ma g if ever, the board of birectorss of
the Co kin provision for Shall, of all liabilities
-xpor~t,~on dda VQk' after
to Flow hiemoriq~ Hospital the roma nlhy hadin-ty...
.nf, tlio...cprposZtion
then be "Charitable organization',,as thatste
by the Infernal Revenue Coda , provided it shall
Hospital is not a "charitable, organIn th ization"e n Flow Memoriald
C as so doflned,
~ y
then said remaining assets shall be delivered iec^u.i1
sharos to the City of Danton, Texas, and the Con
of
Denton, Texasp and to be used by r1ow A;emor.ial Hospital,
or the City of Denton, Texas, and the County of Denton,
Texas, as the case may be, tor. the furtherance of project,,
O in 1{ne with the purposes for which this corporation was
created.
ARTICLE VTI
A hiCD1Dt~E t;T S
SRCTIOIJ 1, Procedure. The Board of Directors, by the
affirmative vote of six (6) members thereof, may alter or
11 amend the By-Laws of the corporation, at any meeting,
regular or special, piovidod that thirty (30) days
E notice of such intent to amend or alter the By-Laws, and ,
the exact nature of such proposed amendment shall have
first been given to each member of the Board of Directors
bL writing.
r
0 ~
L
AMENDMENT 7'O Ti11J BYLAWS OF
r~ FLOW AIL'I4IORIAL HOSPITAL FOUNDATION, INC.
J
I
ARTICLE V:
SEC'T'ION Disbursements, The Board of Directors shall make payments
and disbursements fromcom0 or principle, or both, to or for the use and
benefit of FTo%v Memorial Hospital, at such time as thend daBoisaburdrss Directors in
Its discretion deems best and Svlsh. Such payments ements will n
based upon an assessment of the purpose and need of particular items of equip-
ment in order to attain the stated purpose of the Foundation,
l_
DULY APPROVED BY THE
BOARD OF DIRECTORS
FLOW MEMORIAL HOSPI'T'AL FOUNDATION
JULY 10, 1075
i
l
r
AMENDMENTS TO THE 13YLAWS
PLow NIENIOULIL HOSPITAL FOUNDATION, INC.
Article III, Section 2
~11_pointment of Directors. At all times, the Board of Directors shall be
composed of three 3 members who are members of the Board of Directors of
Plow Memorial hospital and not nembers of the medical staff of Flow ,Wemorial
Hospital in any capacityl three (3) members who are ruembers of the active, con-
sulting, or honorary medical staff of Flow Memorial Hospital, and not members
of the Board of Directors of Plow Memorial Hospital, and three (3) members who
E are reputable residents of Denton County, Texas, who are not members of the
Board of Directors of Flow Memorial Hospital or members of the medical staff
k of Clow Memorial Hospital In any capacity.
Article III, Sectlon 3
Vacancies. In the case of any vacancy In the Board of Directors through
death, resignation, or other cause whatsoever, the Chairman of the Board of
Directors shall promptly appoint a nominating committee to make a recommendation
t•) the Board of Directors to fill such vacancy, Such nominating committee shall
c,)nfer with the Ward of Direct->rs of Flow Memorial I1->spital for nominees to fill
such vacancy,
A1'1'12OVE'D BY THE 130ARD OF DIREC'T'ORS, FLOW MEMORIAL IiOSP1TAI,
1,'OIINDATION, INC, FEBRUARY 12, 1970,
AUG 2 4
A C S Ff
wryofVENTON,T!!XA8 MUNICIPAL BUILDING / DENtON, M
7EXA5 7b20I / reL EPHONE (8171566.8200
Office of City Attorney
r
August 23, 1988
Sennett Kirk, President
Flow Regional Medical Center
218 N. Elm Street
Denton, Texaa 76201
Charles Linton, Administrator
Flow Regional Medical Center
1310 Scripture
Denton, Texas 76201
Res Utility Accounts with the
City of Denton
Dear Gentlemen; that Medical clCenter have
Y You that Flow Regional
is in a de fault I of ticity ordinances a
Settlement Agreement to the litigation between the and the
City of
Denton, County of Denton and Flow Memorial Hospital, which was
executed in December, 1987, Article 5.3 of the Settlement
►greement provides that,,
Flow Regional Medical Center shall pa all utility, bills
presented for payment by Denton on or after January 1
on or before the due date set forth in the' utility
question. In bill in
the event that the Medical Center fails to pay
any utility bill on or before the due date set forth in such
bill, all amounts then owed Denton by the Medical Center,
.including, without limitation, the Utit
($226,000.00), shall immediately become due andliowing Dana
utility service shall be terminated until such amounts are
laid in full.
I am informed that Flow has been billed $65,237.20 for the
months of May, June and July.
1
Senlett Kirk, President
Charles Linton, Administrator
Flog Regional Medical Center
Page 2
Please inform us of your intentions with respect to this
outstanding balance not later than Monday, August 29, 1988 so
that city officials may determine what further legal action the
city will take.
Very truly yours,
Debra Drayovitch
City Attorney
DAD/1h
cc: Lloyd Harrell, Cityyl4ana er
John McGrane, Director of Finance
Bernie Duco, Attorney at Law
2466L
lja I'd =l 1~' ri i I 1. 'i 1:1 E: a;
iN Al:.l [AIIJI' P'I I`1Ei(il :i l L;l.llf l':)d1 1' NO I:: fil:i?17::1$1: Al ;O iE ;c;J • .
a Ci(10i30 t'1; :0i)I)I:;: LI',L U..1 F1, L'.d l;E ':a aE;11.. P1::I"M'CAI- s--t 0 A:11C S3I ; i3:P LURE:
1I'111J3:
11: 1h3[I(R;r`~!<"':D",'i'::'::'q! 0:: "I I:!•1 !{C~;I~:1)~ri.. I'E:: )::Cii 111 qla: it ."iC:VI='
3 D01)Q[12'1! (I•'!1111:. 5::! FI,L4 E:1 .7:11"NPll.. CA I.. Ila 'l6 s111.3:f'fURE:
I =1 1) 0 V 0111- <:E) 'V''I1u 1 0;: t.C FtI I I (1611 i,. 1'1:: I:fi . F.{.1 11 1 1 (;R'I1:11'01 9:: G;
e 111Q1)+304117 1)'.'4 i:L fC; L(i,1 ;.E;3:;ti ;)!.P9:G1:C;aI t•Ir G'1;11.0 13 C' 1;3Y, 'I". I RE
Gil 3 t1 0 1 rI Ij 1 ! G3 1..I:!,I t11141a11,A . 1'I:: ?::C.4 + + ; rl I Il it !:'i11't 11:11'UId'3
0(I 1)00111;:117 ;A 06 F1-LI.J I;:E:•:;::'i;ld;dl.. P)E:I}:3:(:Al.. 1.-s{. C:1' 1.Q 3Liij:t'1'1'l.Ifd:
August 17, 1988
$20,422.70 last payment received 07/06/88 for April Billings.
I
Current Bills $17,989.15 Due Aug 30, 1988
30 Days Arrears 23,782.11 Jul
60 Days Arrears 23,465.94 Jun
90 Days Arrears 19,864.65 May
Total Due $85,001.85 of which $67,112.70 is over 30 days delinquent
) r
)
.mot
I
C1rYo1 DENWN, rEXAS MUNICIPAL SUILDINC / DENTON, TEXAS 76201 / TELEPHONE (817) 566.8100 E
Office of City Attorney
TO: Honorable Mayor and Members of the City Council
FROM: Debra A. Drayovitch, City Attorney
SUBJECT: Flow Transfer Closing
DATE: January 13, 1988
The closing of the transfer of Flow Memorial Hospital is
scheduled for 10:00 a.m, Friday, January 15, 1988 at the
Hospital, I have waited on notifying you until I received
assurances it will go as planned,
Ed Hopkin's associate just informed me that he has 80 percent of
the assignments of the various accounts and lease-purchaoes
completed and hopes to have the rest by Friday. Should something
unexpected come up, Jeanette will give you a call.
Otherwise, if your schedule permits, you may wish to attend this
truly significant event.
Respectfully submitted,
DEER 1(j.g DRAY0VITCH
DAD:js
xe: Lloyd V. Harrell, City Manager,/
i
Attachments
26341
N F W S R F L F A S F
RAY S'fLpHF.NS, MAYOR
CITY OF DFNTON
FOR IMMEDIATE, RFLFASF
November 20, 1987
At this moment
agreement for saving FlowitMemorial Hospitatlrhasi blee!, when an
want to extend hearty congratulations to all parties that ~c'have
responded so affirmatively to the overwhelming challenge b
us, The specific measures for this achievement have been
spelled out on a separate sheet to be distributed, before
To carry cut a success
various entities ful public health care
program, in this plan have the
vehicle for the Mow Regional Medial Center to be successful,
I recognize that In a way this could the
beginning- be considered only s the
g. An integral aspect of Flow's future successarests
wlonneedfhealthmcireeto utflizerr tile physicians services of t~glofgoro citizens
The immediate concern of the new not-for-profit corporation is
in carrying purpose of the great work
endorsed by out the
of Denton, the Count program now b
y current blow Hospital Board, the Flow Y of Denton , the
Off;ce of the Texas Attorney General, As Foundation, and
called upon to work with and to assist In ttzens'unmistre nthe
o
march to recovery, ills This event takes on greater significance because It
during a time when many public hospitals across tine statechav0
been forced to close their doors, The successful completion of
this transfer of Flo w
not-for-profit corporationilisptheldawnina f Bel board
Hos i tal to provide health care for alg
new day for Florw
county community at large,
l persons In the Denton
In the give and take of our negotiations
ObJlecict'vheeal11th carebeef]
factile
i}lt preservation of Flow Hospita]rraSing
sometimes heated exchanges yr,iii h ~ayeg811ng, controversies, and
about Flow Hospital in recent characterized discussions
years have given rosy in the last
few weeks to productive efforts which have resulted in this
historic
to occasion when all parties have united with one
savo Flow Memorial Hospital, goal
3720m
N E W S R E L B A S B
RAY STEPHENS, MAYOR
CITY OF DENTON
FOR IMMEDIATE RELEASE
November 20,,1967
At this moment of triumph for all our citizens when an
agreement for saving flow Memorial Hospital has been reached, I
want to extend hearty congratulations to all parties that have
responded so affirmatively to the overwhelming challenge before
us, The specific measures for this achievement have been
spelled out on a separate sheet to be distributed.
j To carry out a successful public health care program, the
Regionali Medial Center havebprovided the
successful.
vehicle { r the tities Flow associated
I recognize that in a way this could be considered only as the
beeginning. An integral aspect of Flow's future success rests
j whonna healthmcareeto utilizeuthehserviices ofnFlowom citizens
eed E
The immediate concern of the new not-for-profit corporation is
in carrying out the purpose of the great work program now being ton endorsed the City °Boardt0ntliethFlowu Foundation, and
tthe he
cur . r Flow Hospital , Cal., Upon the Texas ework Awitheandetoraassists In this s,unmwe are now
istakable
march to recovery,
This event takes on greater significance because it occurs
during a time when many public hospitals across the state have
of seF.tow irHosdoorZ, pital The auc localul boardcompletion of the
been this forced t close
not•for-profit corporation is the dawning of a new day for Vlow
Hospital to provide heath %are for all persons in the Denton
County community at largo.
In the give and takia of our negotiations, the overriding
objective has been the preservation of Flow Hospital as a
public health care facil ty~ The haggling, controversies, and
sometimes heated exchanp.'s which have characterized discussions
about Flow Hospital in i:tcent years have given way in the last
few weeks to productive efforts which have resulted in this
historic occasion when all parties have united with one goal,
to save Flow Memorial Hospital. ti
3720M
~
PU
r
ciryof 0ENTON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS 78201 / TELEPHONE {817) 588.8307
Office of the C11Y Manager
M E M 0 R A ND UM
1 ~
TO: DISTRIBUTION LISTS 1, 11, F III
FROM: Lloyd V. Harrell, City Manager
DATE: November 23, 1987
SUBJECT: SETTLEMENT REGARDING FLOW HOSPITAL
As you have likely read in the newspaper, all of the affected
entities signed an agreement on Friday which should provide
Flow Memorial Hospital with enough financial support that it
will have a reasonable chance to survive. This issue has
consumed a vast amount of the time of the City Council over the
last few years, and they unanimously supported this agreement
which should put this issue behind us.
Although the settlement does call for the City to make a fairly
substantial contribution to Flow Hospital ($600,000 over the
next three years), the arrangement was carefully structured so
as to minimize the impact on City operating budgets. This
year, the budget already contains enough funds to fulfill the
City's monetary pledge. Therefore, no budget adjustments will
be required because of the Council's commitment to Flow
Hospital, Likewise, our remaining contribution has been
structured so that $200,000 will be forwarded during fiscal
years 1988-89 and 1989-90. Since those yearly contributions
are similar to the amount pledged this year, it is felt it
should be within the City's financial ability to make this
allocation.
The final commitment from the City was to delay the payment of
the past due Flow utility bill until October 1, 1990. Council
felt that it would be better to delay the repayment of the
utility bill than force the hospital to close, and therefore
risk the possibility of not receiving any type of utility
payment,
Settlement Regarding Glow Hospital
November 23, 1987
Page 2
7
The agreement calls for the hospital to be transferred from the
City and County ownership to a new SO1C not-for-profit
corporation by January 1, 1988. Thereafter, the City should be
separated from he hospital and should not be exposed to yearly
requests for operating funds in the future.
The only remaining financial question for the City is our
share, If any, of Indigent health care expenses, Under the
agreed settlement, the County will pay 100% of the indigent
care costs but does reserve the right to bring suit in order to
determine whether the City has any legal liability for these
payments. The Council members have indicated that they are
willing to mount a vigorous defense alleging that indigent
health care is a County responsibility and should not he a
responsibility of the City of Denton. If the Count,., pursues
litigation regarding this matter, it will likely he a number of
years until the Issue is finally resolved and any ongoing
financial obligation of the city is assessed,
In conclusion, it appears as if the City Council has structured
an agreement which although providing Flow Hospital with
emergency funding which it needs to have a chance to survive,
does not have any kind of immediate negative implications
regarding the City's operating budgets, Please provide
assurance to your personnel that no budget reductions will be
required tinder the settlement terms agreed upon for Plow
Memorial Hospital.
If you will post this memorandum in a conspicuous place within
your work area, it may be of interest to all of our employees.
Thank you for your consideration.
o arre
City Manager
LH:bw
3725M
FLOW HOSPITAL - NEWS RELEASE November 18, 1987
The Flow Memorial Hospital Board of Trustees han voted today to accept the tentative
settlement proposal previously adopted by the Denton County Commissioners Court, the
Denton City Council and the Attorney General's Office on behalf of the the H.B. Flow
Trust, subject to finalizing the details of the settlement. While this settlement
does not include the entire amount of financial assistance that the Board and
management of Flow Memorial Hospital believes the hospital needs, we do believe
that the amount of immediate assistance proposed to be made available to the hospital
will enable Flow Memorial Hospital to continue to operate,
Obvioualy, the ¢400,000 loan proposed by the City will help alleviate the immediate
cash flow problems of the hospital, but only if 1) a loan and willing lender are in
fact available, 2) the repayment terms of the loan are not such as to impair the
cash flow of the hospital during the term of the loan and 3) the collateral required
as security for the loan is not such as to impair the ability of the hospital to
obtain other working capital loans is may be necessary over the next few years. To
our knowledge these items have not yet been finalized.
This settlement will prove to be a good one for Flow Memorial Hospital and the
people of Denton County if all parties making commitments under the settlement
can actually deliver upon them within the short time fr - In which action '.is
necessary to keep the hospital open. The public should stso he aware that to succeed
under the terms of this settlement, the hospital will tined strong governance
from the new entity owning and operating the hospital, extraordinary management in
an increasing competitive market and difficult econumic,timee, and an even more
extraordinary level of community support for the new nonprofit Flow Memorial
Hospital. That support must include a commitment from physicians and residents of
Denton County to utilize what we believe is an excellent health care facility, and an
equally strong financial commitment from the residents of Denton County who are
able to make charitable donations to the hospital.
The Flow Memorial Hospital. Board of Trustees is committed to working aggressively
between now and January 1, 1988 to conclude the details of this settlement, to +!+bose
of the pending lawsuit, and to transfer ownership of Flow Memorial Hospital to ti
Board's nonprofit successor, We appreciate the efforts of all other parties involved
in arriving at this tentative settlement, and we expect no leas than their best
and most aggressive efforts to bring this matter to a conclusion for the benefit
of the residents of Denton County,
sp.'fTUNIE T PROPOSAL
NOVEMM 20, 1987
CITY OF DENTON
1. Contribute $200,000 in fiscal year 1987-88 to be used to pay
off old accounts payable.,
2. Defer payment of past-due utility bill (Approx. $226,000)
until October 1, 1990.
3. Repay Flow Memorial Hospital for loan ($200,000 in 88.89;
$200,000 in 89-90) provided the hospital continues to operate
pursuant to service contracts with plow.
4, Assume City liabilities, if any, of plow Hospital debts and
any County liabilities, if any, of Flow Memorial Hospif:al, the
total of both not to exceed ,$400,000; provided however, that
the City and County agree to assume 50% each of liabilities,
if any, arising from 197S and 1975A bond issues. Liabilities,
if any, in excess of $400,000 will be equally funded by City
and County until assets are liquidated.
5. Reserve security interest in fixed assets to extent of
liability; otherwise transfer all interest to non-profit
entity by January 1, 1988.
FLOW MEMORIAL FOUNDATION
1. Provide $400,000 collateral for a bank loan of $400,000 to the
non-profit entity by January 1, 1988, to be used to pay off
old accounts payable,
2. Continue present payments on equipment (Approx. $23,000 me.).
DENTON COUNTY
1, Assume cost of indigent health care, effective September 1,
19870 reserving right to litigate City liability, (Approx.
$1.2 million annually), Should future litigation determine
that the City is responsible for a portion of indigent health
costs, the following payments will be credited against the
City's obligation:
(1) The $250,000 paid to plow hospital in 1986-87.
t
(2) The $600,000 "up front" payment provided for In this
agreement.
(3) An amount equivalent to annual interest of 8% on the
$2260000 utility bill from the time due until the time
paid.
2. Transfer all interest in assets of hospital to non-profit
entity by -January 1, 1988.
3. Release all claims against City of Denton, except indigent
lies Ith care.
PLOW HOSPITAL BOARD OF DIRECTORS
1. Transfer all assets and obligations of flow Memorial Hospital
to a different entity by January 1, 1988.
2. Release all claims against City and County,
3. Agrees to keep all current utility bills paid and to begin
retiring the $226,000 outstanding bill, one-half on October 1,
1990 and the remainder In six equal monthly installments; and
501(c) 3 specifically assumes obligations and the statute of
limitations is waived.
OTHER ENTITIES
1. Non-profit entity agrees to assume assets and obligations by
January 1, 1988.
2. Attorney General approves settlement and agreed judgment.
3. Non-profit entity agrees to secure $400,000 loan from a third
party by January 1, 1988 and to utilize the $200,000 payment
from the City in 1988-89 and the $200,000 payment from the
City In 1989.90 to repay the loan,
2100E
FLOW HOSPITAL - NEWS RELEASE November 18, 1987
The Flow Memorial Hospital hoard of Trustees has voted today to accept the tentative
settlement proposal previously adopted by the Denton County Commissioners Court, the
Denton City Council and the Attorney General's Office on behalf of the the H.E. Flow
Trust, subject to finalizing the details of the settlement. While this settlement
does not include the entire amount of financial assistance that the Board and
management of Flow Memorial Hospital believes the hospital needs, we do believe
that the amount of immediate assistance proposed to be made available to the hospital
will enable Flow Memorial Hospital to continue to operate.
Obviously, the $400,000 loan proposed by the City will help alleviate the immediate
cash flow problems of the hospital, but only if 1) a loan and willing lender are in
fact available, 2) the repayment terms of the loan are not such as to impair the
cash flow of the hospital during the term of t„° loan and 3) the collateral required
as security for the loan is not such as to impai rho ability of the hospital to
obtain other working capital loans as may be ueceL•11•y over the next few years. To
our knowledge these items have not yet been finalized.
This settlement will prove to be a good one for Flow Memorial Hospital and the
people of Denton County if all parties making commitments under the settlement
can actually deliver upon them within the short time frame in which aetion'.is
necessary to keep the hospital open. The public should also be aware that to succeed
under the terms of this settlement, the hospital will need strong governance
from the new entity owning and operating the hospital, extraordinary management in
an increasing competitive market and difficult economic times, and an even more
extraordinary level of community support for the new nonprofit Flow Memorial
Hospital. That support must include a commitment from physicians and residents of
Denton County to utilize what we believe is an excellent health care facility, and an
equally strong financial commitment from the residents of Denton County who are
able to make charitable donations to the hospital.
The Flow Memorial Hospital Board of Trustees is committed to working aggressively
between now and January 1, 1988 to conclude the details of this settlement, to dispose
of the pending lawsuit, and to transfer ownership of Flow Memorial Hospital to the
Board's nonprofit successor. We appreciate the efforts of all other parties involved
in arriving at this tentative settlement, and we expect no less than their best
and moat aggressive efforts to bring this matter to a conclusion for the benefit
of the residents of Denton County.
1
cfry of DBNroN, rEXAS MUNICIPAL BUILDING / DENTON, TEXAS 76201 / TELEPHONE (817) 688.8907
Office of the City Menages
f ~
NEWS RELEASE - DENTON CITY COUNCIL
NOVEMBER 17, 1987
At our City Council session held earlier this evening, the
Denton City Council voted to approve the Settlement
Counter-Proposal for Flow Memorial Hospital dated November 13,
1987, This is (lie same proposal which was endorsed and
approved by the Denton County Commissioners Court at their
session yesterday and which the Attorney General's Office has
recommended that the Flow Board of Directors accept.
The City and County feel that the proposal effectively meets
the requests of the Flow Hospital management firm as outlined
in their presentation October 23, 1987. 'Pile settlement
Counter-Proposal is attached and calls for various
responsibilities on the part of the numerous entities which are
involved with Flow Hospital. The City Council sincerely hopes
that the flow Board of Directors and the new corporation will
join with the City and the County in endorsing this Settlement
Counter-Proposal on Friday so that Flow Hospital will obtain
the funds which it so desperately needs in order to keep
operating.
Although the City recognizes that this proposed settlement
placos substantial financial obligations and burdens on the
City when there is no legal obligation to undertake such
responsibility, the Council feels that such a compromise is
warranted in order to save Flow Hospital.
37101
,
t
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SETTLEMENT COUNTER - P OPOSAL
CIT DENTO 0 1~~N ;r tai ' `-_r: ~
CITY OF DENTON
11 Contribute $200,000 in fiscal year 1987-88 to be used to pay off old accounts
payable,
2, Defer payment of past-due utility bill (Approx, $226,000) until October 1,
1990.
r~ 3. Repay Flow Memorial Hospital for loan ($200,000 in 88-891 $200,000 in 89-90)
provided the hospital continues to operate pursuant to service contracts with
Flow,
4. Assume City liabilities, if any, of Flow Hospital debts and any County
liabilities, if any, of Flow Memorial Hospital, the total of both not to
exceed $400,0001 provided however, that the City and County agree to assume
50% each of liabilities, if any, arising from 1975 and 1975A bond issues.
Liabilities, if any, in excess of $400,000 will be jointly funded by City and
County until assets are liquidated,
5. Reserve seoltrity interest in fixed assets to extent of liabilityi otherwise
transfer all interest to entity by January 1, 1988,
mm,
FLOW MEMORIAL FOUNDATION
1, Provide loan of $400,000 to hospital by January 1, 1988, to be used to pay off
old accounts payablos,.
2. Continue present payment on equipment (Approx, $23000 mo.),
DENTON COUNTY
1, Assume cost of indigent health oars, effective September 1, 1987, reserving
right to litigate City liability, (Approx. $1,2 million annually). Should
future litigation determine that the City is responsible for a portion of
indigent health coats, the following payments will be credited against the
City's obligations
1) The 250,000 ?aid to Flow Hospital in 1986-87.
~2) The 600,000 'up front" payment provided for in this agreement,
(3) An amount equivalent to annual interest of 8% on the $226,000
utility bill from the time due until the time
t~ipoid.
2, Transfer all interest in assets of hospital to d~ t entity by January 1,
1988,
3. Release all claims against City of Denton, except indigent health care,
FLOW HOSPITAL BOARD OF DIRECTORS
1, Transfer all assets and obligations of Flow Memorial Hospital to a M464"rout
entity by January It 1968,
2, Release all claims against City and county,
3, Agrees to keep all current utility bills paid and to begin retiring the
$226,000 outstanding bill, one-half on October 10 1990 and the remainder in
six equal monthly installmentel and 90103 specifically assumes obligation and
the statute of limitations is waived,
1 r.,
y<j~
t
Y
o
SETTLEMENT COUNTER -PROPOSAL
November 13, 1987
Page 2
OTHER ENTITIES
4447 4~t
11 Hentity agrees to assume assets and obligations by January 1, 1988.
2, Attorney General approves settlement and agreed judgment.
3704M
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PRESS RELEASE - FLOW MEMORIAL HOSPITAL - NOVEMBER 16, 1987
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Tim ATTORNEY GF NERAL
OF Tr7Y4►t3
.~TTUI(\k7Y (1Y7\1171tAL
November 17, 1987
r
For Immediate Release: Contact; Ann Kitchen (512) 463-2002
(214) 742-8944
Shelia Enid Cheaney (512) 463-2002
The Attorney General's Office applauds the City of Denton and Denton
County for their efforts in resolving their differences and reaching an
agreement that will allow Flow Memorial Hospital to remain open. The
Hospital Board asked for $575,000 immediate cash and the payment of
$400,000 indigent health care costs. The City, with the aid of a loan from
a third party, has agreed to provide $600,000 in immediate cash, $25,000
more than the Hospital asked for at this time. In addition the City has
agreed to defer payment of a $225,000 utility bill for three years. The
County has agreed to pay the $400,000 in indigent health care and
continue to be responsible for 100% of indigent health care until that issue
is finally resolved in court between the City and the County,
This Office recognizes that in the settlement process all parties must
compromise. Given the time constraints necessary to keep Flow Memorial
Hospital open, settlement is the most expeditious way at this point to keep
the Hospital open and to reach the ultimate goal a funtioninj; community
hospital. A court action could be too time consuming as we feel we need
an agreement by December 1st to save the Hospital.
RIS 0TIS-URkol NI,'PROOMI COURT 111111DIN(1 AUNTI\, TIMAN 10111.9ft-IN
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We are continuing to look for ways to work with the City and the
1
County to make this settlement work, We feel the Hospital Board is being
an obstructionist at this point and foreclosing the possibility that the
Hospital can continue, We understand the Hospital Board has a counter
proposal for the City and the County and we are willing to accept that
E counter proposal if It is agreeable to the City and the County, However, we
feel the Board's refusal to accept the settlement agreement is against the
Interest of the public in keeping the Hospital open.
I L~
SETTLEMENT COUNTER - PROPOSAL
CI 11 ON
NQVL70ER 13, 1987
CITY OF DENTON
11 Contribute $200,000 in fiscal year 1987-88 to be used to pay off old accounts
payable.
2, Defer payment of past-due utility bill (Approx. $226,000) until October 1,
1990,
3. Repay Flow Memorial Hospital for loan ($2000000 in 88-891 $2L%000 in 89.90)
provided the hospital continues to operate pursuant to service contracts with
Flow, j
4, Assume City liabilities, if any, of Flow Hospital debts and any county
liabilities, if any, of Flow Memorial Hospital, the total of both not to
szoeed $400,000 provided however, that the City and County agree to assume
50% each of liabilities, if any, arising from 1975 and 1975A bond issues.
Liabilities, if any, in exoese of $400,000 will be jointly funded by City and
County until assets are liquidated.
5. Reserve security interest in fixed assets to extent of liabilityt otherwise
transfer all interest to d"fsrey~ entity by January It 19884
FLOW MEMORIAL FOUNDATION
1. Provide loan of $400,000 to hospital by January 1, 19881 to be used to pay off
old accounts payables,.
2. Continue present payment on equipment (Approx. $23,000 mo.),
DENTON COUNTY
1, Assume cost of indigent health care, effective September It 1987, reserving
right to litigate City liability, (Approx, $1,2 million annually), Should
future litigation determine that the City is responsible for a portion of
indigent health costs, the following payments will be credited against the
City's obligations
(1) The 1250,000 paid to Flow Hospital in 1986-87,
2 The 600,000 'up front" payment provided for in this agreement.
3 An amount equivalent to annual interest of 8% on the $226,000
utility bill from the time due until the time paid,
2. Transfer all interest in assets of hospital to wWantity by January It
1988.
3, Release all claims against City of Denton, except indigent health care,
FLOW HOSPITAL HOARD OF DIRECTORS
1, Transfer all assets and obligations of Flow Memorial Hospital to a different
entity by January 10 19886
2, Release all claims against City and County,
3. Agrees to keep all current utility bills paid and to begin retiring the
$226,000 outstanding bill, one-half on October 1, 1990 and the remainder in
six equal monthly installmentel and 50103 specifically assumes obligation and
the statute of limitations is waived,
i
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SETTLEMENT COUNTER -PROPOSAL
November 13, 1987
Page 2
OTHER ENTITIES
a i
16 ~ entity agrees to assume assets and obligations by January 1, 1988,
2, Attorney General approves settlement and agreed judgment,
3704M a
it
CITY ofDENTON, rEXAS MUNICIPAL BUILDING / DENTON, TEXAS 76201 / TELEPHONE ?817) 588.8307
Office of the City Manager
r~1 M F. M 0 R A N D U M
TO: City Council
FROM: Ray Stephens, Mayor
Jim Alexander, Council Member
Lloyd Harrell, City Manager
Debra Drayovitch, City Attorney
DATE: November 13, 1987
SUBJECT: Proposed Settlement Regarding Flow Hospital
At a negotiating session held earlier today, the City and
County negotiating teams agreed to the attached proposal and
pledged our willingness to recommend to our respective bodies
that this agreement be approved. Although it is not something
that either the City or the County negotiating teams like in
its entirety, it seems to represent a position which can be
responsibly assumed by both bodies. In fact, many of us think
that this final proposal is more advantageous to the City than
even the one we looked at earlier this week,
The County Hospital Board has not entirely bought off on this
agreement and continues to express concerns over two points,
First, they are concerned about the lack of collateral for the
$400,000 loan which will be made to the hospital and paid back
by the City. All entities are working on this problem in
concert with First State Bank and the Flow Foundation.
Secondly, and probably more substantive, the hospital continues
to drag its feet on utilizing the $226,000 utility bill
deferral as part of the "tip front" cash which they need, One
alternative to thin problem has been offered in having the Flow
Foundation pay the City directly for this utility bill and thus
allowing the hospital to wipe such off its books. Lacking this
agreement, both the County and City negotiators informed the
hospital board that they would be expected to give on this
point to make this deal go.
The timing at this point is for the County Commissioners to
review this agreement on Monday, and for the City Council to
consider such on Tuesday evening, In addition, the current
I
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Council Members
November 13, 1987
Page 2
hospital board will look at the agreement Monday, and the new
5010 board will review the details sometime on Monday and give
their approval. Another negotiating session has been scheduled
for 11:30 a.m. next Friday in hopes of being able to sign some
type of rough memorandum of understanding which sets forth the
provisions of the agreement as described on the attachment,
We will more thoroughly brief the Council regarding the
proposed settlement Tuesday evening, In the meantime, If you
have questions about any of the enclosed provisions, please
feel free to contact any of us.
Finally, everyone pledged to keep this proposed settlement
confidential until it was ready for formal release next
Friday. Therefore, please handle this communication in that
vein.
oy arre -
City Manager
L1I:bw
3706M
Attachment
r
r;
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SETTLEM&JT COUNTER - PROPOSAL
CITY OF DENTON COUNTY OF DE TON
NOVEMBER 13, 2987
CITY OF DENTON
I. Contribute $2000000 in fis:al year 1987-88 to be used to
payable, pay off old accounts
2, Defer payment of past-due utility bill
1990 (Approx. $226,000) until October 1,
.
30 Repay Flow Memorial Hospital for loan (200,000 in 88-89; $2000000 in 89-90)
( provided the hospital continues to operate pursuant to service contracts with
Flow,
4. Assume City liabilities, if any, of Flow Hospital debts and any County
liabilities, if any, of Flow Memorial Hospital, the total of both not to
exceed $400,000 provided however, that the City and County agree to assume
50% each of liabilities, if any, arising from 1975 and 1975A bond issues,
Liabilities, if any, in excess of $400,000 will be jointly funded by City and
County until assets are liquidated,
5. Reserve security interest in fixed assets to extent of liability) otherwise
transfer all interest to different entity by January 1, 1988,
FLOW MEMORIAL FOUNDATION
1. Provide loan of $400,000 to hospital by January 1, 1988, to be used to pay off
old accounts payables „
2. Continue present payment on equipment (Approx. $23,000 mo.).
DENTON____- COUNTY
11 Assume cost of indigent health ogre, effective September 1, 1987, reserving
right to litigate City liability, (Approx. $1.2 million annually). Should
future litigation determine that the City is responsible for a portion of
indigent health costa, the following payments will be credited against the
City's obligations
(1) The 1 250000 (paid to Flow Hospital in 1986-87,
(2) The 600,000 'up front" payment provided for in this agreement.
(3) An amount equivalent to annual Interest of 6% on the $226,000
utility bill from the time due until the time paid,
21 Transfer all interest in assets of hospital to different entity by January 1,
1988.
3, Release all claims against City of Denton, except indigent health oars.
FLOW HOSPITAL HOARD OF DIRECTORS
10 Transfer all assets and obligations of Flow Memorial Hospital to 9 different
entity by January 1, 1988,
2, Release all olaims against City and County.
3, Agrees to keep all current utility bills paid and to begin retiring the
$226,000 outstanding bill, ono-half on October 1, 1990 and the remainder in
six equal monthly installments and 50103 specifically assumes obligation and
the statute of limitations to waived,
t
41
SETTLEMENT COUNTER -PROPOSAL
November 13, 1987
Page 2
OTHER ENTITIES
1, Different entity agrees to assume assets and obligations by January 1, 1988.
2, Attorney Oeneral approves settlement and agreed judgment,
3704M
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{
ij
CITY of DENTON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS 78201 / TELEPHONE 1817) 668.8307 I
OlJlce of the City Manager
NIL M 0 R A ND UM
TO., Vic Burgess, County Judge
FROM, Lloyd V. Harrell, City Manager
DATU: November 12, 1987
R13: Memorandum Regarding Settlement Counter - Proposal
Between The City of Denton and the County of Denton
Regarding Flow Hospital
Attached is a memorandum regarding the City's latest response
concerning matters related to flow Hospital. All of the
contents of the attached memorandum constitute on attempt to
negotiate and settle the lawsuits initiated by Flow Memorial
Hospital and the County of Denton relating to financial
obliggations of the County and the City a+ith respect to Flow
Hospital, and are therefore, not admissions as to any legal
liability by the City as to any fact or issue of the litigation
currently in progress,
While the City does not admit to the liability alleged by the
County and the Flow Board, the City Council recognizes that
protracted litigation may result In the worsening of the
hospital's precarious situation, which, in turn, could result
in the closing of Denton County's only public hospital, a
valued institution, Therefore, the City Council has authorized
me to make the following proposal, which, according to the
management group, will allow the hospital to continue to
operate and provide health services to residents of the City
and the County,
oy arre
City Manager
LH:bw
3701Ni
SETTLEMENT COUNTER - PF,OPOSAL
CITY OF DENTON
1. Contribute $200,000 in fiscal year 1987-88.
2. Defer payment of past-due utility bill (Approx. $226,000) until hospital has
positive cash flow.
3. Repay Flow Foundation for loan ($200,000 in 88-891 $200,000 in 89-90).
4. Assume City liabilities, if any, of Flow Hospital debts and any County
liabilities, if any, of Flow Memorial Hospital which exceed $1.1 million.
5. Reserve security interest in fixed assets to extent of liabilityi otherwise
transfer all interest to different entity by January 1, 1988.
FLOW MEMORIAL FOUNDATION
1. Provide loan of $400,000 to hospital by January 1, 1988,
2, Continue present payment on equipment (Approx. $23,000 mo.),
i
DENTON COUNTY
1. Assume cost of indigent health care, effective September 1, 1987, reserving
right to litigate City liability, (Approx. $1.2 million annually), Should
future litigation determine that the City is responsible for a portion of
indigent health costs, the following payments will be credited against the
City s obligation:
(1) The $250,000 paid to Flow Hospital in 1986-87,
(2) The $600,000 "up front" payment provided for in this agreement,
(3) An amount equivalent to annual interest of 8% on the $226,000
utility bill from the time due until the time paid.
2. Transfer all intergat in assets of hospital to different entity by January 1,
1988.
3. Release all claims against Uiiy of Denton, except indigent health care.
FLOW HOSPITAL, BOAPIi OF DIRECTORS
1, Transfer all assets and obligations of Flow Nomorial Hospital to a different
entity by January 1, 1988.
2. Release all claims against City and County.
OTHER ENTITIES
1. Different entity agrees to assume assets and obligations by January 1, 1988,
2. Attorney General approves settlement and agreed judgment,
3701M
M
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CITY of DENTON, TEXAS MUNICIPAL 9UILbINQ ! DEN70N, texas 76201 ! Teo! ae oN (817) 588-8$07
c7rr Man qer
r M E M 0 R A N D U M !
T0; Vic Burgess, County Judge
FROM: Lloyd V. Harrell, City Manager
DATE: November 11, 1987
RE-, Memorandum Regarding Discussion Between The City of
Denton and the County of Denton Regarding Flow
Hospi tal
Attached is attersrarelatedregarding Fl w Hospital latAll rofpothe
concerning m
contents of the attached memorandum constitute Flo$t Memorial '
negotiate and settle the lawsuits initiated by
Hospital and the County of Denton relating to financial
obligations of the county and the City with respect to Flow
Hospital, liability by and are rCity easftoeony fact dorsissue of the litigation
currently in progress.
While the City does not admit to theyy liability alleged by the
County and the Flow Board, h ittitin CtueciworseningzCs tthe
result
protracted litigation may
hospital's precarious situation, which, in turn, could rlsult
in the closing of Denton County s only public valued institution, Therefore, the City Council has authorized
me to make the following proposal, which, according the
management group, will allow the hospital to cent inue to
operate and provide health services to residents of the City
and the County.
Q arre
City Manager
oyM
Ll1: bw
3G98M
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.ilki .:e R
CITY of DENTON, TEXA$ MUNICIPAL BUILDING / DENTON, TEXAS 76201 / TELEPHONE (817) 686.8807
Office of the City Manager
M E M O R A N D U M
T0: Vic Burgess, County Judge
FROM: Lloyd V. Harrell, City Manager
DATE: November 11, 1987
SUBJECT: Proposals Regarding Plow Hospital
Based upon Council discussion last evening, it appears as if
Council is willing to work further on one of three proposals as
follows:
1. County removes itself from the hospital business;
City removes itself from indigent health care
responsibilities,
City
(1) Would consider increasing the $800,000 "up
front" commitment to the Flow Hospital if required,
(2) Would continue to work on arrangements which
would allow the City to assume liabilities, if any,
of Denton County for Plow Memorial Hospital debts,
County
(1) Would release the City from any responsibility
for indigent health care costs,
(2) Would release all claims against City.
Vic Burgess
November 11, 1987
Page 2
11. Modified County Proposal - A,
C_ 1tY
(1) Would commit the approximate $800,000 "up front"
funds to Flow Hospital as follows:
$200,000 - Direct Payment
$400,000 - Loan from the Flow Foundation to be
repaid by the City as follows:
$200,000 - 1988-89
$200,000 - 1989.90
$226,000 - Utility Bill deferral to a date to be '
determined by conversations with the
Hospital board
(2) Would continue to work on arrangements which
would allow the City to assume liabilities, if any,
of Denton County for Flow Memorial Hospital debts,
County
October 1e x11990, Indigent
ncluding health
back care billing expense
at u1001
level,
(2) Obligations of City for indigent care after
October 1, 1990, to be determined by State law or by
Court decision,
(3) Release all claims against City of Denton,
III: Modified County Proposal - B
City
(1) Would pay a portion of the $8000000 "up front."
required by the Hospital,
Cow
(1) Would pay a portion of the $800,000 "up front"
required by the hospital.
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Vic Burgess
November 11, 1987
Page 3
until (2) Would pay 100% of Indigent health care expenses
such responsibility and if so, what portion. After
such a court determination, the City will pay its
determined share, if any, of indigent expenses paid
_ since the effective date of SB1. In making a
r calculation of any funds due, credit will be given
I to the City for the $250,000 payment made by the
City to Flow Hospital in 1986-87 and any up front
payment made in accord with this agreement.
(3) Release all claims against City of Denton.
LH:bw
3698M
r~'nw
CITY of DiwTON, TAPXA3 MUNICIPAL BUILDING I DENTON, TEXAS 78201 t TELEPHONE (817) 5888309
office of the mayor
T0; Vic Burgess, County Judge
Mary Henderson Williams, Chairperson, Flow Board of
Trustees
FROM; Ray Stephens, Mayor, City of Denton
SUBJECT; Memorandum Regarding the City of Denton's Response
Management
General'' s plan
Position Flow in
the Lawsuit
DATB: November 2, 1987
Attached is a memorandum regarding the City's response to
Hospital Management Professionals' plan for Flow Hospi al, All
of the contents of the attached memorandum constitute an attempt
to negotiate and settle the lawsuits initiated by Flow Memorial
Hospital and the County of Denton relating to financial
obligations of the County and the City with respect to Flow
Hospital, and are therefore, not admissions as to any legal
liability by the City as to any fact or issue of the litigation
currently in progress,
While the City does not admit to the liability alleged by the
County and the Flow Board, the City Council recognizes that
protracted litigation may result in the worsening of the
hospital's precarious situation, which, in turn, could result in
the closing of Denton County's only public hospital, a valued
institution. Therefore, the City Council has authorized me to
make the following proposal, which, according to the management
group, will allow the hospital to continue to operate and
provide health services to residents of the City and the County,
r'
Raay" St p ns, ayor
city o Denton
24931
i
gE84uly~M~
CJTY of DirNTQN, T1fXA3 MUNICIPAL SUILDJN0 / DENTON, TEXAS 76201 1 TELEPHONE (817) 5888309
M B M 0 R A N D U M 0111ce of the Mayor
r
TO: Whom It May Concern
FROM: Ray Stephens, Mayor, City of Denton
DATE: November 2, 1987
SUBJECT: City of Denton's Response to Hospital Management
Professionals plan for Flow Hospital
The City of Denton is prepared to respond positively to the
plan proposed by Hospital Management Professionals by taking
the following action:
(1) Assume the approximate balance of $360,000 remaining
on the 1975 Hospital Bond Issue,
(2) Assume the long term lease payable obligations for
the computer and software now being utilized by the
Hospital in the approximate amount of $643,000,
(3) Defer payment of current outstanding utility bills
in the amount of $226,000 to July of 1988 when it is
pro ected that the Hospital will begin showing a
pos tive cash position,
In return for the City assuming over $1 million worth of
Hospital liabilities and deferring payments of an additional
$226,000, the City would expect the following from the County
and the Hospital Board:
County
(1) Assume 100% of the indigent health care expenses of
Flow Hospital for the period September through
December, 1987, which are estimated at $400,000,
(2) Since the City will be assuming Flow Hospital
commitments for a number of years the County will
voluntarily agree to assume all indigent health care
expenses for the next six years. Thereafter, If it
is determined by a court of law that the City of
expenses sand gstateblaw in this iregardthasanot been
adjusted, the City will begin to assume its
proportionate share of sucn expenses.
t:
Response to Hospital Management Professionals
November 2, 1987
Page 2
(3) Settle all issues in the pending litigation, except
for indigent care responsibility.
r~~ Hospital
(1} Arrange for the City to acquiro an equity position
regarding the Hospital computer and software so the
City will have some monetary protection should Plow
Hospital cease to operate,
(2} Enter into a contract with the City pledging to
repay the $226,000 outstanding utility bill
commencing in July of 19880 in accord with a
mutually agreed upon retirement schedule.
Furthermore, the Hospital will pledge to promptly
pay all future monthly utility bills as such bills
are received.
(3) Work diligently with the City ai,,' County to
establish the 501(c)(3) Corporation as quickly as
possible.
(4) Explore with the Flow Hospital Foundation the
possibility of receiving additional monetary
assistance for other assets which are under lease
purchase or are secured with notes payable,
(5) Relinquish all claims against the City relating to
those issues plead in Flow's suit against the City.
Hopefully both the County and Hospital Board will positively
respond to this proposal so that Flow Hospital can continue to
operate,
aR~ y e n s
Mayo
City of Denton
jw/3683M
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WrYof DENrON, TEXAS MUNICIPAL BUILDIN131 DENTON, TEXAS 78201 / TELEPHONE {817) 6888307
Office of the CIIy Manager
M E M 0 R A N ll U M
TO: City Council Members
FROM: Jennifer Walters, City Secretary
DATE: October 27, 1987
SUBJECT: Attached information from Charles Linton
Mayor Stephens asked that 1 send the attached information so
that you would have time to studv it before the Executive
Session Council meeting on Friday,' October 30, 1087 at 5:00
p.m, The meeting will. be in the City Manager's Conference
Room. Please bring all of this information with you to the
meeting,
re er Wfrt Ci Secre ary
Attachment
2784C
i
HOW 1310 9crlPtune St
reel
MEMORIAL HOSPITAL Nnton, TX 76201
(817) 387.8861
October 26, 1987
The Honorable A. Ray Stephens
Mayor of Denton
The Honorable City Council
City of Denton
215 Bast McKinney
Denton, Texas 76201
Dear Mayor and City Council Memberat
I have enclosed a copy of the management/financial plan presented
to you by Mike Barton of Hospital Management Professionals, on
behalf of the Board of Directors of Flow Memorial Hospital, at the
joint meeting of the City, County and Hospital Board on Friday,
October 23, 1987.
I believe the plan addresses the items requested in Lloyd Harrell's
letter of October 51 1987.
1 have also enclosed a copy of the financial report of the hospital
for the month of September, 1987. As you know, the hospital's fiscal
year ended on September 30, 1987, and the year end result is still
subject to audit adjustments. We will forward copies of the audited
financials as soon as thoy are completed.
If you need additional information, please let me know.
Sinc erel
Char_ BB. Li
nton
Chief Executive Officer
CBL/kf
cot Board of Directors
Plow Memorial Hospital
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FLOW MEMORIAL HOSPITAL
CURRENT SITUATION
CURRENT PROJECTED
AVERAGE DAILY CENSUS - MED/SURD 15 15
OTHER 18 7
LOSS $ 92,000 $1,460,000
ACCOUNTS PAYABLE $1,262,000
ACCOUNTS RECEIVABLE (NET) $1,718,000 (67 DAYS)
CASH BALANCE $ 253,000
NOTEt EXCEPT FOR A FEW, MOST PHYSICIANS HAVE LEFT FLOW AND WILL NOT
RETURN UNDER CURRENT CIRCUMSTANCES.
CURRENT PROJECTIONS INDICATE MISSED PAYROLL IN JANUARY, 1988.
f~
EXPENSE COMPARISON
Monthly
Current Prior Year Reduction
Salary and Wages $ 327 $ 542 $ 215
Benefits 69 85 16
Professional Fees 176 200 44
Operating Supplies 68 158 90
Other 133 187
- 54
TOTAL $ 773 $ 1172
$ 349
FTE's 165 293 128
r
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FLOW MEMORIAL HOSPITAL
AGED ACCOUNTS PAYABLE
AS OF 9/30/87
0 - 60 DAYS $499,732,20
61 - 90 DAYS $ 83,169;54
i
91 DAYS AND OVER
$364,242.29
CURRENT NOTES PAYABLE $ 20,963.24
INVOICED FROM PRIOR YEAR $ 35,000.00
BLUE CROSS BLUE SHIELD $2000000.00
REIMBURSEMENT DUE THIRD PARTIES $227,801.00
TOTAL $1,4250908.27
s
FLOW MEMORIAL HOSPITAL
PROPOSAL
PHYSICIANSt
* WE'VE LOST MOST OF THEM AND THEY WILL NOT RETURN UNDER
CURRENT CIRCUMSTANCES,
* NO ONE INTERVIEWED WANTS TO SEE FLOW CLOSE
* INDICATED THEY WOULD RETURN UNDER NEW STRUCTURE AND
HAI}-INTEREST IN JOINT VENTURE OPPORTUNITIES,
* FLOW STILL NEEDS TO WORC TOWARD PHYSICIAN PAYMENT SYSTEM
FOR INDIGENTS,
STRUCTUREt
* NEEDS TO BE 501(c)3 OR EQUIVALENT
* FLOW NOT DESIGNATED AS INDIGENT HOSPITAL WE WILL OFFER TO
DO INDIGENCY COVERAGE AT MEDICAID RATE
* BUSINESS BOARD
* FLOW FOUNDATION TO STILL SUPPORT FLOW,
1
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FLOW MEMORIAL HOSPITAL
PROPOSAL
SERVICES1
* FAMILY PRACTICE/PRIMARY CARE CONCEPT
* NO OB/NURSERY UNTIL END OF 1988
* SEARCH FOR REPLACEMENT OF ACD PROGRAM (i,e, DIABETES,
ARTHRITIS, ETC)
* KEEP COST CONTROL TIGHT (i.e. STAFFING)
* DEVELOP FLOW BASED PPO PROGRAM (HOPEFULLY INTERFACED WITH
THE IPA)
* DEVELOP STRONG OUTPATIENT PROGRAM
* DEVELOP SERVICES AS FINANCIAL SITUATION PERMITS
i
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FLOW MEMORIAL HOSPITAL
PRO FORMA INCOME STATEMENT
September
Actual Projected
Censusi Med. Surg. 9
ICU/PCU 26
ACD 14 7
Behavioral 9 0
7
Patient Revenue
Inpatient 776,710
Outpatient 234,933 972,904
291,871
Total Patient Revenue 19011,644
1,264,725
Deductions from Revenue
Contractural Adjustments 18,343
Bad Debts & Other 184 179 17 8, 8j 301
,333
Total Deductions 262,522
418,134
Net Patient Revanues 749,122
Other Revenues 54,229 846,641
49,429
Total Not Revenues 803,351
896,070
Operat.fc,,g Expenses
Salaries & Wages 3749565
Employee Benefits 77,064 3279239
Profeasional Fees 175,710 68,845
Operating Supplies 68,243 154,839
Other 132,861 127,720
133,334
Total Operating Expenses 8281443
- 811,977
Income (Lose) Before Depr.
Depreciation ( 25,09?.) 84,093
Non-Operating Revenue ( 69,484) ( 69,484)
2,766 2,800
Total Income (Loss) 91 810
-.Z 17, 4„Oq
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FINANCIAL PROJECTIONS - P&L
October 1, 1987 - September 30, 1988 .
* Assumptions - Hospital will be converted from City/County on Jan.'l, 1987.
* Hospital will reopen O8 and ACD in November 1988,
AVERAGE DAILY CENSUS P&L
M.S,&P ICU & PCU PSY.. OH ACD TOTAL CASH FLOW
OCT, 87 11 4 7 _ - '
22 ($100,000) ($50,632)
NOV, 87 lI 4 7 -
22 0100,000) ($50,632)
DEC. 87 11 4 7 - _
22 ($100,000) 050,632)
JAN, 88 12 4 7 - -
23 90,000) ($50,166)
FEB, 88 13 4 7 - _
24 80,000) ($50,166)
MAR. 88 14 5 7 - - 26
70,000) ($30,166)
APR. 88 lg 5 7 - _
28 55,000) ($15,000)
MAY. 88 18 5 7 - _
30 ($40,000) ( - 0 _ )
JUNE 88 20 6 7 _
33 ($25000) $150000
JULY 88 22 6 7
- - 35 ($10,000) $30,000
AUG 88 24 6 7 _ _
37 $15,000 $45,000
SEPT.88 26 7 7 - _
40 $17,049 $57,049
OCT, 88 26 7 8 r _
41. $17,049 $57,049
NOV, 88 26 7 9 2 7
51 $17,049 $57,049
DEC, a$ 26 7 10 3
a 54 $179049 $57,049
i
$30,802
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FLOW, MEMORIAL HOSPITAL
PROPOSAL
* FINANCIAL PROJECTIONS -,P & L
* FINANCIAL PROJECTIONS - CASH FLOW
* SUPPORT NEEDED:
- REIMBURS8 FOR INDIGENT FOR SEPT/OCT/NOV/DEC
(APPROXIMATELY $400,000) E
TO BE PAID APPROXIMATELY $SOO,OO0 REPRESENTING
CASH FLOW LOSS FOR FISCAL YEAR END 9/30/87
PAY FOR INDIGENCY FOR FISCAL 1988, AT MEDICAID
RATES
i
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FLO14 MEMORIAL IIOSPITAL
INCOME STATEMENT
September 30, 1987
' y
MONTH YEAR TO DATE
PRIOR % PR10R liA
ACTUAL BUDGET VAR YEAR ACTUAL BUDGET VAR Y-T-D
PATIENT REVENUE:
Inpatient Revenue $ 776,710 $1,617,513 (52.0) 510471015, $14,327,754 519,6790830 (27.2) $18,287,605
Outpatient Revenue 234,934 247,006 { 4, 9) 219,786 _ 2,644,070 3,005,430 (12.0) 2,672,153
Tote! Patient Revenue
51.011,644 $1,864,519 (45.7) $1,6910101 $16,971,824 $22,685,260 (25.2) 20,959,758 y
bEDUCTIONS FROM MENUEt
Contractual Adjusts. $ 78,343 $259,475 (69.8) $ 177,947 $ 2,826,111 $ 3,156,880 (10.5) $.2,852,911
Bad Debts 1580468 214,442 (26,1) 387,206 31419,822 2,609,000 31.1 3099,723
Others 25,711 64,673 („60.2) 42,880 727,844 786,900 ( 7.5) 1,051005
Total Deductions x.62,522 _ $538,590 5I 3) 608)033 6 913 777 $ 6.,552,780 6.4 7,3041139 2
Hut Patient Revenues $749,122 $1,325,929 (43.5) $1,083,068 $ 91998,047 ;16,132,480 (38,0) 13,655,619:
Other Revenues 54,2_29 62,975 (1319) 59,761 658,971 766,290 (14.0) 235,575' }
futal Net Revenues $803051 $1,388,904 (42.1) $1,1429829 $100657,024 $16,898,770 (36.9) $1.339889 94
OPERATING EXPENSES: r
Salaries L Pages $374,565. 588,136 (36,3) 522,314 5,368,618 7,155,494 (25,0) 6,513004:
Employee Banufita 77,064 91,281 (15.6) 72,026 934,160 1,110,420• (15.9) •'~'-1417,721 .
Professional Fees 175010 179,414 ( 211) 243,890 2,252,724 2,I82,840 3.2 :,,•'2,40I,8901C4
Operating Supplies 68,243 180,864 (62.3) 182,897 144119943 2,200,255 (35,8);.4,-;`!,897,055-
132,861 a 211,927 37.3) _ 208,405 11843,196 2;577,1995. 28 5) 2
Total Opurating Expenseb $828,443 $1,251,622 (33.8) $1,229,532 $ 11,810,641 $,1512279 004 , (22.4) ,14,,014,,528 p
tncome (1,000) , Y ,+r1;
Bufore Depreciation $ ( 25,092,) 1374282 (118.3) (86,703) $ (1,153)61.7) $ 1,671,766 469.0) $ (183,334)
Depreciation ( 69)484) ( 78,079) (11.0) (62,318) ( 785,627) { 950,000) ( 17.3) (614,889)„'
Nun-Operatin Revenue 21766 23.839 , 88.4) 1__ fib, 7 L. 4., y2 ~00L1 q 280.187 't~
L'otnl Income (Loss) ; (g1,810) _ILL4 (210.6) (421233) $ (1,460,082 S 1.011,x6 (244.3) $ .(518.036)
l
1 1„
FLOW MEMORIAL HOSPITAL
BALANCE SHEET
September 30, 1987 :•;r
ASSETS LIABILITIES 4 FUND BALANCE
/ CURRENTi 1987 1986 CURRENTI
- M 1987, 1986
Cash & Investments $ 252,984 $1,407,311 Current Notes Payable 429,608 386,831 ?;'t•
Accounts Payable 11262,349 1,270,008
Patient Receivables $3,200,589 41829,215 Accrued Expenses 3890205 520,379
Leas Allowance (1,482069) (2,285,363) Due Government Agencies 1970803 434,793 'r.•
Net Patient Receivables $1,717,820 $2,543,852 Total Current Liabilities $2,278,965 $2,612,011;
Other Current Assets 8~g,919 761034 Long Term Debt 11576,316 • 19498,11Q
Total Current Assets $2,869,783 $4,712,497 Total Liabilities $3,855,281 $4,110,121
Property Plant & Equipment
Lend/Improvements $ 31,547 $ 37,547 Fund Balance
Building 31887,593 31780,802 Donated Capital $41455,779 $4,455,779 '
Equipment 7,1532329 6,571,268 Pledges & Gifts 1,229,420 1,026,244 1.,
$11078,469 $10,389,617 Beginning Fund Balance ( 42,491)`' { 475,551 e
Leaei Accumulated Deprc. { 5,910,345) ( 5)552,455) Income & Expense Balance (1,460,082) 5,p36) .
Net Property/Plant/Equip $ 5,168,124 4,837,162 Total Fund Balance 4,182,626 5,
439,538
Total Unrestricted Funds 8,037,907 9,549,659 Total Unrestricted Funds Q71907, "
S _ $ 9,549, 654 0,
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FLOW MEMORIAL HOSPITAL
COMPARATIVE ANLYSIS - ACCOUNTS RECEIVABLE x
September 30, 1987 y
AGING BY DISCHARGE DATE y
CURRENT X OF 2 OF
DAYS. MONTH TOTAL PRIOR MONTH TOTAL r!:
0- 30 $ 1,0511942 32,4 Y. $ 1,3501489 X37.1 2 t
31- 60 831,954 2516 935,265 25,7
61- 90 527,034 16,2 5139146 14.1 a
91-120 308,005 915 308,155 8.5
121-150 189,251 518 1680309 4,6
151 + 3419962 10.5 _-365,370_ 10.0
$ 30250,148 100.0 % $ 3,640,734 10010 x
1 y'
REVENUE BY FINANCIAL CLASS
CURRENT MONTH 09/87 08/87 07187 06187 • 05187 04/87 `s
Medicare $ 335,068 33.1 9 2218 7 30.3 % 28.4 2 26.6 X 30.0 x
Medicaid 35,154 3.5 1012 8.1 11.7 10.6 7.9
Blue Cross 23,959 2.4 3.0 6.1 7.4 4.1 3.2 f
Commercial Ina. 352,306 34.8 32.5 31.0 29.6 36.8 39.9 ;
Self-Pay/County 2650157 26.2 31-.5 24..5- 22.9 21.9 19.0-
$ 1,011,644 100.0 x 100.0 7 100.0 X 100.0 X 100.0 R 100.0 X j
DAYS OIL REVENUE IN A/R. CURRENT MONTH 08J-8 7 07 87 06787 05/87 04187
Grose 69 75 79 77 74 78
Net 67 60 61 56 55 54
WRITEOFFS & RECOVERIES CURRENT MONTH YEAR-TO-DATE DRG OUTLIERS CURRENT MONTH YEAR-TO-DATE
Charity/Hill Burton $ -0- $ 696,864 Number of y'
Bed Debt 397,629 4,2490218 Discharges 1 26
Bad Debt Recoveries 31,537 482,912 Over $18,000 1
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PLOW MEMORIAL HOSPITAL
STATISTICAL S•TATMENT
September 30, 1987
CURRENT MONTH _ YEAR-TO-DATE "
PATIENT UTILIZATIONr ACTUAL BUDGET % VAR PRIOR YEAR ACTUAL BUDGET 2 VAR PRIOR YEAR
Adult Patient Days 1,141 '21100 (45.7) 1,769 20,752 25,550 (18.8) 24,191
Average Per Day 38.0 70.0 59.0 56.9 7010 66.3
Average Length of Stay 6.9 4.4 56.8 4.8 6.1 4.4 38.6 447 ;
Discharges 149 474 (68.6) 356 3,404 5,154 (40.8) 5,166
1 Newborn Patient Days 13 363 (96.4) 226 2,022 41416 (54.2) 31625
Average Per Day .4 12,1 7,5 5.5 12.1 9.9
NICU Patient Days 60 69 567 763 (25.7) 808 "
Average Per Day 2.0 2.3 1.6 2.1 2.2
ICU Pat?.ent Days 68 90 (24.4) 87 899 10095 (17.9) 1,126
Average Per Day 2.3 3.0 2.9 2.5 3.0 3.1
Psychiatric Unit Patient Days 266 468 (43.2) 292 4,220 5,694 (25.9) 5,053
Average Per Day 8.9 15.6 9.7 11.6 15.6 13.8
Percentage of occupancy 29.4 50.7 (42.0) 42.7 44.1 50.7 (13.0) 48.0
OTHER UTILIZATIONi
Operating Room Procedures 91 138 (3411) 139 1026 11681 (21.1) 1,832
Emergency Room Viaits 666 11185 (43.8) 1,074 10,145 14,416 (29.6) 14,230
CT Scene 70 57 22.8 17 743 694 7.1 437
Cert. Nurse-Midwife Deliveries 0 33 33 381 401 (5.0) 405
Total Deliveries 7 60 (88.3) 94 806 730 10.4 1,482
Laboratory Teats 4,079 7,470 (45.4) 10,364 95,551 90,885 5.1 222,766 J'
PER ADULT PATIENT DAYt
Gross Patient Revenue 886.63 887.87 (.1) 955.96 817.84 887.87 (7.9) 86643
Net Operating Revenue 704.08 661,38 6.5 612.25 513.54 661.38 (22.3) 572.47• ,
Operating Expense 786.96 633.19 (24,3) 730.27 606.99 633.19 (4.L) 599.45;;
Income From Operationa (82,89) 28.19 (84,24) (93.45) 28.19 2.90 G
LABOR COST MANAGEMENTi
PTE Employees 232.6 290.8
PTEs Per Adult Patient Day 6.1 4.1 (48.8) 305.2 0 263,9 290;8 (10.6) 322.4
(4.9) 4.9
PTEs Per Adjusted Patient Day* 4.7 311 51.6 4.0 3.5 3.1 12,9 3.7
Payroll As a 2 of Total Expenses 41.7 44,2 (5.7) 40.4 42.6 44,2 (3.6) 44.9 a
*Total FTE = ((Patient Days + Newborn Days) (Inpatient Revenue Total Revenue)]
-4
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1
HOW / 1310 D TX Street
MEMORIAL HOSPITAL Denton, , 2J{ 78201
(817) 387.8881
r'
October 26, 1987
The Honorable A. Ray Stephens
Mayor of Denton .
The Honorable City Council
City of Denton
215 East McKinney
Denton, Texas 76201
Dear Mayor and City Council Memberst
I have enclosed a copy of the management/financial plan presented
to you by Mike Barton of Hospital Management Professionals, on
behalf of the Board of Directors of Flow Memorial Hospital, at the
joint meeting of the City, County and Hospital Board on Friday,
October 23, 1987.
I believe the plan addresses the items requested in Lloyd Harrell's
letter of October 5, 1987.
I have also enclosed a copy of the financial report of the hospital
for the month of September, 1987, As you know, the hospital's fiscal
year ended on September 30, 1987, and the year and result is still
subject to audit adjustments. We will forward copies of the audited
financials as soon as they are completed. ,
If you need additional information, please let me know,
$incerel
Chart B, Linton
Chief Executive Officer
CBL/kf
act Board of Directors
Flow Memorial Hospital
4
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FLOW MEMORIAL HOSPITAL
CURRENT SITUATION
CURRENT PROJECTED
AVERAGE DAILY CENSUS - MED/SURD 15 15
OTHER 18 7
LOSS $ 92,000 $2,460,000
ACCOUNTS PAYABLE $.1,262,000
ACCOUNTS RECEIVABLE (NET) $1,718,000 (67 DAYS)
CASH BALANCE $ 253,000
NOTEt EXCEPT FOR A FEW, MOST PHYSICIANS HAVE LEFT FLOW AND WILL NOT
RETURN UNDER CURRENT CIRCUMSTANCES.
i
CURRENT PROJECTIONS INDICATE HISSED PAYROLL IN JANUARY, 1.988.
1
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EXPENSE COMPARISON
Monthly
Current Prior Year Reduction
Salary and Wages $ 327 $ 542 $ 215
Benefits 69 85 16
Professional Fees 176 200 24
Operating Supplies 68 158 90
Other 133 187 54
TOTAL $ 773 $ 1172
$ 399
FTE's I 165 293 128
h
I
FLOW MEMORIAL HOSPITAL
AGED ACCOUNTS PAYABLE
AS OF 9/30/87
0 - 60 DAYS $499,732,20
61 - 90 DAYS $ 83,169x54
91 DAYS AND OVER $3649242.29
CURRENT NOTES PAYABLE $ 20,963.24
INVOICED FROM PRIOR YEAR $ 33,000.00
BLUE CROSS BLUE SHIELD $200,000.00
REIMBURSEMENT DUE THIRD PARTIES $222',801.00
TOTAL $1,425,908,27
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I
FLOW MEMORIAL- HOSPITAL
' PROPOSAL
PHYSICIANSt
* WE'VE LOST MOST OF THEM AND THEY WILL NOT RETURN UNDER
CURRENT CIRCUMSTANCES,
* NO ONE INTERVIEWED WANTS TO SEE FLOW CLOSE
* INDICATED THEY WOULD RETURN UNDER NEW STRUCTURE AND
HAD-INTEREST IN JOINT VENTURE OPPORTUNITIES.
* FLOW STILL NEEDS TO WORK T014ARD PHYSICIAN PAYMENT SYSTEM
FOR INDICENTS,
STRUCTUREt
* NEEDS TO BE 501(c)3 OR EQUIVALENT
* FLOW NOT DESIGNATED AS INDIGENT HOSPITAL -w WE WILL OFFER TO
DO INDIGENCY COVERAGE AT MEDICAID RATE
* BUSINESS BOARD
* FLOW FOUNDATION TO STILL SUPPORT FLOW.
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FLOW MEMORIAL HOSPITAL
PROPOSAL
SERVICESi
1 * FAMILY PRACTICE/PRIMARY CARE CONCEPT
* NO OB/NURSERY UNTIL END OF 2988
* SEARCH FOR REPLACEMENT OF ACD PROGRAM DIABETES,
ARTHRITIS, ETC)
* KEEP COST CONTROL TIGHT (i.e. STAFFING)
* DEVELOP FLOW BASED PPO PROGRAM (HOPEFULLY INTERFACED WITH
THE IPA)
* DEVELOP STRONG OUTPATIENT PROGRAM
* DEVELOP SERVICES AS FINANCIAL SITUATION PERMITS
n:
FLOW MEMORIAL HOSPITAL
PRO FORMA INCOME STATEMENT
September
Actual Pra ected
Censust Mod, Surg. 9 26
ICU/PCU 6 7
ACD 14 0
Behavioral 9 7
Patient Revenue
Inpatient 776,710 972,904
Outpatient 234,933 2919871
Total Patient Revenue 1,011,644 1,264,725
Deductions from Revenue
Contractural Adjustments 789343 239,801
Bad Debts b Other 184,179 178,333
Total Deductions 262,522 418,134
Net Patient Revenues 749,122 846,641
Other Revenues 54,229 49,429
Total Net Revenues 803,351 896,070
Ope,'atfng Expenses
Salaries 6 Wages 3749565 327,239
Employee Benefits 779064 68,845
Professional Fees 175,710 154,839
Operating Supplies 68,243 127,720
Other 132,861 133,334
Total Operating Expenses 828,443 811,977
Income (Loss) Before Depr. ( 25,092) 84,093
Depreciation ( 69,484) ( 69,484)
Non-Operating Revenue 2,766 2,800
Total ..,woma (Lose) 9]. 810 17,1409
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FINANCIAL PROJECTIONS - P&L
October 1,_1987 - September 30, 1988
* Assumptions - Hospital will be converted from City/County on Jan.' 1, 1987,
* Hospital will reopen OB and ACD in November 1988,
AVERAGE DAILY CENSUS P&L CASH FLOW
M,S.&P ICU & PCU 17A
OCT, 87 11 4 ,000) ($50,632)
NOV, 87 11 4 ,000) ($50,632)
DEC. 87 11
4 ,000) ($50,632)
JAN, 88 12 4 000) ($50, 166)
FEB. 88 13 4 000) ($50,166)
MAR. 88 14 5 7 - - 26 70,000) ($301166)
APR, 88 16 5 7 - - 28 550000) ($15,000)
MAY. 88 18 5 7 - - 30 ($40,000) ( - 0 - )
JUNE 88 20 6 7 - - 33 ($25,000) $15,000
JULY 88 22 6 7 - - 35 010,000) $30,000
AUG 88 24 6 7 - - 37 $15,000 $45,000
SEPT,88 26 7 i - - 40 $179049 $57,049
OCT. 88 26 7 8 - - 41 $17,049 $57,049
NOV, 88 26 7 9 2 7 51 $17,049 $57,049
DEC, 26 7 10 3 8 54 $17,049 $57,049
$90,802
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FLOW MEMORIAL HOSPITAL
PROPOSAL
* FINANCIAL PROJECTIONS -,P & L
* FINANCIAL PROJECTIONS - CASH FLOW
* SUPPORT NEEDED:
REIlIBURSE FOR INDIGENT FOR SEPT/OCT/NOV/DEC
(APPROXIMATELY $400,000)
TO BE PAID APPROXIMATELY $800400 REPRESENTING
CASH PLOW LOSS FOR FISCAL YEAR END 9130/87
PAY FOR INDIGENCY FOR FISCAL 19881 AT MEDICAID
RATES
mom=
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PLV MEHORIAL HOSPITAL
INCOME STATEMENT
September 30, 198.7
`r
MONTlf
YEAR TO DATE"~
PRIOR x
PATIENT REVENUE, ACTUAL BUDGET VAR YEAR PRIOR
ACTUAL 13UDGET VAR Y-T-D
Inpatient Revenue $ 776,710 $1,617,513 (52,0) $1,471,315.
Outpatient Revenue 234,934 -241,006 $14,327,754 519679,830 (27,2) $18,287,605 f
( G,9) 219,786 2,644,070
Total Patient Revenue 3,005,430 (12,0) 2,672,153
LI,UL&At Si,8b4,519 (45.7) $1.,691,101 416 971 824 22,
IL1971-124 685,260 (25.2)20,959,758 t
DEDUCTIONS FROM REVENUEt - t" '-"--~:•i
Contractual Adjusts, $ 78,343 $259,475
had Debts 158,468 214,442 (.1) $ 171,947 $ 2,826,111 $ 3,156,880 (10.5) $•2,852,911
Others (2626,1) 387,206 3,4191822 2,6090000 31,1 3,399,723
64,673 (60 2) _ t,?,880~ 727,844 786,900 ( 7.5) _ 1,051,505 "
1bta1 Deductions 2. 2? 4538,590 51.3) 5 508,033 6 973 777 ~6 552,780 6.4 7,304,139
Hut Patient Revenues $749,122 51,325029 (43,5) $1,083,068
Other Revenues 94,229 62.975 (13_.9) 59 7bl $ 9,6ga,047 $16,132,480 (38.0) $13,655,619~I,1
Total Not Ruvenuus - ,977 766,290 (14,0) 235,575
5803051 $1,388,904 (42.1) $1,142,829 $10,657,024 $16,898,770 (36.9) $1.3,891,194 .,11
OPERATINO EXPENSESt I~
Salaries L Wagus $374065 588,136 (36.3) 522,314 5068,618 7 155,494
Employee Bonofits 77064 91,281 (15.6) 721026 934,160 1,1101420 (25.0) 6013,304
Professional Faos 175,710 179,414 (13.9) 19017,721 R.
Operating Supplies 68443 L80,864 (2,1) 243,890 21252,724 2,182,840 3.2 i,' 2, 401, 890
Other (62.3) 182,897 1,411,943 2,200,255 (35,8) 1,897,055
132,861 211,921 37.3) 208~k05 1,84 ,196 _ 2,57,995 28.) 2 G aB
Ibtol Opurating Expenaeh $ 828,443 r _ .!~.43~-~f
$1,251,622 (33.8) $1,229,532 $ 11,810,641 $ 15,227 004 '
Income (1,080) , (22,4), $14,074,528;
fluforo Depreciation $ ( 25,092) 137,282 ' (118.3)
!)u
pracistion ,282 .5 (86,703) $ (1,153,617) $ 1,671,766 169.0) $ (183,334),,%,
( 69,484) ( 78079) (11.0) (62018)
Nun-0parat1n$ Revenue 2 J 66 3,83 ( 785,627) ( 950,000) (17.3) (614 ,889)
~----Z 4G) W.. 106, 7 8 . G7 .162 0. 00 ~,5.t~ 280.187 f:
'total Income (Loss) 18 r2 2-Loa-6 ( ) 42,~ 233 5 1 '
, - ,Gb0,082) $ 1,011 -w (244.3) fib)
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FLOW MEMORIAL !HOSPITAL t'•
BALANCE SIIEET
September 30, 1987 ASSETS LIABILITIES & FUND BALANCE
CURRENTI 1987 1986 CURRENT; , 1987• 1986 r
rr - Cash & Investments $ 252,984 S1s4071311
Currant Notes Payable $ 429,60B 386t8 1
,
Accounts Payable 1,2&2 349 1 270,008
Patient Receivables $3,200,589 41829,215 Accrued Expenses 389,205 520,379 ,
Less Allowance (1,482,769) (2,285,363) Due Government Agencies 19),803 _ 434,793
Net Patient Receivables $1,717,820 $2,543,852 Total Current Liabilities $2,278,965 $2,612,011
Other Current Assets 898,979 761034 Long Term Debt 1,576,316 1,4981110
Total Current Asaetn
$2,869,783 $4,712,497 Total Liabilities $39855,281 $4,110,121 , ?y!
Prot7erty_ Plant & Equipment
Land/Improvementa $ 37,547 $ 37,547 Fund Balances r.,
Building 3,887093 3,780,802 Donated Capital $4,455,779 $4,455,779 'I
Equipment 7,1531329 6,571,268 Pledges & Gifts 1,224,4201,026,244 ,
$ 11,078,46q $10,389,617 Beginning Fund Balance ( 42,491) '475,551'x!
Least Accumulated Deprc. ( 5,910,345) (5,552,455) Income & Expense Balance (1,460,082) ( 518,036)
..~~r.,• I Ilit r~
Net Property/Plant/Equip $ 5,168,124 $ 4,837,162 Total Fund Balance 4$ ,182,&26 $ 5,4399538
i
Total Unrestricted Funds _L L037,907 $ 91549,659 Total Uurestrictid Funds $8,037.907 549,659 ''tl
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FLOW MEMORIAL HOSPITAL
COMPARATIVE ANLYSIS - ACCOUNTS RECEIVABLE w
September 30, 1987
AGING BY DISCIIARGE DATE
CURRENT % OF % OF
DAYS MONTH TOTAL PRIOR MONTH TOTAL
0- 30 $ 1,051,942 32.4 % $ 1,350,489 x37,1 X
31- 60 831,954 25.6 935,265 25.7 ,
61- 90 527,034 16.2 513,146 1411
91-120 308,005 9.5 308,155 8.5 r
121-150 189,251 518 168,309 4,6
151 + 341,962 10.5 365070 10.0 1
3,2501148 100.0 7. $ 3,640,734 100.0 %
REVENTL BY FINANCIAL CLASS
CURRENT MONTH 09/87 08/87 07/87 06/87 WE 04 87
Medicare $ 535,068 3311 7. 22.8 X 30.3 X 28.4 X 26.6 X 30,0 X
Medicaid 359154 3.5 10.2 8,1 11.7 10.6
B1up. Croce 23,959 2.4 310 6.1 7,4 4.1 37.9
.2
Commercial Ins. 352,306 34.8 32.5 31.0 29.6 36,8
Self-Pay/County 3919
265,157 26.2 31.5 24.5 22.9 21,9 1910
10110644 100,0 2 10010 % 10010 % 10010 % 10010 X 100.0 X
r;
3 OF REVENUE IN A R CURREN'C MONTH 08 8 07 87 0 7 -'0l f --~~7
Gross 69 75 79 77 74 78 A,~J
Net 67 60 61 56 55 54
WRITEOFFS 6 RECOVERIES CURRENT MONTH YEAR-TO-DA E DRG OUTLIERS
CURRENT MONTH
Charity/Hill. Burton YEAR-TO-DATE
$ -0- 696,864 Number of
Bad Debt 3970629 4,2490218 Dischargas 1
Bad Debt Recoveries 31,537 482,911 Over $18,000 26
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PLOW MRMORIAL HOSPITAL
STATISTICAL STATMLN'r
September 30, 1987
CURRENT MONTH YEAR-TO-DATE
PATIENT UTILIZATION! ACTUAL BUDGET Z VAR PRIOR YEAR ACTUAL BUDGET 2 VAR PRIOR YEAR
Adult Patient Days 12141 2,100 (45.7) 1,769 200752 25,550 (I8,8) 24,191
Average Per Day 38.0 70.0 59.0 56.9 70.0 66.3
Average Length of Stay 6.9 4.4 56.8 4.8 6.1 4.4 38.6 4.7 i
Discharges 149 474 (68.6) 356 31404 5,754 (40.8) 5,166
Newborn Patient Days 13 363 (96.4) 226 21022 4,416 (54.2) 3,625
Average Per Day .4 12.1 7.5 5.5 12.1 9,9
NICU Patient Days 60 69 567 763 (25.7) 808 .
Average Par Day 2,0 2.3 1.6 2.1 2.2
ICU Patient Days 68 90 (24. 4) 87 899 10095 (17.9) 1,126
Average Per Day 2.3 3.0 2.9 2.5 3.0 3.1
Psychiatric Unit Patient Days 266 468 (42.2) 292 4,220 51694 (25.9) 3,053
Average Per Day 8.9 15.6 9.7 11.6 15.6 13.8
Percentage of Occupancy 29.4 50.7 (42.0) 42.7 44.1 50.7 (13.0) 48.0
OTHER UTILIZATIONt
Operating Room Procedures 91 138 (34.1) 139 1,326 10681 (21.1) 1,832
Emergency Room Visits 666 11185 (43.8) 1,074 10,145 14,416 (29.6) 14,230
CT Scans 70 57 22.8 17 743 694 711 437
Cert. Nurse-Midwife Deliveries 0 33 33 381 401 (5.0) 405
Total Deliveries 7 60 (88.3) 94 806 730 10.4 1,482
Laboratory Tests 4,079 7,470 (45.4) 10,364 95051 90,885 5.1 122,766
PER ADULT PATIENT DAYi
Gross Patient Revenue 886.63 887.87 (,1) 955.96 817.84 887.87 (7.9) 866.43 i
Net Operating Revenue 704.08 661.38 6.5 612.25 513.54 661.38 (22.3) 572.47
Operating Expense 786.96 633,19 (24.3) 730.27 606.99 633.19 (4.1) 599.45;,
Income From 00erations (82.89) 28.19 (84.24) (93.45) 28.19 2.90
LABOR COST MANAGEMENTt
PTE Employees 232.6 290.8 (25.0) 307.00 260.0 290.8 (10.6) 322.4
FTEa Per Adult Patient Day 6.1 4.1 48.8 5.2 3,9 4.1 (4. 9) 4.9
PTEs Per Adjusted Patient Day* 4.7 3.1 51.6 4,0 3.5 3.1 1249 3,7
Payroll as a % of Total Expenses 41.7 44,2 (5.7) 40.4 42.6 44.2 (3.6) 44.9
kTotal PTE ((Patient Days + Newborn Days) (Inpatient Revenue = Total Revenue
. )1
-4-
OR
CITY'S POSITION REGARDING PLOW HOSPITAL
1, If a long-term lease with a 50I(c)-3 is desired, this could
best be achieved by joint, direct action by the City and
County,
II, Before the City is willing to consider direct ownership and a
resulting lease with a 501(c)-3, the following conditions
must be satisfied:
t
A. All legal work must be accomplished and the 501(c)-3
Board be in place so that the hospital operation can be
leased immediately upon the City assuming ownership,
B. A realistic short and long term financial plan must be
filed with the City Council which:
1. Illustrates that the hospital has a reasonable chance
for long-term financial success,
2. Illustrates how the current liabilities of the
hospital will be met and what obligations will be
assumed by the City.
3. Illustrates the extent of the estimated annual
financial subsidy required for indigent health
care,
4. Illustrates the extent of the estimated annual
financial subsidy required for general expenses of
the hospital, over and above that required for
indigent health care expo:ises.
5, Enumerates the types of services which Plow Hospital
will be able to offer under a reorganization
involving City ownership and the operation under a
501(c)-3 corporation,
6. These financial rlans should be complete, realistic
and be able to withstand independent review by
outside third parties,
C. The City receives adequate assurance from the financial
plan and the immediate lease that it is not assuming
liabilities which are beyond the capability of the City
Government to effectively handle,
3641M
1
MY& DENTON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS 78201 / TELEPHONE (817) 588.8907
October S, 1987 011/0eol the CI(Y Manager
Mr. Charles Litton
Administrator
Plow Memorial Hospital
1310 Scripture
Denton, TX 76201
Dear Charles:
Per the pledge to you as a result of the Joint meeting between
the City, County, and Hospital Board held on October 1, 1987,
b
City and County elow please find outlined the types of items which both the
management/financial would like
be filed by covered
Hospital pBoa~rdsand
thehCitytandnC unty{to-determine he`herl a longl termuleaseewith
a 501(c)-3 corporation is practical for the entities and Plow
F Hospital, This management/financial plan should be very
complete, realistic, and be able to withstand independent
review by outside third parties which may be employed by the
City and County to review the plan.
The realistic short and long term plan for Plow Hospli;al should
be filed with the City and County which, at minimum:
1, Illustrates that the Hospital has a reasonable
chance for long term financial success ;this
should include census pro) ections based upon
realistic commitments rom the medical
community),
2. Illustrates the amount of the current
liabilities of the Home t spital pp and how these
obligat:'~on s ofll thee City an County ty~towathe
rd
retirini- these liabilities.
3, Illustrates the extent of the estimated annual
:inanrial subsidy required for indigent health
care,
f
Management/Financial J'1«n Items
October S, 1987
Page 2 j
i
4. Illustrates the extent of the estimated annual
financial subsidy required for general expenses
of the Hospital, over and above that required
for indigent health care expenses,
S. Enumerates the types of services which Flew
Hospital will be able to offer under a
reorganization involving a 501(c)-3 corporation.
f~ By a copy of this letter, J am forwarding this outline to Judge
Vic burgess and the attorney for the County, Mr, Jim Allison,
They may desire that the Hoard provide additional information
so that the County can determine whether to support a long toi;i
lease with a 501(c)-3 corporation.
As mentioned during our meeting, it will likely take
approximately two months after a plan has been agreed upon to
legally establish a SO1(c)-3 corporation and activitate a lease
agreement, Therefore, assuming that a comprehensive
management/financial plan can be filed with the City and County
by the end of the month, it would seem that the earliest a
S01(c)-3 corporation could be put into effect would be January
11 1988, This may be helpful to you as you prepare the answers
called for +!i the above questions,
The City government is verv supportive of Flow Hospital and the
' Council has stated that it is willing to do anything which is
financially responsible to guarantee the long term viability of
t
he Hospital, Hopefully, this plan will provide the necessary
data
oblifor
which will have determine
be assumed past
ordand er for current
he
Hospital to have long term success,
The City Council looks forward to receiving this report so this
matter can be expeditiously resolved,
Thank you for your consideration.
_..Very ,rely ynu~s,
11 ~j/ vvN'_V
'"'Cloy V, f!<!/ell
City Manager
din
cc, Mayor and City Council
Vic Burgess, Presiding Judge
Jim Allison, Attorney, Dw- on County
Debra Drayovitch, City Attorney, Denton
36SIM
CITY ofDBNTON,TtX48 MUNICIPAL BUILDING / DENTON, tEXAS 7e201 / rOLEPHONS(917)tiee•6307
October 5, 1987 Offtaoofthe City Monsoff
Mr. Charles Litton
Administrator
Flow Memorial Hospital
1310 Scrippture
Denton, TX 76201
Dear Charles;
Per the pledge to you as a result of the joint meeting between
the City, County, and Hospital Board held on October 1, 19870
below please find outlined the types of items which both the
City and County would lake to see covered in a comprehensive
management/financial plan to be filed by the Hospital Board and
perhappa the new 501(c)•3 Board. This plan will be utilized by
the Clty and County to determine whether a long term lease with
a 501(c)-3 corporation is practical for the entities and Flow
I'IospitaI. This management/financial plan should be very
complete, realistic, and be able to withstand independent
review by outside third parties which may be employed by the
City and County to review the plan,
The realistic short and long term plan for Flow Hospital should
be filed with the City and county which, at minfmumt
1. Illustrates that the Hosppital has a reasonable
chance for long term financial success (this
should include census projections based upon
re,ilistlc commitments from the medical
coomunity),
2. Illustrates the amount of the current
liabilities of the Hospital and how these
liabilities will be met; specifically, the
obligations of the City and County toward
retiring these liabilities,
3. Illustrates the extent of the estimated annual
financial subsidy required for indigent health
care,
Management/Financial Plan Items
October 5, 1987
Page 2
4. Illustrates the extent of the estimated annual
financial subsidy required for general expenses
of the Hospital, over and above that required
for indigent health care expenses.
5. Enumerates the types of services which plow
Hospital will be able to offer under a
reorganization involving a 501(c)-3 corporation,
i~ By a copy of this letter, I am forwarding this outline to Judge
Vlc Burgess and the attorney for the County, Mr. Jim Allison,
They may desire that the Board provide additional information
so that the County can determine whether to support a long term
lease with a 501(c)•3 corporation.
As mentioned during our meeting, it will likely take
approximately two months after a plan has been agreed upon to
legally establish a 501(c)-3 corporation and activitate a lease
agreement, Therefore, assuming that a comprehensive
management/financial plan can be filed with the City and County
by the and of the month, It would seem that the earliest a
501(c)-3 corporation could be put into effect would be January
i, 1988, Phis may be helpful to you as you prepare the answers
called fur in the above questions,
The City government is very supportive of Flow Hospital and the
Council has stated that It is willing to do anything which ,is
financially responsible to guarantee the long term viability of
the Hospital, Hopefully, this plan will provide the necessary
obligationst whichouwill have dtoe be nassumed pInstorder forrrthe
Hospital to have long term success.
The City Council looks forward to receiving this report so this
matter can be expeditiously resolved.
Thank you for your consideration.
Very my yours,
r
LIoy V. Ha re
City Manager
dm
cc! Mayor and City Council
Jim Alli gson, Attorney, Denton Count
Debra Drayovitch, City Attorney, Denton
3651M
' Cuptlvc Insurers
Humnnu !lied to defend Itself "Ir
dlverslflca(lon, ns did the other large
chains, Hospital 2orp, of America, Aumrl•
I caA Mcdkmf Internatfanal Inc. and Na.
IIJ` lional Medical Enterprises lac. Tice Idou
was that if a hospital owner also had an iu•
t i987 ; , sttrane0 plan, It could steer patients to Its
Insthutlons through financial incentives.
it tLa VIC "anent pool might shrink, but the
P t V« compass could grab a blggor part of it.
At Ilia $ame time, other now venlm,es,
50 C It, N .l, 9 such as doctors' offices, would tap the out.
ppatient market-ill affect following the
buslness that was leavl4lnosphals, All of
the 'low 1103it be brouht
Guarded Condition t
ogether underrtherhistlraocojdan and sold
AS a cut-rate package to einployors,
Hospital Chains Curb "There was a lima in the early '8os
when these 6'1lys were saying, 'Wo're 901 rig
Ambitions in the Wake to operate everything, Including funeral
parlors,' "says Uwe Reinhardt, a health-
care economist at Princeton University.
Of Setback at Humana Lcadlnll the Trend
No other hospital owner ran so herd
along this path as Humana, Its Insurance
plan' Humana Care Pius, signed up 616,000
It Rushed Into Related Fields
people within three years, Its Humana
Like Insurance and Clinics MedMI'61 network of doctors' offices hung
out Its first shingle in ID81 and soon grew
But Has Had to Retrench 1 is include 168 1168eswrite-offs feinted to
the doctors' offices and the Insurance plan
f Alienating the Local Doctors totaled wovr $109 eal Wrong? ,Humana ac.
I knowledges, In Its rush to dominate fields
BY RWRAtII KotpHla J it was new to, it discovered Only bolatediy
SrtV1ItVp0rrer Of TR8 WAIA,a Tit kY,7 JIM INA I, I thnt SamO of Its maneuvers were having
WUISVILIA Ky,-In the business of I n0sssy Opposite the Intended results,
"call" care, Humana Inc, seemcvl to be care Plus, though meant to bolster Ito.
blazing the trail to the future, mono hospitals, was paying for more ad-
The operator or 86 for.profit hospitals, owrjiohjyttoo r1wil institutions mee nto is "Irst, though bun ding a heallh unsure It ea planasropidlj strengthen Iles
with doctors, created ee•
along with a national network of as ell, treatment. Many physicians Outside the
offices, citing changes In medical econom• new network people on whom Humana
leg, Its chief executive, thnvid Jones, was hospitals also rolled for phteats--saw tine
hand on fasMonlug nuthing Jess than a doctors' offices as an encroachment, l
health-care conglomerate, Mr, Jonas, who IS Humtina's chalrMall
Other challis of Investor-owned hQppl• o
05 Well as ChO, " (Omislakees in exeautlonnot In slat}
lets; more cautiously, wore movingan hu+ eg, Though forced to rolroneh, he has sig.
same direclion-toward file kind of )life. a y!I
9gt
ated company that tndu'st through ncuhplan racerg AIjJsItlop
he104 lm a company that ' ailing ry jargon fa• lnetra
thatlthe
The future looks rather different now, c gtinanMremains n O the Ilformer led 10 dheoed toil
Humana'8network ofdactora'office$, hay. MedF'irst, says Mr. Jotnes "may wln,lhls
Ing never turned a prop(, has "eon dis. thin
banded And 118 Insuranco plan, Stung bq g yeh"
heavy losses, has dropped out of atwul Raft The other chains, however, have had
the geographical morkofs In which II once coonggh. HOr '+ot Corp. of America has
dtd business, enam Its mum foray Into Insurance (I( Still
IteappralsQl has a passive interest In an Insurer), and last Mr, ,tones -lust look everything on tit lost moon running tile nil other is ho Ilals Io
once and II was n ho)I of a ride," says ciently, American Medical 132 more and Nai nal
tot's-OffIceH P work." NOW he's lsorti R insure icelven ures$r$IllfooksndO +ned On t 6'(
through IAe pieces," there Isn't going 10 be anyy 'suppeermed,'
The experlonte has been sobering not says Thomas C, F`HSl Jr., Hospital Corp,,$
JU31 for Humana bill also for Its cemWli• chief executive,
tors In the Invesi0r•Owrled segment of the At litmana, rapid expansion was nl
IlOs
We of pitnl' business, which controls about ways the walohWOrd. The company is lho
strya vl g.sanew to flj<uroe ooh howabasj to MrgJouea atidaWentgfelt Cher 1lryg, tIu tear
deal Ith (he Social and ecosmmic trend president, opened In Wendell C Wtliln a Boca
the sAt Humana off on its rocky course, the concern was out of 411ftI tg homes, into
thtif 's
and g`read is a o by r costs osts The ~ hospitals, on the aequtsAlon'bail,
, The
Nib ernoVAforramont to curbrb m hospital Chains, ofedleal couf80; is 11 became known (Or light controls of
At Oemral part of this frupalfly drlvoIs hO9plta) purchasing and stafffag, ("Hit.
nn s[felt to keep people out of hospitals, l1f11ma, One doctor cads it), All the Willie,
I rata (110 wave of rising U.S, spending oil
medlca( care, And Its stock price soarM,
Then (he 1108011/11 industry was shaken;
Please 7iirn Id Page*,
Ca1rI»ih 1 r
S THIS WAI,I, qT3?Vvq1 FRIDAY, OCTOBER 9, 1987
Guarded Condition; Humana's Woes in Diversifying
Makes Big Health Conglomerates Less of a Prospect
The watrnrrersshed ehcdeH•..vent t was the nwve he ))eye by the W,ere Humana Ranks Among.HospitalManage s
cderal Medicare program, starting In
IIINB, to pay hospllAls fixed fees nccor'din
to dlngn6stlc calcgades; the govtrmneru Trailln>~ the Market Industry !seders
,reVinusl>llal's
} y covVpQd all or a host old. ffumaaa vs. the S&P 500, monthly
lays for n+rathlg Medicare patients, closing pricer indexed to 1981 ■ Number of bed
IN1111n rsemenl from employers and close = 100 L 11.alest a,u"wal net ircame
mlht s
their hlsurers also tightened as they radsed 200 (In nnsofdoll
ars)
deduclll,les and beg"A to monitor doctors' t
admMIng prncliees closely. And the Im llotpllalCorpof A
inr,ka
growth of such cnst-cutllng insurance plans -
f 3Qf meo
ns herdnrouthrtenance Organizations put 1h0 I7.nsi
Gtrlher pressure on hoapilal occupancy 174 d
r;des and htcome, Ito Ilumsna
, 117179
All InsullulCe Venture 1P0
})kin lIlse, InhgAT) it) pare l Its ! hosn}L1hI National Med. E:nlerprlaea
plil c 1Ufl
anti swlftiv Irrnnclled ant Into other health. 16,804
care bushnesses• !I' Hamam Care Plus, II 80 (b970j
❑u,nana
Premed un Insurance plan (hat could ap. do American Hedtcal ]nil
peal to employers wltll relatively low pre. Ism Mile 0,9UI
Intunls. After they bought, Ihell• employees 1Der c 's 6140
Who needed hospitnilzation ,all Incentives
in choose Humana; if they didn't, the de• - _
u,dllble wonkl Ix higher suit 1110 Insurer HUMANA INC.
8r06
8/A6 8/ed 8/88 8182
would pay a smNier percentage of the rest 4Derations
rnouar, lr ,„lllba,I
nf the hill, except with emergencies, Sales
The pr0blen1 was Iho doctors still $3,446,4 $2,188.4 _ SI,flOL2 81,746.1 $1,fi14,8
nmke most Of the doclsions about which Not Income $64.6 -
110spilal It pnlieul goes to. and the plan Haspltals Opornted - 8q - _ $218.2 _ $108,3 $IOO.o E127,1
contained little to influence Ihem. By and - _ 87 OI ~0 80
large, duelers were loath to change their Occupancy Rate 47.7% 482% `54,496 --68.64 00,1%
Ways and start admitting to different llos• Per Shen Irllormation
pltals, Mr. Jones Says some doctors sin)
reported almisslons to nou-Humana hosp~ Net lncomo (PrIalsry) $0,60 $2.19 $1,94 $1,44 $1.38
I tats as emergencies, protecting
from finmleial penally , patients Common Divldond $0.74 $0.411 $0.65 $0.66 $0.84
And some 110111lats outslde Iho Humana SOU ve; Mrdfo Cr ura! fynanefal.Serr ton, 6'.p, ifatlon
ehAin fought back. In Lns VegAs, the site
of the ginnl 679-bed Humana Hasppltal•sun• thought we would be patsies," aupplters of things like dnags and eye,
rise, file rival Valley ifospltnl ModicalCan• Some admhdstrators of Humana hospb glasses,
far simply matched HumnnA's Incentives, tats terued cool to Medb'Irsl doctors' of. And Huainan has Jul taken a big
Valley hasaeelsedCHePlusotretallating flees, concerned that other physlclnns ble to Florida, it is trying to reylvelnter
accbyusallon delaying payments of Valley s bills, an prig ,al begin to boycott their Institutions, national Afedlcal Cantors ins an HM01t
Humana denies, "4110 hospitals listed us," says Savas acquired In June for $40 million unit a conk
Humana was stow to realize that Coma ,altos, a former Humana executive who mifinenI to Infuse 11 with $20 million,
Plas was misfiring, hills from Its own box" WAS; the director of opepattona for Med• IMC's 140,000 members re toni8h Insur•
pltals, sent olectronleallyy as soon as at First "A lot of times Weqult Imarketsi be. once rolls that had fallen back an Humana
Ices were rendered, Wood to aceunlU' cause of 1110 ng pressure we gel front our ad, lot policies expire In weak markets, And
earlier than bills from other hospitals, mlnialrators, ' iMC IS In p slate wham Humana hag IS
a false plcllrre of the share of rare Humana began Its dlgposnl of McgtF9rsl hospitals; But its conlriblillon remaAls to
Plus admissions that Humana hospitals CMOs ins! year and completed it in Au• be seen, for IMC has big problems,
were enpluring• In foci, as of early lose gtfsG It s111t owns a few of thorn but no It had ;ntracled with the federal Rev.
only 47% 01 Care plus admisslons across longer uses the MedMrst name,
the U .S. to cover Medicare patients, The
tats, ,S, far bolo below the ending 76% expected, III Humana hospl• occupancy so off governmentpold IMC, whichwnssupposed
xpected' MOanwhlto, hospital Occupancy has con • ° !lay hospit
rude surprises, it built the offices and can. als and doctors a fixed fee
Al Numuna MedFlrst; too, (hero wgro Ilnued to sll , pl Humane as elsewhere, s In might advance need, for But most of IMC the didn't care make Ire
members
pp
treated will' physlclan•adminlstraror8 to rate has f1111en 104190 from 41% In 198E A It4 , and last year lr
hire doctors and run them, Tito offices remain profit margins At Humana llosltals had an money str$18.4etch far million loss. enough, was In state •
were axpocl0d to operate prorilably, remain high by industry standards, they
Asstdrl•upcostsandotherglitcheskept months erondr61 Somewhat. For Ili nine cplAccor Ing ng to f decal turd-
a share, federal Indlc ll8ge 1lIi to federal regulators, the fine I
As In fire red, Hamana began to Put tall lits to $1ljq MAY 31, mutton, corporate
more of the doctors' offices near Humto on revenue 1"70 (a of $2,83 lf0p O And Humana federal IndIC clmeut thn this ye this ye the trouble. A<
billion.
hospitals. If IIICy weren't profitable, aC stock has lost its glamo
ur, It clased slater, ar charged fors,
leer 'MC Prosldont Miguel B. Itecarey Jr,
least they could steer patients Hilmann'a day at $26,60 a share, y with conspiracy and bribery fu connection
way. But then the Humana hospitals be. As Air with all atr°mt 10 win It contrnet from it
Came targolsof other doctors, who saw file , Jones sloe if, Ilia conth'uing tabor union, po has pleaded innocent,
MOVIrst chahl as a threat to their lac, pressure on occupancy rules shows Hu• ftr union, soy Humana has moved un•
mane l right In Iryin
tlces. somodoctars Ware, Incensed that this of i g (o got the kinks out Orgcllcally to right filings, Installing now
competitor had been set up by a company giving di vorslticalt°n strategy rather than management, crealing a Team of nurses to
that wanted them to send their atients to One of up on hi. I think we re going to be monitor file qualify of loco and w°rkln !
its hospitals, p one of t c big winners, he says. g tp
In Ban Anlonlo, Texas Tho htrurance plan is helping hospital attract nmrMedicare members, In other''
, a group of physl MOM now than before. Humana markets, too, [he company has stepped up
citing took out n0wspaper Ads purportlng~io his Its 110104 efforts,
allow mane high X-ray •ray in and fab Greensboro, N,ChargesC , at a A H doe u• mfass flunrioals, are largely gelling becattae the about the of Its nd Insurance • Mr reeled
, its es Jones so errors ya t and that ihM In the Humana In" car
has
g1f run
'or glue as chief of mcdlelne At A Hmhana plaits riwrltton tougher forms, Undercon• Its strategy for dealing With the nallonal
"
hospital III prOlesl, And III taaisvltlp, as Irncls redchtd with 6,000 dollars so tar, effort to curb medical b ills will work oul•
Important market
tarl; for Humana as well as IlosPllntizaIlan, a Hai ana hospud h needs Still, Ile concedes, "Wo don't know what's
I Its headquarters ell ,doctors Ihreataniag be used in most Cases, out there to bite us next,"
it split dissuaded Humnnn train opening Mr. 30I109 hits Humana looking Into
Any Medloirsf offices at all, What else the IIIallratoo venture (which 1s
f' Humana never realized there would be I (Ills kind of resistance," says Stuart Cohen, gradually a plans) ilgg name la Humana
A fanJly darter In Uiilsvulc, "They fly is Health try l pxnc.t volume cliscoentf from
P
1
1
•r
NO. 87-1907-C
DENTON COUNTY, TEXAS, § IN THE DISTRICT COURT
Plaintiff §
§
V* §
CITY OF DENTON, FLOW MEMORIAL§ OF DENTON COUNTY, TEXAS
HOSPITAL BOARD, H. E. FLOW §
TRUSTr and JIM MATTOX, §
ATTORNEY GENERAL OF THE §
STATE OP TEXAS, §
Defendants §
§ 211TH JUDICIAL DISTRICT
PLAINTIFF'S ORIGINAL ANSWER TO COUNTERCLAIM
AND FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY
TO THE HONORABLE JUDGE OF SAID COURT)
DENTON COUNTY, TEXAS, by and through the members of the
Commissioners Court, Plaintiff in the above-entitled and
numbered cause, makes and files this its Original Answer to
Counterclaim and First Amended Original Petition for Declaratory
and InJunctive Relief and Damages pursuant to the Uniform
Declaratory Judgments Act, Chapter 37, Texas Civil Practices and
Remedies Code, and in support thereof would show the Court as
follows)
ARME
I.
Denton County, Texas, generally denies each and every, all
and singular, the allegations contained in defendant Flow
Memorial Hospital Board's Original Counterclaim and Cross-action
and demand strict proof thereof as required by the laws of the
State of Texas and the Texas Rules'of Civil Procedure,
DECLARATORY REL
TT,
Plaintiff Denton county ("County") is a political
subdivision of the State of Texas, Defendant Flow Memorial
Hospital Board ("Hospital Boardfl) is a joint county-city
hospital board duly created pursuant to TAx.Civ-Stat.Atln, art,
44941-1, by agreement of the governing bodies of the
I
r Commissioners Court of Denton County, Texas and the City of
Denton, and has previously entered its appearance in these
proceedings by filing its original answer, H, E, Flow Trust is
a charitable trust established February 14, 1946 and has been
served with citation by serving its trustees, Ray Stephens,
Municipal Building, Denton, Texas, and Vic Burgess, 212 w.
Sycamore, Denton, Texas. The City of Denton ("City") is a
municipal corporation created under the laws of the State of
Texas and has previously entered its appearance in these
proceedings by filing its original Answer. Jim Mattox, Attorney
General of the State of Texas is a necessary party under the
provisions of Tex,Civ,Stat.Anns article 4412a, and has been
served with citation at the Supreme Court Building, Austin,
Texas,
zzz,
The controversy before the Court began with an inter vivos
gift from H, E. Flow on February 14, 1946 and the last will and
testament of H, E. Flow dated January 14, 1946 and filed for
probate on February 8, 1947, Item 9 of the last will and
testament of H. E, Flow left the bulk of his estate to a board
-2-
Of trustees composed of the then Denton County Judge, the Mayor
of the City of Denton and, respectively, the cashiers of Denton
County National Bank and the First State Bank of Denton, "and to
their respective successors in office ...11. The legacy was
directed to the creation of "Flow Memorial Hospital for the
benefit of the City of Denton and Denton County, Texas, as a
city-oounty hospital..,". Mr. Flow also empowered the named
trustees to make "arrangements with the City of Denton, the
County of Denton and/or any other organization that might
undertake to properly administer such hospital, such
arrangements as may in the judgment of said Board of Trustees be
to the best interest of said hospital and the people of Denton
and Denton County."
IV.
On July 19, 1971, the City of Denton, County of Denton, and
the Board of Directors of Flow Memorial Hospital executed an
agreement reorganizing Flow Memorial Hospital as a Joint
City-County Hospital Board under art. 44941-1.
Under the terms of this agreement, the hospital board shall
prepare an annual budget for the operation of the hospital. The
city and county agreed to transfer to the hospital board any
funds necessary to balance the hospital's budget uaj ® s W
budget 1s
CO-u." (emphasis supplied) For fiscal year 1971-72, the city
and oounty were to Contribute any necessary funds in equal
amounts. Transfers for subsequent fiscal years were to be
renegotiated. On October 18, 1978, the City and county by joint
-3-
resolution agreed to e=11Y contribute to the Hospital Hoard
until the series 1975-A bonds were fully paid on July 1, 1994.
V.
The city and county continued to contribute the funds
necessary to balance the Flow Hospital budget on a more-or-less
equal basis until fiscal year 1979-80. Beginning in fiscal year
r~
1978-80, the City of Denton has provided much less than an equal
contribution of the funds necessary to balance the Flow Hospital
budget, During two fiscal years (1981.1983), the city made no
contribution. During the 1981-86 fiscal years the city
contributed $790,998 while the county contributed $2,528,176.
The city has not responded to requests for additional
contributions, Unless this Honorable Court enters its judgment
declaring the rights, duties and obligations of the parties
regarding the assets and obligations of Flow Memorial Hospital,
this condition is likely to continue and Flow Memorial Hospital
will be unable to balance its budget. Denton County further
requests judgment against the City of Denton for damages in
excess of the minimum jurisdiction of the Honorable Court for
failure to perform its obligations.
V1,
In 1985, the legislature adopted the Indigent Health care
and Treatment Act (Tex.Civ,stat,Ann, art. 4438f), This act
defines the responsibility of governmental entities to provide
funding for indigent health oars, Section 1243'states, in
parts "Each governmental entity that owns, operates, or leases
a public hospital shall
provide sufficient funding to the
-4-
hospital to provide the health care assistance required by this
Act." A governmental entity includes a county or a city
(Section 1.02(6)), Flow Memorial Hospital is a public hospital
under the Act, (Section 1.02(10)),
VII.
Since the effective date of these provisions of the Indigent
Health Care and Treatment Act (art, 4438f), the county has
budgeted and provided 80$ of the funding necessary for Flow
Memorial Hospital to provide the health care assistance required
by the Act, The City of Denton has failed to provide sufficient
funding to most its responsibility under the Act and has stated
that it does not accept any responsibility for funding indigent
health care and assistance.
Iniunctive Relief
VIII.
Plaintiff would further show the Court that the Flow
Hospital Board has failed to comply with the terms and
conditions of the 1971 Agreement and failed to perform its duty
to act solely for the benefit of the county and city as required
by Article 44941-1, V,T.C.S, As previously stated, the 197,
agreement required that the annual budget of the hospital be
approved by the city and county. The 1971 agreement further
provided "All expenditures of Hospital funds in exceas of the
total budget allocation shall be approved by the Board, the City
and the County prior to such expenditure", In recent years, the
Hospital Board has operaued the hospital in violation of there
contractual obligations on several ocoasionr,
-B.
I
l
TX,
Further, the Flow Hospital Board has demonstrated that even
with Denton County's generous funding, it is unable to
economically operate Flow Hospital and has in fact operated Flow
Memorial at a loss for some time. The 1987-1988 budget
submitted to Denton County for approval projected a $1,971,150
lose from operations and requested a $2,039,474 contribution
from the county and city. This budget has not been approved by
either the county nor the city, and the Hospital Board is
currently operating the hospital without an approved budget.
Denton County simply cannot accept or approve this fiscally
irresponsible situation, Denton County requests that this Court
enter a declaratory judgment that Denton County is not
responsible for losses and obligations incurred by the Flow
Hospital Board.
X.
The Flow Hospital Board was created to operate and manage
Flow Memorial Hospital in the public trust and for the benefit
of the public, The operation of the hospital at such a loss is
irresponsible and detrimental to the taxpayers of Denton County,
the taxpayers of City of Denton, and the public generally, The
inability of the hospital board to satisfy its public trust and
obligations defeats its purpose for existence and compels its
dissolution, Denton County therefore requests this Court to
exercise its equitable powers to dissolve the Hospital Board and
distribute its assets between Denton County and the City of
Denton,
-6-
I
XI,
In the alternative, and not waiving any other rights to
relief, Denton County asserts that the creation of the Flow
Memorial Hospital Board by Denton County and the City of Denton
constitutes a partnership between the parties to provide a
service and benefit to the public. It is basic to the law of
partnership that where the object of the partnership fails, any
partner is entitled to dissolution and distribution of assets by
the Court, Denton County and the City of Denton are also the
Joint owners of that certain tract of land described in Exhibit
A attached hereto and incorporated herein fully by reference,
on this basis, Denton County requests that the Flow Memorial
Hospital Board be dissolved and the assets of the Hospital and
the real property described in Exhibit A be divided or
partitioned among the partners in proportion to tsheir res ectiv
shares of ownership as decided by this Court, p e
WHEREFORE, PREMISES CONSIDERED
, Plaintiff Denton County,
Texas, prays that, after due notice and upon final hearing
herein, this Honorable Court enter a judgments
16 Declaring the undivided ownership interests of the
various parties in the assets of plow Memorial
Hospital,
2, Declaring that Denton County, Texas and the City of
k Denton, Texas are equally responsible
contributions to balanoe the budgetoffFlow Memorial
' Hospital upon approval of such budget by the city and
county and equally responsible for the funding
M7-
i
necessary for Flow Memorial Hospital to provide the
health care assistance required by the indigent Health
Care and Treatment Act and awarding Denton County
damages against the City of Denton for its failure to
fund its obligations.
3. Dissolving the Flow Memorial Hospital Board and
dividing the ascots of the Flow Memorial Hospital
between Denton County and the City of Denton.
4. Awarding attorney's fees to Denton County, Texas.
6. Such other and further relief, both in law and in
equity, as it may be justly entitled,
Respectfully submitted,
ALLISON & ASSOCIATES
Byl
J nos P. Allison
16 SraxOa, Suite 204
Austin, Texas 78701
(612) 482-0701
State Bar No. 01090000
CERTIFTCAfiE_OF SERVTCF
This is to certify that a true and correct copy of the
foregoing Plaintiff's Original Answer and First Amended Original
Petition for Declaratory and injunctive Relief was mailed
certified mail, return receipt requested, to the following
attorneys for the partiesi Lewis T. LeClair, Johnson & Swanson,
900 Jaokson Street, One Founders Square, Dallas, Texas
78202-4499, Bill R. Bludworth, Wood, Luoksinger & Epstein, Four
Houston Center, 1221 Lamar, Suits 1400, Houston, Texas
77010-3018, and The Honorable Jim Mattox, Attorno Oengral of
oe_xgp,, ,p Box 12648, Austin, Texas 78711, on the _ day
, 1987,
J es P, A1liecn
-g-
all-
1 i1996.DlCL Or' VjWI:yANCI r ,
; TIIL• CVTL OF Tf;x t, rJ< 1'11
COUNTY Of, DCIt!'Oh KIIOh' ALL MEN by TIJUSS4 PhCCClff11 i
1
Tn t rtl, Gerald gto6xira, County Judge of iwntoll County,,Texof, j. L, YArororgn, tuyot
•t' of the CSty of Denton, 1ex g, h, hrrra, Cost.
ter of the Oontoll County NeL1t1.AI batmi end
I
Lvn hgnadrscr•. Cashier of trio Pirst Star b..in 0.0
of lA ntonl trusLaaa cf trio Yiom namor i
Ha
Sal al' tnh City rho County of Wnto'.. 11, donllourattorl df tea "D or lYl, W11ors (IlG1 ano Ra
otnur volwuLitl COrlilOtlrrSlofLL. IlNJ tr.u furtnur OtnilalrAtlOn of the ollly,.tlon upon Lna Prrt '
LI trio City al' Lunt OR, 1vA.s sea flaunty gt Lantuh, leAut to Conttrudl, g4.LRL6th rda opur..to a
Clty-"%Puby hospltel, xeown lot the Plow h4rorlel hospitu upon trio hmrul0altur coseri wo roil
adlrta, Rave Lrrntid, solo and L011weyYo, hnu Oy tn°aa pre4enLi, °o LrLnt, cvli Ilea CohvYy unto
,
1r'a,~tt~y. the srld City of pYntou, ~YA.t, r suniL'1Pri oorporhtlon, Anu trio County of Luntdn
P011tierf wuLalvlsion of tie SLwtu of IaAIlt , le a
1clr.Uy, ell 041, wrtrln trot or pgrcel Or 01 land
z hltw.taa if. trio City of Lahtan ono County of Lrntori W.Lr of leA.l
port of u,+ h. beguaont
',t `'•L~• Lurvey, i.ostr"t ho,
31, and a0ftl Vgrt10u1rriy oaudrlWd es f6114re1 I
"OINUjfiw of a oonervto taxer W last north of the scutn oowtu:ry ling of Seripturv
t
Street in 1he City 01 Lemon, 16A4.11:. , . 1 and 00 tegL oast of trig rust oourwery ling of brYrn Stnrt
in the City of DsAto11, TlxrLl
SIIEIICL North bb° I
50+, Lift 909,5 tart to 4144 point of 6urvaturv at to alroulur aarYa to Uit
~ lrttl
r }:s THL'lk;L In a NOrLhsost6rlY dlreetlon along the er6 01 sold atrve whose radlus is 131 h•t,
a dlataneo of 205096 lest to trio point or tangency of solo ourvel
7 181111cC North 00 191 most 464.5 lent to if comfits Air"r for aornarl }
TUIICV North e9° 3b, Vest b3V.. (got to at 6oncrwta wrier toe corhorl
l'H8lfCL Counh 0° l41 Wet 60a, fowl to the plua4 of too4ionshg, unu Laing the eamtl ueet
j %w
.4 of l..no Convoysu wy Aaolo GerlpturIl, et, all to the Flog Pw Oof:.l hospital I'rustvei Ly oYod
a,.tma Autw,l 1, 194? end ro°Ornad It, Volteoe 339, P+gY 497 or tilt betla hYCoras of Whtull County,
laA.,s, loss thet portlon or sells trtat dsaicotea to this publlo for street purpa4Il4
TD HAVC AND TO MOLD the soovs dosrriboo promises, tagother rtth all red ed Rsulur, 1111
'.'j".'"•~.• rfrhts A(W rppurta Mon°es thereto in Anywlse Lulonll rig unto LRY eYIY City of Dentonl Ttl3rs, Ind
County of Denton, 1'ax6h,ehoIr swaassiurs end alalins forever,
H y •
ti lh',t?nf', VITNIGS our iwnda this 20th Loy of YA !
Y, 19454
OAPAld SLOdkrrd I
h. M. Will
t rw .1,. Len Nondersor,
.t:~r t J• b4 Yvrbmp111L DtATC OF TLUCI
COU ry OP URDU)
Detorm am, harµraL Knight, A Notary Public in And for Denton County, Tax„a, on this lsey
T~~ ~Id, Yt ff,}+ psrooAAlly oppaA»d Willa StOokerd, Oownty Judge at Denton 4o6A%y, Tmxwsl J, L, YArbrowgh,
yi'aw%,~ , MAYOP of this silty Of Witt°A, Toxrul ksM. bArM, Cashier 01 1114 WAton Cal h61101361 Ir"I
i , • 'EA •t l 1't 1•Ae
" Len Nvnderson, Cushier of the First State iwf* of 04ALOnl trustl1dof the plow Kohorlal Hospital
~ty, 4f,,' ,i~»1 ,'•'F!4 01 tnv city AfW County of Denton, t•samat Anatol to s4 to (M Site partuns end truetvwb whites names 4•
Are suLOo Plbod to the toragolns Lnetru"AL, And %no sells Coreld 4LOOA04 160all"loogta LY W tllrt
1 rte &AYOwted the seso tar 1M perpoaes And 001d1dbWLO1, Attu In the dapoaity therein Staled,
'e 'l'~'•,'i" a r.',•, Ana Ing hold J, L, VorbPOYfh 66Nn0Y104116 to M Lh.,t he ssaOwLYJ the sASx, for stir Purpoass And
t:. , A.yS1
'~'►"'Xe•, ;Ia." duh11a4rition AM IA Inv 64pUlty thuflin 11W404, And tM Cwt6 h. M, bmrnt, u041,am110y'w6 to
ew Willi no 64MAL4u the 46YW lo? the p1u P0ess elld eons lutleL lIlU end in the oAPmaltY lhrfoll-
October 7, 1975 Continued
Haywood, requ
(B A estingpthat Ctheazoningaclassification5 of a f~tract Petition
at o 1203 Avenue A
be changed from the Single Family (SF-7) to the Mfulti-Family (MF-1) classification,
'Phis tract, comprising approximately 1,2 acres, is located on the southeast corner
of Avenue A and Collins Street,
report from theeDirectorgof Conmmunity Developmentestatingnthatt 28tnotices had
been mailed, with 7 in favor and 9 in opposition and a report that the Planning
and Zoning Commission had recommended approval, motion was made by King, seconded
by Mitchell that the petition be approved, Motion carried unanimously.
(C) A public hearing was hold on S-107, the petition of Mr. L, A.
Nelson, requesting that he be granted a specific use permit for a mobile home
park at 400 I-358. Central Freight Lines now occupies the property and a mobile
home park, with one mobile home is proposed for the site.
After hearing 1 proponent and none in opposition and a report from
Colmmission, motion~wasimaade by Stephens, seconded by Mthe Planning itchell that a the Zoning
~ be approved. Motion carried.
(D) A public hearing was held on Z-12550 the petition of Mr. R, D.
Welborn and Mr, J. L. Brown, requesting that the zoning classification of two
lots in the 1300 block of Greenlee Street be changed from the Single Family
(SF-7) to the General Retail (GR) classification, This tract, comprising
approximately 1,3 acres is located on the south side of Greenlee Street near
the intersection of Greenlee and I-35B.
andproponent
approval by the Planninghearing
Zoning Commission, imotionopposition
made dby Keng,tseconded
by Hughes that the petition be approved. Motion carried,
4. The Mayor read and presented a Special Achievement Recognition Award
to Doug Hill, who conceived and promoted' the fire works display presented at
Fourth of July celebrations at Fouts Field, sponsored by the Kiwanis Club,
5, The Mayor read a Proclamation proclaiming October 12-18 as Legal
Secretaries Week,
6. The Council considered resolutions approving tLo issuance of bonds by
the Denton County-City of Denton, Texas Hospital Board; approving the sale of
such bonds; making provisions for payment of maintenance and operating expenses
of Flow Memorial Hospital by the City of Denton; ratifying and confirming
creation of Hospital Board and contracts between the City of Denton and Denton
County and the bylaws of the Hospital Board,
The following Resolutions were presented;
(A) A RBSOLUTION BY THE COMMISSIONERS' COURT OF DBNTON COUNTY, TEXAS,
RELATING TO PROVISIONS TO BB MADE BY DEMON COUNTY, TEXAS, WI711 RESPECT TO THE
HOSPITAL OPERATED BY THE DEMON COUNTY-CITY OF DENTON, TEXAS, HOSPITAL BOARD;
MAKING CERTAIN COVENANTS IN CONNECTION THEREWITH,
*fflREAS, the City Council of the City of Denton, Texas, and the Commissioners'
Court of Denton County, have heretofore executed a contract effective October
It 1971, whereby both political subdivisions a roed to provide jointly funds
for the operation of the plow Memorial Hospital; and
111111EAS, the Denton County-City of Denton, Texas, Hospital Board, the operator
of said hospital, as the joint agent of said City and County, is in the process
of authorizing the issuance of bonds in order to provide for hospital and the prospective purchaser of one of the series of bonds has requestedrthements,
existing arrangement of the City and County be clarified; now, therefore,
M
(~j{ J I I
October 7, 1975 Continued Y
BE IT RESOLVED By THE CG1tMISSIONERS' COURT OF DENTON COUNTY, TEXAS;
SECTION 1; The amount to be transferred annually to the Hospital Board by
between thetideunder nticalhparties swhich saeffectiv October l1, of the 1971, contract
shall be the
lesser of:
(a) an amount equivalent to the principal of and interest on the
Series 1975 and the Series 1975-A bonds (in the process of ...r
being issued by the said Hospital Board), or
(b) the amount that a tax of 10¢ on the $100 valuation would produce
on the County tax roll (Assuming the then current rate of
collection),
SECTION 2: The amount to be transferred annually to the Hospital Board by the ,
try o?_ nton shall be an amount equal to the amount paid by Denton County
under Section 1,
SECTION 3: The covenants of S9ctions 1 and 2 shall be effective during the time
t e er os 1975-A bonds are outstanding and unpaid.
PASSED AND APPROVED, this the 6th day of October, 1975.
s
ATTEST; ,
s
APPROVED:
ATTEST: M OR0
,
Motion was made by King, seconded by Stephens that the Resolution be
approved, ~On roll call vote
l1ughes voted "aye", Mitchell voted "aye", Stephens
voted "aye", King voted "aye,' and Jester voted "aye". Motion carried.
(8) A RELATING TO MAKING PRO SIONNFOR BY THE CITY COUNCIL OF THE CITY OF DENTON,
THE OPERATION OF 774B FLO4 MEMORIAL HOSPITAL.S)
WHEREAS, the City Council of the City of Denton, Texas, and the Commissioners' Court
of Denton Cowity, have heretofore executed a contract effective October 1, 19710
whereby both political subdivisions agreed to provide jointly funds for the
operation of the Plow Memorial Hospital; and
W-HIREAS, the Denton County-City of Denton, Texas, Hospital Board, the operator
of said hospital, as the joint agent of said City and County, is in the process
of authorizing the issuance of bonds in order to provide for hospital improve-
monts, and the prospective purchaser of one of the series of bonds has requested
the existing arrangement of the City and County be clarified; now, therefore,
'PHE COUNCIL OF THE CITY OF DENTON HEREBY RESOLVES:
SECTION Z: The resolution heretofore adopted by the Commissioners' Court of
Denton ounty, Texas, a true copy of which is attached hereto as an Exhibit
(and made a part hereof for all purposes) is hereby approved,
1
i
October 7, 1975 Continued
SECTION 2; The Mayor is authorized and directed to (1) furnish a certified copy
o this resolution (with its attached Exhibit) to the County Judge of Denton
County, and (ii) sign a copy of the attached Exhibit showing approval by the
City of Denton, 'texas, through this governing body,
SECTION 3; This resolution shall be in force from and after its passage and it
is so roso ved.
PASSED AND APPROVED, this the 7th day of October, 1975,
i 51
asT1 ESr ; MAYURO cl r ''`b~r~N, MS
APPROVED AS TO LEGAL DORM;
c Y'PV"A'PMILQE
Exhibits are filed in packet #4750 in the City Secretary's Office
Motion was made by King, seconded by Stephens that the Resolution be
r, :ed. On roll call vote Mitchell voted "aye", Stephens voted "aye", Hughes
"aye", King voted "aye" and Jester voted "aye". Motion carried,
RATIFYING AND CONFIRMING THEN ESTABrLIIWIENi'COF THE IOSPITAL IBOARD;APPROVING TI1H
PROPOSED ISSUANCE OF BONDS BY TIM DENTON COUNTY-CITY OF DENTON, 'TEXAS, HOSPITAL
BOARD; APPROVING THE SALE THEREOF,
WHEREAS, the Denton County-Cit of Denton, Texas, Hospital Board has been
heretofore established under t~e provisions of Article 44941-1, V,A,T.C,S., and
as the Agent of the City and County operates the Flow Memorial Hospital; and
WHEREAS, the Board of Directors has entered into negotiations with and proposes
to authorize the issuance of bonds, but the same may be delivered only If
approved by this governing body; now therefore,
THE COUNCII, OF TIIB CITY OF DENTON HEREBY RESOLVES:
SECTION 1: The creation of the Denton County-City of Denton, Texas, hospital
So-ard under the provisions of Article 44941.1 by the City Council of the City of
Denton, Texas, and the Commissioners' Court of Denton County is hereby ratified
and confirmed, and the contract heretofore executed by and between the City of
Denton, Denton County and the Flow Memorial Hospital and the By-laws heretofore
adopted by said Board of Directors and approved by said City and County are
hereby approved, ratified and confirmed.
SECTION 2: That the authorization, issuance and delivery of the two series of
bonTcs w"ii-or the terms and conditions set forth in the attached resolution
(Exhibit A) of the Board of Directors of the said Board, is hereby approved, The
Direct Loan Agreement by and between the Board and Secretary of Health, Education
and Welfare (Isxhibit B) is hereby approved,
SECTION 3: Ilia sale of the Denton County-City of Denton, Texas, Hospital Board
eve1~" IM Bonds, Series 1975, to the Secretary of Health, Education and Welfare
at the price of par and accrued interest is hereby approved,
SECTION 4: The sale of the Denton County-City of Denton, Texas, Hospital Board
ovenue ids, Series 1975-A, to First Denton Count National Bank and First State
Bank of Denton at the price of parr-anC' acc 'j- ntorest"=s Ti`ere y approve .
I
October 7, 1975 Continued
SECTION 5; This resolution shall be effective from Auld after its passage.
PASSED AND APPROVED, this the 7th day of October, 1975,
/s/
ATTEST: Mayor, ty o enton, exas
APPROVED AS TO LEGAL FORM;
/s/
i'4-A'!°CbUP7-
Exhibits are filed in packet #4750 in the,City Secretary';; Office
Motion was made by King, seconded by Stephens that the Resolution
be passed, On roll call vote Mitchell voted "a a", Stephens voted "aye", Hughes
voted "aye", King voted "aye" and Jester voted 'aye", Motion carried.
7. After receiving Minute order from the Planning and Zoning Commission,
the City Attorney gave his opinions relative to possible conflict of interest in
the case of 3 Council Members voting on the North Texas State University street
closing request, lie stated that the 3 NTSU members did not have a legal conflict
because he could not find a personal pecuniary interest regarding the street
closings. However, he did state that there were other factors to be considered
in this instance. (sham stated that many citizens had already concluded that
there was a conflict and it was important that the Council maintain and retain
the confidence of the public, Therefore, It was his opinion that even though
there was not a legal conflict, the 3 NTSU Council Members should abstain from
any consideration of the NTSU street closing request. Upon questioning of the
Mayor, Council Members Stephens, Mitchell and Hughes stated that they would
abstain, Isham then said the matter could not be acted upon by the Council
because there was no possibility of a favorable vote being reached with 3 Council
Members abstaining.
81 Jim Hawkins, speaking for Bill Angelo, appeared before the Council
requesting renewal of a permit to paint house numbers on street curbs,
Motion was made by Hughes, seconded by Stephens that the request be
approved. Motion carried,
9. After reading the names of citizens by Mayor Pro Tom King, Chairman of
t
motio
he Nominating Committee, to serve as members of the Charter Revision Committee) was made by namednto the Charter Revision Committee as recommended by
the Nominating Committee:
Frances Pender Bill Brady
Sue Smith Jack Brown
Nick Stabile Lonnie Yarbrough
George Hopkins Alex Finlay
Mary Evelyn Huey g y
John Thomson Rev, Jose Mata
John Nelson Ruby Cole
George Holladay
Motion carried,
Motion was then made by King, seconded by Mitchell that the organizational
meeting of the Committee be set on or about October 20, 1975, Motion carried,
, M
J
JOHNSON & SWANSON
ATTORNEYS AND COUNSELORS
A Parldership including professional corporallons
100 F
Writer's
r)irrc101as Number 900Jeckson Strreetg
f HO$, Texas 15202.4499 Telex 55111?
(214) 977-9566 214.977.9000 releaoey214977.9np1
September 21, 1987
The Honorable Vic Burgess
county judge
county court of Denton County
612 Joseph A, Carroll Courts Building
401 W. Hickory
Denton, Texas 76201
Re; Flow Memorial Hospital
Dear Judge Burgess;
The Flow Memorial Hospital Board has authorized me to respond
togoti youatre moswitth rehe
ne
tcentCounty letter, reaffirming their willingnests of
aspes to
and the City o, Denton all
c
the future of Flow Memorial Hospital, including the transfer of
the hospital to an entity mutually agreeable to all parties
involved, Specifically, the Flow Memorial Hospital Board wishes
to go off record as favoring a transfer of the County's interest in
the facility to the City of Denton, followed by a transfer by the
most appropriate means from the City to a community-based not for
profit corporation.
As you know, the Flow Memorial Hospital Soard has also
instructed us to file a counterclaim in the pending .litigation,
wherein we shall ask the court to declare the obligations of the
City and County and the rights of the Flow Memorial Hospital Board
under the 1971 agreement, It is not the Boards intention to
obstruct the course of negotiation among the parties, In the
event, however, that the negotiations are not as fruitful as we
all hope they will be, we do believe that it is necessary for the S
court to construe that 1971 agreement,
pj
r~
t
7
r
r
~S
The Honorable Vic Burgess
September 21, 1987
Page No. 2
Please be assured that the Flow Memorial Hospital Board is
committed to a speedy and fair resolution of this matter,
Sincerely,
C dwa.~d
Edward J. Hz a
EJH: ck
cc: Members, Denton County Commissioners Court
The Honorable Ray Stephens, Mayor
Members, Denton City Counoil
Members, Flow Memorial Hospital Board of Directors
Honorable Jim Mattox, Attorney deneral
Charles R, Linton, Administrator
of Flow Memorial Hospital
Members, H, E, Flow Trust
F, U Ibook I4\09758\0019\Dulits$2 111
i,
I'
~a - 723 do~
A~ 006
7~ , 7 ~ mod, ~s w
7~ o-/le 16d_
76
g z~-
~3 - Ty ~a5r vvU
y - s ~isD, oo d
~s` -glo aaa,vbG
7
.
,r
HOW 1310
Scripture Street
MEMORIAL HOSPITAL Denton. TX 79201
1817) 387.8881
1~ Iti ,ice
S~P22W
September 18, 1987 qO11 t7
A»ACf7S Ui rrr
Certified Mail - RRR
No 8 -943
The Honorable A, Ray Stephens
Mayor of Denton
City of Denton
215 East McKinney
Denton, Texas 7620;
Dear Mayor Stephensi
In OtdOr to o
you with
f DirectorsuofaFlow our request for financial assistance, the Board financial The hospital's loss i in o August n was through $203,699, month and thof Augut,
e year-to-date
loss now totals $1,368,273, The Board of Directors is requesting
that the city and county reimburse the hospital for this lose,
As of September 14, 1987, the hospital had $222,213 in cash and
certificates of deposit, and had accounts payable of $1,150,151,
of which $746,612 were past due,
The Board of Directors would appreciate your consideration of this
matter.
Sincerely, r
M1 I
Charles B. Linton
Chief"executive Officer
act The Honorable Vic Burgess, County Judge
Michael J. Whitten, Chairman, Board of Directors
F
7
a
j
FLOW MEMORIAL. HOSPITAL
INCOME STATEMENT
August 31, 1987
YEAR-TO-
PATIENT REVENUEI MONTH % PRIOR DATE $ PR10R
ACTUAL. BUDGET VAR YEAR ACTUAL
Inpatient R $ 875,498 $ 1,671,439 (41,6) $ 1,1 552,738 $13,551,043 UDGT
Outpatient Revenue 271,214 255,258 6.3 $18 2?4,683 2y409 , 136 2158 {25.0) 416,816,290
Total Patient Revenue $ 1,246,712 $ 1,926,697 ' 8, 424 (12'1) 21452,367
DEDUCTIONS FROM REVENUE (35.3) $ 1,187,421 $15,960,180 $20,8200741 (23.3) $19,268,657
Contractual Adjustments $ 130,252 $ 268,118 (51.4) $ 199,203 $ 2,747,768 $ 2,897,405 (5.2) $ 2,441,645
Bad Debt 264,843 221,586 1915 392,907 3,261,354 2o3949558 36.2
Other Do(IUCtions 46,640 66,833 30.2) r 206,276 702, 133 3,043,141
'foal Deductions 722,227 2.8) ~ 1,0].8,345
$ 441,735 $ 556,537 (20.6) $ 698086 $ 6,711,255 $ 6,014,190 11,6
$ 63503,131
Net Patient Revenue $ 804,978 $ 1,370,1G0
Ne Operating Revenue _ 26,924 65,083 ( $ 1,04 $ 9,248,925 $14,806,551 (37,5) $12,765,526
Other (58.-6) - - 82,11 _ 604,748 _ 703,315 14,0) ___663.095
Total Net Revenue $ 831,901 $ 1,435,243 (42,0) $ 1,151,149 y
$ 9,853,673 $15,509,866 (36,5) $13,428,621
OPERATING EXPENSES
Salaries & Wages $ 469,025 $ 607,126 (22.8) $ 555,896
Employee Benefits 99,879 94,308 5,9 76 699 $ 4,944,054 $ 6,567,358 (2,3,9) $ 5,990,990
Professional Fees 188076 185,392 1.6 259,838 210857,095 1,019,139 , 913j676
77,014 2,003,426 (13,7) 2,168,127
Operating Supplies 103,616 186,667 (44.6) 161,738 1 343,699 2 019,391
Other 137,129 218,951 (37,4) 190 410 (33.5) 1,787,726
'l'ots] Operating Expenses $ 998,025 $ 1, ' 1,710,336 _ 2~3b6, ,pyg (27,71 2,Q38,126
293,244 (22.8) $ 1,244)581 $10,982,198 $13,975,382
Income (Loss) (21.4) $12,898,645
Before Depreciation $ (166,124) $ 141,999 (217,0) $ (93,432) $(1,128,525) $ 11534,484 (173,5) $ 529,976
Depreciation (67,275) (80,685) (10,6) (59,705)
Non-Operating Revenue 27_,700 24,630 12.5 (716,146) (871,921} (17,9) (541,8
46,311 476,396 266) 181 79,0 _ 703,A71
71
Total Income (Lose) $ (205,699) $ 85,944 (339,3) $ (106,826) 1 368,273)
~_(..1._W 1 928,724 247,3) 692,491
-1-
3+
K
FLOW MEMORIAL. HOSPITAL
BALANCE SHEET
August 31, 1987
ASSETS LIABILITIES & FUND BALANCE
CURRENT: 1987 _ 1986 CURRENT: 1987 1986
Cash & Investments $ 261,963 $ 11531,910 Current Notes Payable $ 98,367 $ 248,296
Accounts Payable 1,293,472 1,030,658
Patient Receivables 31593,981 4,778,068 Accrued Expenses 456,566 463,477
Less Allowance (1188587) (1,910,815) Due Government Agencies 1010335 267,763
Net Patient Receivables $ 1,104,394 $ 2,867,253 't'otal Current Liabilities $ 1,9491740 $ 2,0101194
Other Current Assets _ 933,436 757,077 Long Term Debt 1,9671311 1,8840451
Total Current Assets $ 21B99j793 $ 5,156,240 Total Liabilities $ 31917,051 $ 3,894,645
Property, Plant & Equipment Fund Balancer
Land/Improvements $ 37,547 $ 37,547 Donated Capital $ 4,455,719 $ 4,455079 ;
Building 3,887,592 3,732,667 Pledges & Gifts 1,205,568 970,467
Equipment 7,2090529 7)307j069 Fund Balance Beg, of Year (42,491) 475,551
$ 11,134,668 $ 11,077,283 Income & Expense Balance - _11368,273) 692,491
Low Accumulated Depr, (5,866,827) (5,7441590) Total Fund Balance ; 4,250,583 $ 6,594,288
Net Property/Plant/Equip 5,26.7,841 $ 5,332,693
Total Unrestricted Funds 8,167,634 $ 10,488,933 Total Unrestricted Funds 8 167,634 $ 10,488,933
2 -
t,
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i'
PLOW MEMORIAL HOSPITAL
COMPARATIVE ANALYSIS - ACCOUNTS RECEIVABLE '
August 31, 1987
ACING BY DISCIIARCE DATE
CURRENT X OF X OF
DAYS MONTH 'DOTAL PRIOR MONTH TOTAL
0- 30 $ 1,350,489 37.1 % $ 1,514,459 39.3
31- 60 935,265 25.7 9159055 23.8
61- 90 513,146 14.1 525,998 13.7
91-120 308,155 815 252,157 6.5
121-150 168,309 4.6 155,064 4.0
151+ 365,370 10.0 491,141 12.7
3,640 723 100.0 % ~ , 1_3,853L874 100,0 X ?
i
REVENUE ISY FINANCIAL CLASS
CURRRNT MONTH 08/87 07/87 06/87 05187 04/87 03/87
Medicare $ 288,274 2218 % 30.3 Y, 28.4 X 26.6 % 30.0 % 34.3 2
Medicaid 128,257 10.2 8.0 11.7 10.6 7.9 11.3
Blue Crone 37,165 3.0 6.1 7.4 4.1 3.2 3.6
Commercial Ina. 4090814 32.5 31.0 29.6 36.8 39.9 32.1
Self-Pay 397,346 31.5 24.5 22.9 21.9 19.0 18,7
$ 11260,856 100.0 % 100.0 % 100.0 X 10010 % 10010 % 100.0 %
DAYS OF RRVENUE IN A R CURRIiNT MONTH 07187 06/0 05 81 04 LL U 87
Cross 75 79 77 74 78 84
Not 60 61. 56 55 54 59
WRITEOCCS & RECOVERIES CURRENT MONTH YEAH-TO-DATE: DRO OUTLIERS CURRENT MONTH YEAR-TO-DATE:
i
Charity/Hill-Burton $ 26,798 $ 696,864 Number of
Bad Debt 395,851 30851,589 Discharges 3 25
Bad Debt Recoveries 229818 4529375 Over $18,000
I
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:
,
7
1Y
PLOW MEMORIAL HOSPITAL
STATISTICAL STATEMENT
August 31, 1987
PATIENT UTILIZATION1 ACTUAL BUDGET Z VAk PRIOR YEAR ACTUAL BUDGET 2 VAR PRIOR YEAR
Adult Patient Days 1,537 20170 (29.2) 1,827 19,611 23,450 (16.4) 22,422
Average Per Day 49.6 7010 58.9 68,1 70.0 66,9
Average Length of Stay 5.5 4.4 25,0 4.1 6,0 4.4 36.4 4,7
( Discharges 276 490 (43.7) 390 3,255 5,280 (38.3) 4,810
Newborn Patient Days 141 375 (62.4) 329 2,009 4,053 (50.4) 3,399
Average Per Day 4.6 12,1 11 10.6 6.0 12.1 10,2
NICU Patient Days 31 65 (52.3) 64 567 703 (19.4) 739
Average Per Day 1.0 2.1 2.1 1.7 2.1 2.2
ICU Patient Days 73 93 (21.5) 107 831 1005 (17.3) 1,039
Average Per Day 2.4 3.0 3.5 2.5 3.0 3.1
Psychiatric Unit Patient Days 294 484 (38.2) 352 3,954 5,226 (24.3) 4,739
Average Per Day 9.7 15.6 11.4 .11.8 15.6 14.2
Percent of Occupancy 36.0 50.7 (29.0) 42.7 42.4 50.7 (16.4) 48.5
OTHER UTILI7,_ATION_t
Operating Room Procedures 89 143 (37,d) 147 1,235 1,543 (20,0) 19693
Emergency Room Visits 931 1,224 (23.9) 11074 9,479 13,231 (28.4) 13,156
CT Scans 63 59 40.7 22 673 637 5.7 420
Cort. Nurse-Midwife Deliveries 47 34 38.2 39 381 368 315 372
Total Deliveries 69 62 10.1 133 799 670 1.9.3 1,368
Laboratory Testa 7,010 7,719 (9.2) 89721 91,472 83,415 9.7 112,402
PER ADULT PATIENT DAYS
Gross Patient Revenue 811.13 887.29 (8.6) 978.34 813.84 887.29 (8.3) 859.36
Net Operating Revenue 541,25 661.40 (18,2) 596.08 502,'06 661.40 (24.0) 569.33
Operating Expense 693.10 633.15 9.5 713.89 596.52 633.15 (5.8) 599.36
Income From Operationa (151,85) 28.65 (630,0) (83.82) (94.06) 28.65 (428.3) (,52)
LABOR COST MANAGEMENT:
FTL Employaas 252,2 290.8 (13.3) 323.2 252.7 290.8 (13.1) 323.9
PTEs Per Adult Patient Day 5.l 4.1 24,4 5.5 3.7 4.1 (9.8) 4.8
F'TEs Per Adjusted Patient Dny* 3,6 3.1 16,1 4.0 3.3 3.1 6.4 3.7
Payroll as a Z of Total Expenses 44.0 44.2 (.4) 42,6 42,7 44.2 (3.4) 44.6
*Total CTEs t ((Patient Days + Newborn Days) 4 (Inpatient Revenue 4 Total Revenuo)l
-4-
CITY of ORNTON, TOXAS MUNICIPAL BUILDING I DENTON, TEXAS 76201 r TELEPHONE (817) 560-6309
011/ce of the Mayor
September 16, 1987
i
E The Honorable Vic Burgess, Judge,
and Members of the County Commissioners Court
County of Denton
212 West Sycamore
Denton, Texas 76201
Dear Judge Burgess and County Commissioners:
Our City Council read with interest your statement in Tuesday's
Record Chronicle that the County Commissioners Court would like
to see Flow Hospital continue to remain open, That has been
the consistent goal of our City Council so, hopefully, our two
bodies can now get together and achieve this goal.
We fer-. that the attached proposal provides a way for the
County to remove itself from future hospital dealings while at
the same time providing for the continued existence of Plow
Memorial Hospital.
Our City Council respectfully requests your prompt considera-
tion and reply to this proposal,
Sincerely,
Ray rtehens, Mayor
sj
Attachment
cc: Members of Denton City Council
Lloyd V. Harrell, City Manager
3619M
a
r
PROPOSAL:
In an effort to remove the County from future direct involve-
ment with Flow Memorial hospital while at the same time
allowing the Hospital to continue to operate, the Denton City
Council offers the following proposal;
1. The City and County jointly and quickly will
transfer the management and control of Flo w
Memorial Hospital to an independent, not-for-
profit tax exempt 501(C)-3 corporation. Since
most of the legal work has been previously
performed to accomplish this arrangement, this
action should be promptly concluded.
2. So that a new board can have a reasonable chance
at making the Hospital successful, past liabil-
ities will be frozen at the time of the transfer
to the 501(0)-3 corporation, The responsibility
for these past obligations will then be included
and decided as part of the pending litigation but
will not be the responsibility of the new 501(C)-3
board,
We feel this is a reasonable proposal which will provide Flow
Hospital with a chance to survive. As it is obvious that a
timely response is critical, we ask for your prompt consider-
ation of this proposal.
A PROPOSAL TO SOLVES THE FLOW HOSPITAL PROBLEM
The Denton City Council wants to share with you the latest in a
series of proposals we have made to the County o sae Hospital, This latest proposal will be discussedtsoonvb Plow
county Commissioners Court,
y the
If are wt th ti
proposal, please communicate your yfeelingsoimmediatehls latest
y to the
County Commissioners Court, Action must be taken soon if Flow
is to survive and the County relieved of future responsibil-
ities. Please help if you can,
PROPOSAL:
In all effort to remove the County from future direct involvo-
ment with Plow hiomorial Hospital while at the same time
allowing the Hospital to continue to operate, the Denton City
Council offers the following proposal;
1, The City and County jointly
transfer the management and and quickly will
Memorial Hospital to an independent~ ofFlow
profit tax exempt 501(0)-3
most cor or
of the legal work has been ion, Since
performed to accomplish this arrangemtnt,~lothis
action should be promptly concluded,
2, So that a new board can have a reasonable chance
at making the Hospital successful) past liabil-
ities will be frozen at the time of the transfer
for the 501(C)`3 corporation, The responsibility
those past obligations will then be included
wilIdnotdbe the respnsibility pending of ttheinewa501(Cbu3
board,
We feel this is a reasonable proposal which will provide Flow
hospital with a chance to survive.
This ad personally paid for b
Lionie McAdams, Mayor Pro Tom; Council MemberSohea s JimtrAlexander;
Council Member Hugh Ayer; Council Member Randall Boyd`
Council Member Jane Hopkins
DENTON CITY COUNCIL
PRESS RELEASE
/ 9-8-87
In recent weeks, we have submitted numerous proposals to the
Denton County Commissioners Court to Join with us in efforts to
stabilize the financial situation at Flow Memorial Hospital.
These proposals have been submitted in good faith with the
expectation of prompt and favorable action. We have yet to
receive any type of positive response. As a result of the lack
of progress in these discussions, we have reluctantly concluded
that we should engage in no further negotiations with the
County until we receive some indication that they are sincerely
interested in stabilizing Flow Hospital. Failing such a
response, we will issue no further statements until we have
consulted with the law firm retained to represent us in the
matter of County of Denton v. City of Denton. That meeting
with our attorneys will take place on Tuesday,
September 15, 1987.
i
v
r
A PROPOSAL TO SOLVE THE FLOW HOSPITAL PROBL133M
The Denton City Council wants to share with you the latest in a
series of proposals we have made to the County to save Fl,)w
Hospital, This latest proposal will be discussed soon by the
County Commissioners Court, if you agree with this latest
proposal, please communicate your feelings immediately to the
County Commissioners Court. Action must be taken soon if Plow
is to survive and the County relieved of future responsibil-
lties, Please help if you can,
PROPOSAL:
In an effort to remove the County from future direct involve-
ment with Plow Memorial Hospital while at the same time
allowing the Hospital to continue to operate, the Denton City
Council offers the following proposal:
1, The City and County jointly and quickly will
transfer the management and control of Flow
Memorial Hospital to an independent, not-for-
profit tax exempt 501(C)-3 corporation, Since
most of the legal work has been previously
performed to accomplish this arrangement, this
action should be promptly concluded,
2. So that a new board can have a reasonable chance
at making the Hospital successful, past liabil-
ities will be frozen at the time of the transfer
to the 501(0)-3 corporation. The responsibility
for these past obligations will then be included
and decided as part of the pending litigation but
will not be the responsibility of the new 501(C)-3
board,
We feel this is a reasonable proposal which will provide Flow
Hospital with a chance to survive,
This ad personally paid for by: Ray Stephens, Mayor;
Linnie McAdams, Mayor Pro Tem; Council Member Jim Alexander;
Council Member Hugh Ayer; Council Member Randall Boyd;
Council Member Jane Hopkins
STATEMEM JF SUPPORT FOR FLOW NOSFI'rAL
September 151 1987
In recent weeks, the Denton City Council has submitted numerous
proposals to the Denton County Commissioners Court to join with
us in efforts to stabilize the financial situation at 1:1 ow
Memorial hospital and insure its long-term existence,
i
I
It is important that all Denton citizens understand that our
entire City Council is committed, if at all possible, to the
goal of allowing Flow Hospital to remain a viable part of our
community. We have explored with the County several means to
achieve this objective and we remain committed to this goal.
All Denton citizens can be assured that their City government
will take any responr,ible action to see that flow continues to
exist and provide the services which are so important for this
community. Hopefully, in the days ahead, we car) persuade the
County Commissioners Court to allow an effective reorganization
of Flow Hospital so that it may continue as a not-for-profit
institution.
Finally, we must point out that the City cannot take
independent action which will save Flow Hospital. Not only
must we have cooperation from the County, but also support from
the physicians and citizens alike. We ask everyone to join us
in attempting to achieve this goal and we pledge to you our
best effort.
36161
STATEMENT OF SUPPORT FOR FLOW HOSPITAL
September 15, 1987
In recent weeks, the Denton City Council has submitted numerous
proposals to the Denton County Commissioners Court to join with
us in efforts to stabilize the financial situation at Flow
Memorial Hospital and insure its long-term existence.
It is important that all Denton citizens understand that our
entire City Council is committed, if at all possible, to the
goal of allowing Flow Hospital to remain a viable part of our
community. We have explored with the County several means to
achieve this objective and we remain committed to this goal.
All Denton cltlzens can be assured that their City government
will take any responsible action to see that Flow continues to
exist and provide the services which are so important for this
community. Hopefully, in the days ahead, we can persuade the
County Commissioners Court to allow an effective reorganization
of Flow Hospital so that it may continue as a not-for-profit
institution.
Finally, we must point out that the City cannot take
independent action which will save Flow Hospital, Not only
must we have cooperation from the County, but also support from
the physicians and citizens alike, We ask everyone to join us
In attempting to achieve this goal and we pledge to you our
best effort,
36101
4
1y'!
I!
S'T'ATEMENT OF SUPPORT FOR FLOW HOSPITAL
September 1S, 1987
In recent weeks, the Denton City Council has submitted numerous
proposals to the Denton County Commissioners Court to join with
us in efforts to stabilize the financial situation at Flow
Memorial Hospital and insure its long-term existence.
It is Important that all Denton citizens understand that our
entire City Council is committed, if at all possible, to the
goal of allowing Flow Hospital to remain a viable part of our
community, We have explored with the County several means to
achieve this objective and we remain committed to this goal,
All Denton citizens can be assured that their City government
will take any responsible action to see that Flow continues to
exist and provide the services which are so important for this
community. Hopefully, In the days ahead, we can persuade the
County Commissioners Court to allow an effective reorganization
of Flow Hospital so that it may continue as a not-for-profit
institution,
Finally, we must point out that the City cannot take
independent action which will save Flow Hospital, Not only
must we have cooperation from the County, but also support from
the physicians and citizens alike. We ask everyone to join us
in attempting to achieve this goal and we pledge to you our
best effort,
3616M
r
STATEMENT OF SUPPORT FOR FLOW HOSPITAL
September 15, 1987
In recent weeks, the Denton City Council has submitted numerous
proposals to the Denton County Commissioners Court to join with
us in efforts to stabilize the financial situation at Plow
Memorial Hospital and insure its long-term existence.
It is important that all Denton citizens understand that our
entire City council is committed, if at all possible, to the
goal of allowing Flow Hospital to remain a viable part of our
community. We have explored with the County several means to
achieve this objective and we remain committed to this goal.
All Denton citizens can be assured that their City government
will take any responsible action to see that Flow continues to
exist and provide the services which are so important for this
community, Hopefully, in the days ahead, we can persuade the
County Commissioners Court to allow an effective reorganization
of Flow Hospital so that it may continue as a not-for-proflt
institution.
Finally, we must point out that the City cannot take
independent action which will save Flow Hospital. Not only '
must we have cooperation from the County, but also support from
the physicians and citizens alike. We ask everyone to join us
in attempting to achieve this goal and we pledge to you our
best effort.
3616M
CITYof DENrON, TEXAS MUNICIPAL BUILDING / DENTON, TEXAS 78201 / TELEPHONE (817) 688.8307
Office of the Clly Manager
September 4, 1987
The Honorable Vic Burgess, Judge,
and Members of the County Commissioners Court
County of Denton
212 West Sycamore
Denton, Texas 76201
Dear Judge Burgess and County Commissioners:
This correspondence acknowledges your letter of September 19 19870
and the subsequent negotiation session with your representatives
on the afternoon of September 1st,
During recent sessions, the County Commissioners Court has stated
your goal of removing the County from any further ownership
interest in Flow Hospital. The County's goal in this respect is
recognized and acknowledged by the City of Denton and we pledge to
assist you in achieving this objective, On the other hand, the
entire City Council is committed, if at all possible, to the goal
of allowing Flow Hospital to remain a viable part of our community
and we seek the assistance of the County in helping us to achieve
this clearly stated City goal,
In attempting to discover an arrangement whereby both of our goals
can be achieved, the City Council would like to offer the
following proposal for your consideration. Our City Council would
be willing to enter into a formal agreement with the County
pledging that by January 1, 19880 one of the following actions
will have beer) concluded by our bodies, These options are as
follows,.
1, The City of. Denton will execute the necessary legal
documents to assume sole ownership of. Flow Hospital
and relieve the County of future liabilities
regarding the Hospital from such time forth. It
should be emphasized that the City will not accept
this alternative and assume sole ownership unless
it can be clearly demonstrated that there rre
reasonable expectations for the long-term succc,3s
of the Hospital and that the financial liabilities
of the City are clearly limited.
rFlow Hospital
September 4, 1987
Page two
2, Tito City and County will transfer their ownership
interests in Flow Hospital to a third party either
by an outright sale or a lease/purchase arrange-
ment. The initial step in exploring this alter-
native will involve the City granting permission
for sale and/or lease/purchase proposals to be
submitted by outside third parties.
3, If City ownership or the transfer of the asset
proves to be impossible to finalize, the City
pledges to join with the County in pursuing the
dissolution of the present ownership structure of
Flow Hospital,
We feel that the successful accomplishment of any of the alter-
natives outlined above will allow the Commissioners Court to
achieve your goal of quickly terminating County involvement with
Flow Hospital,
In return for the City assisting the County in achieving your
goal, we must insist that the County help Lis achieve our goal of
saving Flow Hospital if at all possible, If Flow is to be saved,
it is essential that short-term financial relief be provided to
the Hospital In order to stabilize the current situation and allow
one of the three alternatives outlined above to be implemented.
Therefore, If the City agrees to undertake the actions as outlined
above, the City would expect, at a minimum, that the County Com-
missionors Court would release and forward to the Hospital the
remaining $250,000 which is included in your 1986/87 budget for
Flow. In turn, the City of Denton will release a like amount as
of October 1st to provide some immediate financial relief to the
hospital and, hopefully, stabilize the situation until a long-term
arrangement can be implemented,
Very truly yours,
Kay Stephens, Mayor
sj
cc: Members of the Denton City Council
Lloyd V, Harrell, City Manager
Flow Hospital Board of Trustees
3599M
z
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I
Cl" Of "NrON, rArXA8 MUNICIPAL BUILDING / DENTON, TEXAS 76201 f TELEPHONE (817) 566.8309
Office of the Mayor
August 26, 1987
The Honorable Vic Burgess, Judge,
and Members of the County Commission
County of Denton
212 west Sycamore
Denton, Texas 76201
Dear Judge Burgess and County Commissioners;
This correspondence is in response to your letter of
August 16, 1987, in which you offered to transfer the
County's ownership interest in Flow Hospital to the City
of Denton.
As you are aware, the entire Denton City Council favors
the continuation of Flow hospital and all of its important
programs. As a body, we feel thAt It would be a major
community loss if the Hospital is allowed to close.
Because of this strong feeling, the Denton City Council
has thoroughly examined and debated your offer to transfer
ownership interest in the hospital to the City, Our
analysis has indicated that an affirmative response to
your offer as stated would require the City to increase
o
yearly subsidy ur tax rate by up to ten cents in order to provide the
addition, future r sqfinancial bliabilitiesand Hospital requests for
CitytelMise os needs financialbeburfacod dens are solely too bsevethe,
re
for our City to assume alone, and thus, we must
reluctantly reject the County's offer under the terms as
set forth in your letter,
I
As the Commissioners realize, the City's valuation is
approximately twenty percent of the County's, Therefore,
what is a severe burden for the City of Denton citizens
alone becomes very manageable when spread throughout the
County. It was for this reason the City
offered to transfer its ownership interest to theeCounty.
We made this offer In good fate!;, as a workable plan which
would guarantee Flow's survival as a public hospital.
Flow Hospital
August 27, 1987
Page two
Hioptyefsul ealy, l i
rthe ofr
e Cfer ommits o sioners' Court will reconsider the
t,' transfer our ownership interest Ill
Flow to the County. We remain willing to commence
discussions immediately to achieve such a transfer, if
the Commissioners' Court remains unwilling to consider
sole ownership, the Council would like to promptly
commence discussions %,ith the County concerning all other
options which might be available to retain Flow Hospital
I in this community including possible City ownership under
more favorable conditions.
Our City Council is convinced that Flow lospital is at a
crisis stage and that some immediate action is required in
order to stabilize the Hospital and allow us the time
necessary to discover a long-term solution to the hospital
problem. Therefore, the Council has already set in motion
a plan which would allow us to budget $400,000 for Flow
Hospital by raising our tax rate two cents to provide for
this budgetary expense. Based Upon Flow Hospital's
budget, a similar two cent
Commissioners' Court would provideedsufficienthefundsuntoo
save Flow Hospital and allow it to continue to operate
while the legal action continues and our two bodies are
discussing 101,9-term arrangements for the hospital, Our
Council acknowledges that the County government recognizes
the Imp y tand, roler which ahpub
eslic hospital y
your body would he
willing to make this short-term finthat ancial commitment,in our
Because of our limited tax base, the City of Denton cannot
independently save Flow Hospital. Thi;
effort would have a City of Denton residentolnt funding
cents in taxes versus a two cent rate for all othern~ ounty four
residents. Our entire Council respectfully requests that
you join us with an allocation equal to two cents of your
tax rate, This modest commitment on your r can save
Flow Hospital, whereas a negative response patt this time
will, in all likelihood, lead to the demise of a valued
institution,
Our City Council recognizes that this tax allocation must
be viewed as a short-range, temporary step to stabilize
Flow and n?low us the time required to work towards a
long-term solution for the institution, In that regard,
the Council would be willing to discuss with the County
Commissioners' Court all potential long-range solutions
including, if necessary, the sale or lease/purchase of the
hospital to a third party provided it can be demonstrated
that Flow Hospital cannot survive as a public Insti-
tution. In addition, the Council is even wi1'4ng to
rr~
f"
Flow Hospital
August 27, 1987
Page three
reconsider sole City ownership if the County Commis-
sioners' Court could propose alternate conditions to those
contained within your recent letter which would not expose
the City to so great a financial burden as the earlier
proposal.
Hopefully, the County government will respond promptly in
this time of crisis to provide the short-term financing
needed to keep the hospital operating. In turn, our City
Council pledges to work with you to find an acce,itable
long-term solution to this problem which has plagues our
community for a number of years.
We anxiously await your response to this letter. Thank
you for your time and consideration.
Very truly yours
r
,
R U
ay Stephens, Mayor
I
sj
F
cc; Members of the Denton City Council
35 90M
i
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Clry'Of DBNTON, rsz4$ MUNICIPAL BUILD)NO / DENrON, 7EXAS 76201 / TELEPHONE (817) 568.8307
011100 of Ihs C1fy Manager
CONPIAL
1 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
r
SUBJECT; Summary of Meeting on August 19, 1987 with
Vic Burgess, Don Hill and Jim Allison regarding Plow
Hospital and the County's Offer to Transfer Such
Ownership to the City
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
which are available to the Council to deal with the current
situation.
COUNTY POSITIONS TAKEN AT TUO MEETING
o The County formally requested that the City adopt a
position that neither the City nor the county will
henceforth Issue independent statements about the Hospital
situation but only joint statements would be issued,
Furthermore, the County requested that the City should
announce that it shares the County's commitment to change
the current situation of Plow 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
issuing a letter indicating that we would entertain
proposals to sell the Hospital, Lacking the ability to
successfully conclude any of, the above stated
alternatives, we would join with the County to close Flow
Memorial Hospital,
Flow Hospital
August 20, 1987
Page 2
o The point was clearly and forcefully made that
II Commissioners do not the county wi th a public want any further direct
hospital, although involvement
Commission feel It Is In a majority of the
keep the County's best interest to
a public hospital in the community possible,
Thus, there appears to be a if willingness and desire by e
County Court majority for the
~
the Hospital, City to assume ownershiptof.
o The county seems to be willing to negotiate terms and
conditions of the transfer to the City. They m be
willing to talk about the percentage of support £or
indigent care, although it a
let that issue be decided by pthe peared
current preference was to
stated several times that the Indigent care issue could be as the
put aside); underwriting current liabilities of the
Hospital for a certain period of time; and possibly '
allocating the remaining 250,000 in this yearls 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.
majority in the Co rtretul a It was expressed that a
probably support reasonable
condions order to ain
o The County admitted that if a public hospital,
exist and continues to service theirs me pservice nareaeS to
p
of the county) that Plow currentl
y (all
erves, then such
public hospital will be the exclusive srvir of Indigent
rovides
health care within the county to the extenteFlow provides
the necessary services,
CITY OPTIONS
0 tion I
Acce t the Hos Ital Board's re uest for two cents
va ua n
s ar to our arr con tion t:e '02) et,
on
a er n s us resr ons ous a menu 'e, a oc caourt
a
U t at u e on a or, n on care t 9 w e
f
t
l
Flow Hospital
August 20, 1987
page 3
County Reaction to this nnrinn;
During the meeting the
woul County was asked what action d take if the City adopted this it noted that they may bring legal stance,
The county dissolutionment of action asking for the
the partnership and attempt to force
the closure of the Hospital, Furthermore, they indicated
that future Indigent health care as
limited as possible. Payments would be
Adva_ nos;
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
clearly attrfbutet Its closure etobest
the C-ij tytsnaction,
2. Based upon Flow's current financial performance,
this level of subsidy might allow the Hospital to
continue to operate and function for a substantial
period of tfine.
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,
4. Timing still permits the Inclusion of funding for
this alternative within the 1987/88 City budget;
thus, not permanently damaging other City programs
by making mid-year reductions.
Disadvantages;
1. This strategy could rompt the accounts ayable
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,
flow Hospital
August 20, 1987
~ti 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.
Option II
Join with the Count in assuming the sale or lease/purchase of
t` ►Te-Aospita to a `rfiperty.
Advantages;
1. If successful, the City could remove itself from the
hospital business, greatly reduce or eliminate
associated liabilities, and may get all or a portion
of its indigent care obligations funded by the buyer,
2. The City and County could work In partnership and
relationships between the two entities would be
positively affected,
3. 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: ,
1. 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,
3. Title problems could prevent a rapid sale or
lease/purchase of the Hospital even if a viable
purchase proposal was received by the entities.
~l
i
Flow Hospital
August 20, 1987
Page 5
PR ion_ III
Enter into serious no otiations with the count in an at.te_ mpt
to assume owners n o t o osy to
Advantages:
1, The announcement of this intention could restore
stability to Flow Hospital, Such seems to be the
only remaining way a public hospital can be
8uaranteed to continue In the community for the
Foreseeable future,
Disadvantages;
1, The City would be assuming a very substantial
financial risk by selecting this option, If one
assumes the accuracy of the Hospital Board's budget
which ally for a total subsidy of $2,000,000 (,$1,2
miilsubsidy) indigents and $800,000 for other
~ the City could be facing at a minimum a
yearly $1,4 million payment if one assumes a 50%
Indigent health care split. Also, there would
remain $700,000 - $800,000 accounts payable,
2. As the Council is aware, the hospital industry is
extremely unstable. Therefore, if the City did
assume ownership and despite our best efforts the
Hospital was later forced to close, according to the
Deloitte, Haskins and Sells report, there would
remain an estimated $1,678,000 in accounts payable;
$o339 000 accrued expenses; capital lease obligation
1,554,000, notes payable of $85,000, bonded
indebtedness of $360,000, and other contractual
commitments of approximately $125,000 (Total:
$40141,000), The report also states that, "in
addition, the Hospital would incur significant legal
fees and security expenses during the phaseout
period, Outplacement counseling personnel should be
retained to limit the Hospital's unemployment
compensation liability",
3. Unless a 501C-3 corporation was created, pressure
would occur asking the City to issue bonds to
' provide the capital improvements needed to modernize
and improve the Hospital,
-All
,
F
;t
Flow h'nsp i cal
August 2G, 1967
page 6
In conclusion, it appears to the negotiating group that the
Council
Option take
Immediately w andactions
move forth this
by i increasWe can
ing the
City tax rate by two cents ($.02; at our earliest opportunity
and earmark this allocation for Flow Hospital. This strategy
would call for us to reject the County's overture for City
ownership because of the immense financial obligations that
such would demand in view of our limited tax base and pass the
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 II and/or III regarding the Hospital and
pledge to change the current structure of Plow 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 11 or III will not occur quickly !
because of title problems and/or required negotiations.
i
3585M
11
yy
9
N
C/rYOf DBNrON, rBX48 MUNICIPAL SUILOINO / DENTON, TEXAS 78201 / TELEPHONE (817) 888.8307
Office of the C11y Manager
August 10, 1987
The Honorable Vic Burgess,
Judge of Denton County, and
Denton County Commissioners
212 West Sycamore
Denton, Texas 76201
Dear Judge Burgess and County Commissioners:
During the recent hospital district campaign, it was suggested
that part of the difficulties experienced over the years by
Flow Hospital was a result of political disputes between the
City and County because of our joint ownership. One suggested
solution to this problem was that the City transfer its
interest in Flow to the County, Many individuals feel that
this clarification of ownership would allow decisions regarding
Flow to be made more expeditiously and could help insure the
solvency of the hospital.
Although the Council is reluctant to release this asset all of
the members of our City Council are even more committed to
retaining a public hospital in the community if at all
possible, With the defeat of the hospital district, such a
transfer appears to be one of the few ways remaining to save
Flow as a public hospital.
In view of this situation, the Council desires to leRrn If the
County is interested in commencing discussions which could
hopefully lead to the transfer of the City's ownership interest
in Flow to the County. In turn, the City would expect some
firm guarantees that Flow would continue to exist as a public
'
hospital and that the community outreach programs now operated
by the hospital would be retained,
Qp 1
n
r'
August 10, 1987
Page two
The Cma ny is aware that this transfer would not be simple and
that ny details would have to be resolved. On the other
hand, this approach might offer a workable solution to a
longstanding community problem.
Your prompt response to this proposal would be appreciated.
Thank you for your time and consideration.
Very truly yours,
Ray Stephens, Mayor
s~
I
3570M
M
a
NO. 87-1907-C
DENTON COUNTY, TEXAS, $ IN THE DISTRICT COURT OF
Plaintiff
v. ~
1 DENTON COUNTY, TEXAS
CITY OF DENTON, FLOW MEMORIAL
HOSPITAL BOARD, H.E. FLOW
TRUST, and JIM MATTOX, ATTORNEY $
GENERAL OF THE STATE OF TEXAS
Defendants
$ 211TH JUDICIAL DISTRICT
~ COMPROMISE BETmr,~MENT AGRF,F~F'T
The Agreement attached hereto as Exhibit A is 1.7 and between
Denton county, Texas, the City of Denton, Flow Memorial Hospital
Board, H. E. Flow Trust, and Jim MattOx, Attorney General of the
State of Texas and sets forth the compromise settlement agreement
between the parties for consideration of the mutual promises and
agreements as set out in Exhibit A.
it is understood and agreed that this compromise settlement
agreement contains the entire agreement between the parties and
supersedes any and all prior agreements, arrangements, or
understandings between the p&-ties relating to the subject
matter. No oral understanding, statements, promises or
inducements contrary to the terms of this compromise ott.tlement
exist. This compromise settlement cannot be changed or
terminated orally, It is further agreed that this compromise
and such additional terms a$ necessary to fulfill this settlement
settlement/will be set forth in a proposed agreed judgment to be
submitted to the Co!irt by all parties for approval and entry.
t '
it is understood and agreed that this compromise settlement
agreement may be executed in a number of identical counterparts,
each of which shall be deemed an original for all purposes.
The parties have executed this agreement on the day
of , 1987.
The Agreement, attached as Exhibit A, is approved as to form
and contentt
Denton County, Texas, Plaintiff,
by Vic Burgess, County Judge
City of Denton, Defendant,
by Ray Stephens, Mayor
Flow Memorial Hospital Board, Defendant,
by Mary Williamej Chairperson
Jim Mattox, Attorney General of
the State of Texas, Defendant,
by Ann Kitchen, A&sistant Attorney
General
H. E. Flow Trust Defendant
by
Accepted and Approvedt
Flow Regional Medical Center, Inc.
byt
Flow Memorial Foundation
byt
EXHIBIT A
SETTLEMENT PROPOSAL
NOVEMBER 20, 1987
CITY OF DENTON
1, Contribute $900,000 on or before January 1, 1988, to be
01 b F1owiMemorilu Hospital8as of December 31ya~987on the books of
the $200,000 may be used as working capital pduringd such
interim period if said funds are replenished by the non-profit
entity to an accounts payable fund at the rate of $30,000 per
month beginning February 1, 1988,
2. Defer payment of past-due utility bill (Approx. $226,000)
until October 1, 1990,
3, Repay Flow Memorial Hospital for loan ($200,000 in 88.89;
$200,000 'In 89.90) provided the hospital continues to operate
pursuant to service contracts with Flow.
4, Assume City liabilities, if any, of Flow Hospital debts and
any County liabilities, if any, of Flow Memorial Hospital, the
total of both not to exceed $400,000; provided however, that
the City and County agree to assume 50% each of liabilities,
if any, arising from 1975 and 1975A bond issues. Liabilities,
if any, in excess of $400,000 will be equally funded by City
and County until assets are liquidated,
5. Reserve security interest in fixed assets to extent of
potential liability; otherwise transfer all interest to
non-profit entity by January 1, 1988.
PLOW MEMORIAL FOUNDATION
1. Provide $400,000 collateral for a bank loan of $400,000 to the
nori-profit entity by January 1, 1988, to be applied to
accounts payable on the books of Flow Memorial Hospital as of
December 31, 1987,
DENTON COUNTY
1, Assume cost of indigent health care, effective September 1, '
19870 reserving right to litigate City liability, (Approx.
$1.2 million annually). Should future litigation determine
that the City is responsible for a portion of indigent health
costs, the following payments will be credited against the
City's obligation:
(1) The $250,000 paid to Flow Hospital In 1986-87.
(2) The $600,000 "up front" payment provided for in this
agreement,
(3) An amount equivalent to annual interest of 8% on the
$226,000 utility bill from the time due until the time
paid,
2. Transfer all interest In assets of hospital to Ion-profit
entity by January 1, 1988.
3, Release all claims against City of Denton, except Indigent
health care.
FLOW HOSPITAL BOARD OF DIRECTORS
1, Transfer all assets and obligations of Flow Memorial Hospital
to a different entity by January 1, 1988,
2. Release all claims against City and County.
3. Agrees to keep all current utility bills paid and to begin
retiring the $226,000 outstanding bill, one-half on October 1,
1990 and the remainder in six equal monthly Installments; and
501(C) 3 specifically assumes obligations and the sta.ute of
limitations is waived,
OTHER ENTITIES
1. Non-profit entity agrees to assume assets and obligations by
January 1, 1988.
2, Attorney General approves settlement and agreed judgment,
3. Non-profit entity agrees to secure $400,000 loan from a third
party by January 1, 1988 and to utilize the $200,000 payment
from the City in 1988.89 and the $200,000 payment from the
City in 1989.90 to repay the loan.
2100L
FLOW HOSPITAL - NEWS RELEASE November 18, 1987
The Plow Memorial Hospital Hoard of Trustees has voted today to accept the tentative
settlement proposal previously adopted by the Denton County Commissioners Court, the
Denton City Council and the Attorney General's Office on behalf of the the HE. Flow
Trust, subject to finalizing the details of the settlement. While this settlement
does not include the entire amount of financial assistance that the Board and
management of Flow Memorial Hospital believes the hospital needs, we do believe
that the amount of immediate assistance proposed to be made available to the hospital
will enable Flow Memorial Hospital to continue to operate.
Obviously, the $400,000 loan proposed by the City will help alleviate the immediate
cash flow problems of the hospital, but only if 1) a loan and willing lender are in
fact available, 2) the repayment terms of the loan are not such as to impair the
cash flow of the hospital during the term of the loan and 3) the collateral required
as security for the loan is not such as to impair the ability of the hospital to
obtain other working capital loans as inay be necessary over the next few years. To
our knowledge these items have not yet been finalized.
This settlement will prove to be a good one for Flow Memorial )?capital and the
people of Denton County if all parties making commitments under the settlement
can actually deliver upon them within the short time frame in,which ection1a
necessary to keep the hospital open. The public should also be aware that to succeed
under the terms of this settlement, the hospital will need strong govetsanoe
from the new entity owning and operating the hospital, extraordinary management in
an increasing competitive market and difficult econ~mic,times, and an even more
extraordinary level of community support for the new nonprofit Flow Memorial
Hospital. That support must include a commitment from physicians and residents of
Denton County to utilize what we believe is an excellent health care facility; and an
equally strong financial commitment from the residents of Denton County who are
able to make charitable donations to the hospital,
The Flow Memorial Hospital Board of Trustees is committed to working aggressively
between now and January 1, 1988 to conclude the details of this settlement, to dispose
of the pending lawsuit, and to transfer ownership of Flow Memorial Hospital to the
Board's nonprofit successor. We appreciate the efforts of all other parties involved
in arriving at this tentative settlement, and we expect no lees than their best
and most aggressive efforts to bring this matter to a conclusion for the benefit
of the residents of Denton County.
1
94
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CITY of DENTON, TBXAS MUNICIPAL BUILDING / DENTON, TEXAS 70201 /TELEPHONE (W)566-9307
Office of the City Manager
ME•M0RANDUM
T0; Vic Burgess, County Judge
FROM; Lloyd V. Harrell, City Manager
DATE: November 12, 1987
RE: Memorandum Regarding Settlement Counter - Proposal
Between The City of Denton and the County of Denton
Regarding Flow Hospital
Attached is a memorandum regarding the City's latest response
concerning matters related to Flow Hospital, All of the
contents of the attached memorandum constitute an attempt to
negotiate and settle the lawsuits initiated by Flow Me,aorial
Hospital and the County of Denton relating to financial
obligations of the County and the City with respect to Flow
Hospital, and are therefore, not admissions as to any legal
liability by the City as to any fact or issue of the litigation
currently in progress.
While the City does not admit to the liability alleged by the
County and the Flow Board, the City Council recognizes that
protracted litigation may result in the worsening of the
hospital's precarious situation, which, In turn, could result
In the closing of Denton County's only public hospital, a
valued institution, Therefore, the City Council has authorized
me to make the following proposal, which, according to the
management group, will allow the hospital to continue to
opei1Pe and provide health services to residents of the City
and thi County,
;
oy , arre
City Mal,ager
LH:bw
3701bi
SETTLEMENT COUNTER - PROPOSAL
CITY OF DENTON
1. Contribute $20),000 in fiscal year 1987-88,
2. Defer payment )f past-due utility bill (Approx. $226,000) until hospital has
positive cash flow, d,1D/"i J
3. Repay Flow Foundation for loan ($200,000 in 88-891 $2001000 in 89-90).
4. Assume City liabilities, if any, of Flow Hospital debts and any County
liabilities, if' any, of Flow Memorial Hospital which exceed $1.1 million.
5. Reserve security interest in fixed assets to extent of liability► otherwise
transfer all interest to different entity by January 1, 1988.
ROV MEMORIAL FOUNDATION
1, Provide loan of $400,000 to hospital by January 1, 1988,
2. Continue present payment on equipment (Approx. $23,000 mo.).
DENTON COUNTY
1. Assume cost of indigent health care, effective September 1, 1987, reserving
right to litigate City liability, (Approx. $1.2 million annually), Should
future litigation determine that the City is responsible for a portion of
indigent health costs, the following payments will be credited against the
City's obligations
(1) The $2500000 paid to Flow Hospital in 1986-87,
(2) The $600,000 "up front" payment provided for in this agreement,
(3) An amount equivalent to annual interest of 8% on the $2260000
utility bill from the time due until the time paid.
2. Transfer all interest in assets of hospital to different entity by January 1,
1988.
3. Rolease all claims against City of Denton, except indigent health care,
FLOW HOSPITAL BOAPD OF DIRECTOFS
1, Transfer all assets and obligations of Flow Memorial Hospital to a different
entity by January 10 1988,
2. Release all claims against City and County.
OTHER ENTITIES
1. Different entity agrees to assume assets and obligations by January 11 1988,
2. Attorney General approves settlement and agreed judgment,
3701M
C17Yo1 D,WrCN, reX4S MUNICIPAL SUILDINO / DENTON, TEXAS 78201 / TELEPHONE (817) 888.8307
Office of the City Manager
MEM0RA N D U M
TO: Vic Burgess, County Judge
PROM: Lloyd V. Harrell, City Manager
DATE: November 11, 1987
RR: Memorandum Regarding Discussion Between The City of
Denton and (fie County of Denton Regarding Plow
Hospital
Attached is a memorandum regarding the City's latest response
concerning matters related to Flow Hospital, All of the
contents of the attached momorandum constitute an attempt to
negotiate and settle the lawsuits initiated by Plow Memorial
Hospital and the County of Denton relating to financial
obligations of the County and the City with respect to Flow
Hospital, and are therefore, not admissions as to any legal
liability by the City as to any fact or issue of the litigation
currently in progress.
While the City dons not admit to the liability alleged by the
County and the Flow Board, the Cityy Council recognizes that
protracted litigation may result in the worsening of the
hospital s precarious situation, which, in turn, could result
in the closing of Denton County's only public hospital a
valued institution. Therefore, the City Council has authorized
me to make the following proposal, which, according to the
management group, will allow the hospital to continue to
operate and provide health services to residents of the City
and the County.
r
oy4arre
City Manager
LH:bw
3698M
,
ciryofOBNTON, TEXAS MUNICIPAL BUILDING/ DENTON, TEXAS 78201 / TELEPHONE(817) 806.8307
Office of the City Men Eger
i M E M O R A N D U M
T0: Vic Burgess, County Judge
FROM: Lloyd V. Harrell, City Manager
DATE: November 11, 1987
SUBJECT: Proposals Regarding Flow Hospital
Based upon Council discussion last evening, it appears as if
Council is willing to work further on one of three proposals as
f lows:
l• County removes itself from the hospital business;
City removes Itself from indigent health care
responsibilities,
City
(1) Would consider increasing the $800,000 "up
front" commitment to the Flow iospital if required,
(2) Would continue to work on arrangements which
would allow the City to assume liabilities, if any,
of Denton County for Flow Memorial Hospital debts,
County
(1) Would release the City from any responsibility
for indigent health care costs,
(2) Would release all claims against City.
,
Vic Burgess
November 11, 1987
Page 2
11. Modified County Proposal - A.
City
(1) Would commit the approximate $800,000 "up front"
funds to flow Hospital as follows:
$200,000 - Direct Payment
$400,000 - Loan from the Plow Foundation to be
repaid by the City as follows;
$200,000 - 1988-89
$200,000 - 1989-90
$226,000 - Utility Bill deferral to a date to be
determined by conversations with the
Hospital Board
(2) Would continue to work on arrangements which
would allow the City to assume liabilities, if any,
of Denton County for Flow Memorial Hospital debts.
County
(1) Assume all indigent health care expense until
October 1, 1990, including back billing at 1006
level.
(2) Obligations of City for indigent care after
October 1, 19900 to be determined by State law or by
Court decision.
(3) Release all claims against City of Denton.
III: Modified County Proposal - B
City
(1) Would pay a portion of the $800,000 "up front"
required by the Hospital.
Count
(1) Would pay a portion of the $800,000 "up front"
required by the Hospital.
Vic Burgess
November 11, 1987
Page 3
(2) Would pay 100% of indigent health care expenses
until a court determines if the Clty should share
such responsibility and if so, what portion, After
such a court determination, the City will pay its
determined share, if any, of indigent expenses paid
since the effective date of SDI. In making a
calculation of any funds due, credit will be given
to the City for the $2S0,000 payment made by the
City to Plow Hospital in 1986.87 and any up front
payment made in accord with this agreement.
(3) Release all claims against City of Denton.
LN;bw
3698M
.
rLOW ,+lEMORIAL HOSPITAL
PATIENTS APPROVED AS COUNTY INDIGENTS
JANUARY 21, 1987 THROUGH MARCII 11, 1987
Name Admission Discharge
Date _ Date
Moreno, Sergio - Service Char es
Moreno, Infant 01/28/87 01/29/87 08
$ 1,964.81
Venable, Tammy 01/28/87 01/29/87 Newborn
Venable, Infant 02/02/87 02108181 08 290.95
Eseamilla 02/02/87 02/02/87 Newborn 4,424.72
Solis, Ro,salva Raul 02/23/87 02/28/87 Surgical 2,208.00
Solis 02/17/87 02/20/81 5,745.21
, Infant OR
02/1 2,151.03
Adams, Linda 7/87 02/25/87 Newborn
03/04/87 03/05/87 1,970'41
Adams, Infant OR
03/04/87 03/06/87 952.87
Goertz, IJilliam Newborn
02/1.3/87 02/13/87 184.20
Zimmerman, Sheila ER
02/04/87 02/08/87 211,10
Zimmerman, Infant 08
02/04/87 02/08/81 3,92/i.76
Deeds, jimmy Newborn
02/11/87 02/21/87 561.20
Henderson, Arlene Surgical
01121187 01129187 Medical 7,329.51
Henderson, Arlene
Henderson, Arlene 02/03/87 02103187 ER 8,941.93
Henderson, Arlene 01/31/87 01/31/87 ER 336.25
Nabors, Nannette 02/05/87 02/10/87 Medical 321.75
02/18/87 02/18/87 8,289.47
Nabors, Nannette Outpatient
01/23/87 01/23/87 476.25
Nabors, Nannette ER
01/21/87 01/21/87 234.65
ER 171,25
50,590.32
i
Clryof DENroN, rExAS MUNICIPAL BUILDING / DENTON, TEXAS 01 i TELEPHONE (817) 566.8200
MEMORANDUNI
T0; Vic Burgess, County Judge
Mary Henderson Williams, Chatrperson, Flow Board of Trustees
FROM; Ray Stephens, Mayor, City of Denton
DATE; November 2, 1987
RE; Memorandum Regarding the City of Denton's Response to Hospital
Management Professionals' plan for Flow Hospital and the
Attorney General's Position in the Lawsuit
Attached is a memorandum regarding the City's response to Hospital
Management Professionals' plan for Flow Hospital, All of the con-
tents of the attached memorandum constitute an attempt to negotiate
and settle the lawsuits initiated by Flow Memorial Hospital and the
County of Denton relating to financial obligations of the County
and the City with respect to Flow Hospital, and are therefore,
not admissions as to any legal liability by the City as to any fact
or issue of the litigation currently in progress,
While the City does not admit to the liability alleged by the County
and the Flow Board, the City Council recognizes that protracted
litigation may result in the worsening of the hospital's precarious
situation, which, in turn, could result in the closing of Denton
County's only public hospital, a valued institution. Therefore,
the City Council has authorized me to make the following proposal,
which,according to the management group, will allow the hospital to
continue to operate and provide health services to residents of
the City and the County.
M7 St ens
Mayor
City of Denton
Tses crrr 01 DBNTQIy, TaX,4s MUNICIPAL BUILDING / DENTON, TEXAS 76201 / rELEPHONyE~(817) 568•
MEM0RA ND UM 8309
bJlrce of the may",
TO: Whom It May Concern
(~~I FROM; Ray Stephens, Mayor, City of Denton
DATE; November 2, 1987
SUBJECT; City of Denton's Response to Hospital Management
Professionals Plan for Flow Hospital
The
plan Cpropo edD by oHo pi prepared to Management a Pprofessiona ively to the
the following action; is by taking
(I) Assume the approximate balance of
on the 1975 Hospital Bond Issue, $360,000 remaining
(2) Assume the long term leaable l f the com uter a softwaresnowabeing utilizedoby the
Hospital In the approximate amount of $643,040.
(3)V~-Pogltive Defer payment of current outstanding utility bills
in the amount of $226,000 to July of 1988 when it is
I pd cash at the Hospital will begin showing a
position,
In return for the City assuming over add
iti $2261000, ithelCity would expect lthe pfoll wing (fromn he Coonty
and the Hospital Board, the County
CC o
~l) Assume 100% of the indigent health care expenses of
Flow Hospital for the period September through
December, 1987, which are estimated at $400,000,
(2)since the Cit9 y will. be assuming Flow Hospital
commitments for a number of
01ers, the County will
voluntarily agree to assume allaindigent health care
expenses for the next six years. Thereafter, if it
is determined by a court of law that the Cit
~f Denton is responsible for any indigent health care
expenses and state law in. this regard has not been
adjusted, the City will begin to assume its
proportionate share of such expenses.
(3) Settle all issues in the
for inciigont care responsibendin
ility litigation, except
Response to Hospital Management Professionals
November 2, 1987
Page 2
Hospital Arrange othehHo piittaltcomputereanan equity d position
a
regarding the
City will have some monetary protection should Flow
Hospital cease to operate.
(2) Enter into a contract with the City pledging to
repay the $226,000 outstanding utility bill
commencing in July of 1986, in accord with a
mutually agreed upon retirement schedule.
Furthermore, the Hospital will pledge to promptly
pay all future monthly utility bills as such bills
are received.
(3) Work diligently with the City and County to
establish the 501(c)(3) Corporation as quickly as
possible,
(4) Explore with the Flow Hospital Foundation the
possibility of receiving adritional monetary
assistance for other assets which are under lease
purchase or are secured with notes payable.
(5) Relinquish all claims against the City relating to
^^JJ those issues plead in Flow's suit against the City.
lud Hopefully both the County and Hospital Board will positively
respond to this proposal so that Flow Hospital can continue to
operate.
ay~ ens
Mayor
City of Denton
jw/3683M
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OESau~~N
CITY of DENrON, TEXAS VUNICIPAL BUILDING / DENTON, TEXAS 76201 1 TELEPHONE (817) 588.8309
Office of the Mayor
August 26, 1987
The Honorable Vic Burgess, Judge,
and Members of the County Commission
County of Denton
212 West Sycamore
f~~ Denton, Texas 76201
Dear Judge Burgess and County Commissioners;
This correspondence is in response to your letter of
August 18, 1987, in which you offered to transfer the
County's ownership interest in Plow Hospital to the City
of Denton.
As you are aware, the entire Denton City Council favors
the continuation of. Flow Hospital and all of its important
programs. As a body, we feel that it would be a major
community loss if the Hospital is allowed to close.
Because of this strong feeling, the Trenton City Council
has thoroughly examined and debated your offer to transfer
ownership interest in the hospital to the City, Our
analysis has indicated that an affirmative response to
your offer as stated would require the City to increase
our tax rate by up to ten cents in order to provide the
yearly subsidy requested by Plow Hospital Board. In
addition, future financial liabilities and requests for
capital improvement needs would be faced solely by the
City. These substantial financial burdens are too severe
for our City to assume alone, and thus, we must
reluctantly reject the County's offer under the terms as
set forth in your letter,
As the Commissioners realize, the City's valuation is
approximately twenty percent of the County's. Therefore,
what is a severe burden for the City of Denton citizens
alone becomes very manageable when spread throughout the
County, It was for this reason the City previously
offered to transfer Its ownership interest to the County.
We made this offer in good faith, as a workable plan which
would guarantee Flow's survival as a public hospital.
Flow Hospital
August 27, 1987
Page two
Hopefully, the Commissioners' Court will reconsider the
City's aarlier offer to transfer our ownership interest in
Flow to the County, We remain willing to commence
discussions immediately to achieve such a transfer. If
the Commissioners' Court remains unwilling to consider
_ ,ole ownership, the Council would like to promptly
I commence discussions with the County concerning all other
options which might be available to retain Flow Hospital
in this community including possible City ownership under
more favorable conditions,
Our City Council is convinced that Flow Hospital is at a
crisis stage and that some immediate action is required in
order to stabilize the Hospital and allow us the time
necessary to discover a long-term solution to the hospital
problem. Therefore, the Council has already set in motion
a plan which would allow us to budget $400,000 for Flow
Hospital by raising our tax rate two cents to provide for
this budgetary expense, Based upon Flow Hospital's
budget, a similar two cent pledge by the County
Commissioners' Court would provide sufficient funds to
save Flow Hospital and allow it to continue to operate
while the legal action continues and our two bodies are
discussing long-.term arrangements for the hospital, Our
Council acknowledges that the County government recognizes
the important role which a public hospital plays in our
community and, therefore, hopes that your body would be
willing to make this short-term financial commitment,
Because of our limited tax base, the City of Denton cannot
independently save Flow Hospital. This joint funding
effort would have a City of Denton resident prying four
cents In taxes versus a two cent rate for all other county
residents. Our entire Council respectfully requests that
you join us with an allocation equal to two cents of your
tax rate, This modest commitment on your part can save
Flow Hospital, whereas a negative response at this time
will In all likelihood, lead to the demise of a valued
institution.
Our City Council recognizes that this tax allocation must
be viewed as a short-range, temporary step to stabilize
Flow and allow us the time required to work towards a
long-term solution for the institution, In that regard,
the Council would be willing to discuss with the County
Commissioners' Court all potential long-range solutions
including, if necessary, the sale or lease/purchase of the
hospital to a third party provided it can be demonstrated
that Flow Hospital cannot survive as a public insti-
tution. In Addition, the Council is even willing to
Flow Hospital
August 27, 1987
Page three
reconsider sole city ownership if the County Commis-
sioners' Court could propose alternate conditions to those
would expose
financial burden as the earlier
so greatrecent
thet City to within
proposal.
Hopefully, the County government will respond promptly in
this time of crisis to provide the short-term financing
needed to keep the hospital operating. In turn, our City
Council pledges to work with you to find an acceptable
long-term solution to this problem which has plagued our
community for a number of years.
We anxiously await your response to this letter. Thank
you for your time and consideration,
Very
truly yours,,
RAT
Ray Stephens, Mayor
I
sf I
cc: Members of the Denton City Council
3590M
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PROBABLE STEPS INVOLVED IN CREATION OF MUNICIPAL
501(C)(3) CORPORATION
1. The existing corporation charter should be used and amended,
if necessary, Board of Advisors appoint replacements for own
membership and explore appointments for Board of Trustees.
B
oard of Advisors complete constitution of Board of Trustees to
work With
including atileastsd existing
position Flow
n debtrandolianegotiate bility, role lease,
hospital in the community, 'an'd clarification of lease issues
remaining at the AG's office and AG's Trust Division, The Board
of Trustees should be committed to community cost control and
community goals and be assured of their own limited liability by
counsel.
2. A public relations officer of the City and spokesman for the
Board of Trustees should be appointed and used exclusively to
speak for the progress of negotiations. The City public
relations officer would report to the City Manager directly and
he, in turn, to his Council.
E 3. The operating minimum for the hospital, given reasonable
assumptions, should be stated. This
baseline for resolving the debt problem ofstheo hospita 1 and for
developing physician programs. It should not be set forth until
County transfer is accomplished in order to protect the
hospital.
4, Physician involvement program development must take place.
More than Board of Trusties appointments, this must be an
active, working plan for sub-corporate and joint-venture
planning. At least assurances of physician involvement should
be a precondition for minimizing the liability fears of the
City.
5. County transfer should be negotiated, completed, approved
and, if necessary, certified so that a constructive environment
for the hospital can be established. Once accomplished, the
municipal 501(c)(3) should be implemented immediately.
V.
EMERGENCY AGENDA
CITY OF DENTON CITY COUNCIL
August 21, 1987
Emergency Meeting of the City of Denton City Council on Friday,
August 21, 1987, at 5:15 p,m, in the City Manager's Conference
Room of the Municipal Building at which the following items
will be considered:
The emergency and urgent public necessity being the continued
viability of Flow Memorial Hospital in light of the existing
litigation.
i
5:15 p,m,
1. Executive Session:
A. Legal Matters Under Sec. 2(e), Art. 6252-17
V.A.T.S.
I. Discuss settlement negotiations in the
County of Denton vs, the City of Denton, +
2. Consider 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. 6252-17
V.A.T.S.
C. Personnel/Board Appointments Under Sec, 2(g),
Art 6252.17 V.A.T.S.
2. 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
I certify that the above notice of meeting was posted on the
bulletin board at the City Hall of the City of Denton, Texas,
on the day of
p.m. 1987 at o'clock
C
2730C
i~„~
F,
ClrYatDBNrON, rEXAS MUNICIPAL BUJLDINQ / DEWON, TEXAS 78201 / YELEPHONE(817) 588.8307
O/l/cr of the 01y Manage,
I MEMORANDUM
TO: Mayor and Members of the City Council
FROM: Lloyd V. Harrell, City Manage,.
DATE: August 20, 1987
SUBJECT: Emergency Council Meeting of August 21, 1987
The attached represents background information for the
emergency meeting to be held Friday evening, Because of the
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 would
like more information,
oarre
sj
4
Enclosuro
3S86M
DA ciryof m rAIT0N,TEXAS MUNICIPAL BUILD/N0 / OEN7ON, TEXAS 78201 / TELEPHONE (8t7)A 588,8307
Olflce of the city Manager
CONFIDDNTIAL
MEMORANDUM
I
l
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
Hospital and the County's Offer to Transfer Such
Ownership to the City
This memorandum summarizes our joint impressions of the,
positions taken by the County at a meeting on ~A"auus~tt1§%old to
clarify their current offer to transfer owner's Tp of Flow options
are to the
available City of f then Councillsto deal uwith the current
which Hospital
t
situation.
COUNTY POSITIONS TAKEN AT THE MEETING
o The County formally requested that the City adopt a
osit that neither the City nor the County will
ence orth issue rode endent statements about 0 j?T..T le Hospital
situation but only' o i sl l eme s would be issued,
Furthermore, the County requested that the~nt_to chanld
announce that it shares the County's
the current situation of Clow Hospital, either by the ity
assum n o n or join nW the
County n a ell or leas aso the
Hospital to a third party. s s au ncs~ t e city
issu r indica that e oul
ro os is to sel t e o ital. aC ng t e ability to
success u 1y cone u e any or the above stated
alternatives, we would 12ja with the Co,_y,pty to close Flow
Memorial Hospital.
j
1
Flow Hospital
August 200 1987
Page 2
o The point was clearly ~aantd forcefully made that the ,Co ,n y
Commissioners do not any a s ital rec 1 ement
~i t Comm ss on feel it s ri the hCountys mestr inte're t to
kee a
a
tnerappearsp o e a willingness an destre by County Court majority for the City to assume ownership of
r ` ~X✓ < r " the NoSpltal,
coe i~ounty seems to be will
ions of the transfer to the City. Army
w 11 ng o talk about the er Tltey m`y be
indi ent carer although it appeared pre erence rwas to
f
le at ssue be decided by the current lawsuit (as they
stated several times that the indigent care issue could be
put aside); underwritin r,urr nt
Hospital for a certa n ilities of the
all the remainin 25 ° of time; and possibly
bu get to Flow osp a in this year's county
o The County seems
conditions associateo w"~-`=-ounter xpres regarding
of Flow Hospital to the ,7e trans er o e ownership
majority of the C y' It was esed that a
conditions in orderototretalin a probably
Pub support reasonable
Public c Hospital.
o The County admitted that If a n_ubli~c hhos
inues pitat contint!e
to service o
f th count t a e s ervice area
pu (all t A-1- w be h tl serves then such
health care w t n t e ounty to the extent low provides
the necessary services,
CITY OPTIONS _ rL
Acce t the Nos ital Board's re uest for two cents 1 .OZ er
va uat on
s w ar to our an con ton t e a ocat on
a at rev ous a went ,e,
n s us res onsi a or a court
u * at atlon n Bent care g w 0
Flow Hospital
August 2o, 1987
Page 3
County Reaction to this option;
During the meeting theyy County was asked what action it
noted that itheyhemayitbrf adopted
actionncaskingrtefor outhe
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.
Advantages:
1. This stance would clearly state to the community
that the City has done all It could re n naibty do
to save t e .n„h I the Hospital
closes, this option has the best opportunity to
clearly attribute its closure to the county's action.
2. Based upon Flow's current financial erformance,
this level of subsidy m j~y,~~ sp---p--P0
c_ontn~e rn nyer a and unction for a substantial
period of time,
3. This stance would have the assuming no more
fI!ji li atfon for a Hos p to an currently
ex ts,and n a t could offset future obli tiuus
f ndigent healt costs are ater ass ne tao t e"
4. Tlmin st 1 ermits the inclusion fund In for
It
is a ter.natlve w n e City,
t us, no'C___Pe~_rmane_n_tl amaging of er City proU get;
grams
by making mfcTar re uc
Disadvantages:
Ill. This strategy c2 Id rom It the accounts b e
reditor C17nn nn
1 X hospital stuff to f, and
to become impatient at not seeing any
changes In the basic structure of the Hospital.
These indIX.Iduals could then action
J / which m~Q tt fore
irrespective of .i v arrtn„ losin of the osp to
ilk
r1
Flow Hospital
August 20, 1987
Page 4
2 The City would be involved in rolon ed litl a Ion
With the county to finally res
r
11 o ve t s matter an
s
noatively affected, This tatter a st tuation lcoubd
have an aFi"ec~ on the
services such as County funding for point
defense library, health unit, civil
~r 1 , and emergency medical,
3• This stance would a Tow the instability of. flow
Hospital to c~ on`tfnue.
Option 11
Join with the Count in ~ the sale or lease/ urchase of
t e nan rs ~ infra art
Ad v a----- n~t_a~a s S
l If successful, the C- mould r
how 1 bu eq,S, great .v 1e, itself from the
assoc 1 1, t Itt or P1 hate
o its indilenticareeoblinatios-Y n all or a ortion
tTe,
2. The C t and County could w_Q r
relations ps etween the twork -'o -n"
and
titles wou d be
positively affected,
3. 06ta_lnin ales off
struct~~ina hel
ArrAnaemAnt` d e the Cite y i'
own~t an i r,
--L- where we wou e
acti~eon idedt to bespthe Imost madvanC unous course of
Is if,cta sale or lease/purchase is finally I
uld insure the continuation of the hos tal
co
wtt mmrunoty eingtreta ne conomic benefits to the
nisadventaoesr
The communit would
associated wLb A >,""r r and service ages
2• Health care aLL~ '
s for the"medics
c fer with only pr vate ospitals remaining
in Denton,
3' Try problems cniild
burr,{' - nrev n a ofd aA1~
purc ast- a of the flospltaI eve rn
proposal was received by the entities,viabie
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Flow Hospital
August 20, 1987
Page 5
Option III
}inter into serious ne otiations with the Courts in an attempt
o assume owners , o t e osp to
Advantages:
f~ 1. The announcement of this intention could a ore
sLabllit to Flow Hos ital. Such seems to be the
ems w~v a o ~bli 11 spitaI can be
guaran~Q~d__to continue in the community or
foreseeable future,
Disadvantages:
1~ The City would be ssumin~ „a fiery subs antial
financial rr1 k by selecting this option. I one
C~ti~ ar;~ as Limes a accuracy of the Flospital Board's budget
?k' which calls for a total subsidy of 2 000 000 ($1,2
~million for Indigents and $800,0 0 or 'other" i11`~l,subsidy), the City could be facing at a minimum a 'n7f "
IV } ,1,yearly :I1 .4 mi i i
,bindigent heal"~"`th AYea °ent If one assumes a
rams 7 0 SP I t. Also, there would
/I counts flyable. As the Council is aware, the hospital
7 ex~rpmpl i~ncrnhlP
/Y Therefore, i£ the City ydid
assume ownership and despite our best efforts the
Hospital was later forced to close, according to the
Deloitte, Haskins and Sells report, there would
remain an estimated $1,678,000 in accounts payable;
$339,000 accrued expenses; capital lease obligation
indebtedness00o f notes payable of $85,000, bonded
$360,000, and other contractual
1 / commitments of approximately ,125,000
(Total:
4 14 The report also states that, "in
a t on, the Hospital would incur significant legal
fees and security expenses during the
phaseout
period, Outplacement counsoldng personnel should be
retained to limit the Hospital's unemployment
I compensation liability",
3. Unless a 501C-3 corporation was created, ressure
would occur asking the City to issue bonds ,moo
r al f vements a to modernize
an improve t}te Flosp to
;%lr,~r;rt r!L1 ~r .i. ltl.ltd'r.t rRtc . fr1 ~~`t l J ~'A C.'l.~Ftn q'~ a91,4 f1i..? 4 XI 'I61C
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Flow Hospital
August 20, 1987 b
Page 6 •
~r
el/ ell
In conclusion, it appears to the negotiating group that the
C ci can take one of two actions at this point. We can
adopt Option immedia el and move forth b increasing the
My tax rate by t o cents $.0 ) at our oarll t opportunity
and ear+7iark t~iii_S_~1 .Q hh fnr ilnw Hpital.el'fhis strategy
would call for us to ~eiect the Count 's overture City
s be s ense nanc a o f tat
such would errand in view of our limited tax ase and pass the
ball back to the County regarding the future of Flow Hospital.
on the other hand, we could adon~ t the ,~o~ntY'..~-philosonhv__and
indicate that we will immediately join with them to further
explore ion and/or III regarding the Hospital and
Pledge t e th ur nt st Bvell
under this opt on, owever, It is felt that he Council s old order to help consider a o _1jd.Q vent (S.02) tax Hospital cont
nue, Such action is needed because
implementation of Option It or III will not occur quickly
because of title problems and/or required negotiations.
\ lN. ~___f/,~~`.~ ~'r"!~'1 i"l1. fs~. r'b' •i c.9(5.. ~.'CtN'.~lt.I/9`s'1,..,
~~~I'r°t~tr~~/ f . ~9~..✓'~'; ' ,'~~Y' t rj:i"S t-,.. t a.r
, n
4 fclT r. fj Gv7..1~ rte " li,.% " err ?;r.<.(K~
3585M
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COUNTY COURT OF OENTdN COUNTY
812 JOSEPH A, CAAAOLL COURTS BUILDING
401 W, HICKORY
0pNTON,TEXA$ 78201
/ (817) 888.8808
November 10, 1987
Hon, Ray Stephens and City Council, City of Denton
BoardChalrpersonDirecto
ofMaryrsH, Williams and Flow Memorial Hospital
Honorable Jim Mattox, Attorney Cleneral of Texas
Ref Flow Memorial Hospital Settlement Counter-Proposai
Attached is an outline of a proposal settlement counter-proposal to resolve our
pending litigation, This proposal Is structured to respond to the suggestions of the
parties at our conference on November 9, 1987. This proposal reduces the commitment
required from the City of Denton and the Flow Poundation as requested, This proposal
provides the minimum funding estimated by the present management and Board of
Directors to sustain operations at the hospital, approximately $800,000 less funding than
our previous proposal.
Since the City has now declared Indigent health care responsibility to be a non-
negotiable Issue, this proposal also removes the Indigent health care Issue from this
litigation. The County will assume the full burden of Indigent health care while pursuing for
shar wecowillurt
Its
thegIndigent heCit alth ea eaIssue from Ourepending. It proal i to approved,
thls settlement.
~
This proposal is submitted for settlement purposes only and does not constitute
an admission of any Issue. We again suggest that If we are in agreement on its basic
Issues, that we Immediately make a joint presentation to the other necessary entities,
We request your prompt response,
Yours ery truly,
VIC BURKRSSA"l
County Judge
Vl3tja
t
SETTLEMENT COUNTER - PROPOSAL
CITY OF DENTON
1. Contribute $200,000 In fiscal year 1987-88,
2, Defer payment of past-due utility bill (Approx, $228,000,) until hospital has
positive cash flow,
3. Repay Flow Foundation for loan ($200,000 In 88-89, $200,000 In 89-90).
4. Assume all llability, If any, of Denton County for Flow Memorial Hospital debts.
S. Reserve security interest In fixed assets to extent of liabllityl otherwise transer
all interest to different entity by January 1, 1988.
FLOW MEMORIAL FOUNDATION
11 Provide loan of $400,000 to hospital by January 1, 1988.
2. Continue present payment on equipment (Approx. $23,000 mo,),
DENTON COUNTY
1. Assume cost of Indigent health care, effective September 1, 1987, reserving right
to litigate city liability, (Approx, $1,2 million annually).
21 Transfer all Interest In assets of hospital to different entity by January 1, 1988.
3. Release all claims against City of Denton, except Indigent health care.
FLOW HOSPITAL BOARD OF IRECTORS
1. Transfer all assets and obligations of plow Memorial Hospital to a different entity
by January 1, 19886
,
2 Release all claims against City and County,
1
OTHER ENTITIES
1. Different entity agrees to assume assets and obligations by January 1, 1988.
` 2. Attorney Oeneral approves settlement and agreed judgment.
I
I
,V1C 13U1tGCSS
COUN
61 2 OF DeNTON COUNTY
2 JOSEPH A. CARROLL CCURTS 9UILMNe
401 w, HICKORY
DENTON.TENAS 76201
(817) ee8.8886
Novembor 9, 1987
"on, Ray Stephens and Cit
Chalrporson Mar Y Connell
Y H, Williams and F, City of Denton
Board of Directors Flow Memorial Hospital
Honorablo Jim Mattox, Attorney Qeneral of Texas
[t e: Flow Memorial llospltal Settlement proposal
ALtaehed is an outline of a settlement ro
Pending litigation,
concerns of all 'rhls proposal provides a Proposal
framework the issues in our
parties, It Provides a realistic Opportunity for 1?low
to eonthwe as u valuubie health care asset In the community. to satisfy the ntnJnr
controversies eoneerllin Memorial llo5pitul
indidPnt health care, 6 obligations of Flow Memoriat tlospita~and raesponsibillity the
Y for
This proposal also lnvolvus a considerable contribution by the to sustain the hos ilal
necessary p WO believe that this tangible nlarrifestatloa of suminunfty
co in to
conflden revitalize Flow operations and express community and blstiituttonal
t hospital,
This proposal is submitted for settlement purpoaes only an admission of any lssuu, If wo are able to agree oil a basic settlement, we suggost
that we uuake a Joint presentation to other nue and does not eonstltute
YoUr prompt rC81)UMe, essary enlitius,
We look forward to
Yours truly
~VfO Li LSS,
Denton County Judge ,
Vmja
7.1
A'SETTLEMENT PROPOSAL
CITY OF DENTON
1. Contribute $400,000 In fiscal year 1987-88 and $400,000 In fiscal year 1088-89
to obligation fund for Flow Memorial Hospital.
'2. 9Seaime-alLllab1llty, If My, of Denton County for Flow Memorial Hospital debts.
FLOW I .RWYRIAL, FOUNDATION
1• Contribute $500,000 by January 1, 1988 to obligation fund for Flow Memorial
Hospital,
2• Continue present payments on equipment (Approximately $23,000 mo.)
DENTON COUNTY
1• Assume full responsibility for Indigent health care until September 1, 1989.
(Approximately $2,9 milllon), After September 1, 1989, Indigent health care cost
will be shared equally by city and county unless state law provides otherwke,
Release all claims against City of Denton.
FLOW ,IIOSP TAL _l3OARD OF D1f2EC'rORS
1. Transfer all assets and obligations of Flow Memorial Hospital to a different entity
I by Junuury 1, 1088.
i
'r VIC BURGESS
.,k JuDoE
COUNTY COURT OF DENTON COUNTY
612 JOSEPH A. CARROLL COURTS BUILDING
401 W. HICKORY CDENTON.TEXAS 7620!
(81 71665-8686
September 22, 1987
2 2
a RS
Honorable Ray Stephens and Council Members M-~.
RFFIr,E
215 E. McKinney ~•w.,
Denton, TX 78201
Dear Mayor Stephens and Members of the Council:
In response to your letter of September 16, 1987 and the attached proposal, the
Denton County Commissioners Court appreetates
wies and in
attempting to resolve the problems of Flow Hospitalybyrnegoltiagtions We wiilltconttinue
our efforts to achieve a joint resolution that will prevent further expenditure of tax
payer funds for operating losses while providing the best opportunity for the continued
existence of Flow Memorial Hospital.
However, we must recognize that the City of Denton and Denton County cannot
negotiate a solution without the cooperation of the Plow Hospital Board of Directors,
Article 44941-10 V.T,C.S., provides, In part, °sold Hospital Board shall not be authorized
to encumber, sell, lease or carry any real or personal property unless such encumbrance,
sale, lease, or conveyance Is approved, prior to final consummation thereof, by resolutions
of the Commissioners Court of said County and the governing body of said city,
respectively." It Is our belief that this statutory provision requires the joint action of
the Plow Hospital Board of Directors, the City and the County to voluntarily change
the structure and management of Flow Hospital , Indeed, the statute envisions that the
Flow Hospital Board of Directors will initiate such proposals, For several weeks, we
have called upon the Flow Hospital Board of Directors to commit themselves to such a
negotiated transfer. They have failed to respond. Without their cooperation, the City
and County can only proceed by litigation.
Second, your present proposal Is somewhat vague. However, if you are proposing
to transfer the assets of Plow Memorial Hospital to a now, non-profit corporation, while
retaining responsibility for all existing liabililties with the Flow Board, the City, or
the County, your proposal would violate the Texas Constitution. A governmental entit
may not transfer assets to a private entity, except for adequate consideration, y
A
further clarifloation of your proposal might resolve this di££iequat
We continue our offer to transfer Flow Hospital to the City or any other agreed
solution. We call upon the Flow Board to commit to this goal. We look forward to
continuing these efforts,
Yours very truly,
i/le ~
VIC BURGESSO~
VS:ja County Judge
cc: Flow Hospital Board of Directors
H, E. Clow Trust
Non. Jim Mattox) Attorney General
I
l
I
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JOHNSON & SWANSON
ATTORNEYS AND COUNSELORS
A Partnership Including Professional Corpontlons
100 Founders Square
Writer's Direct Dui Number 900 Jackson Street Uric ss [172
Dallas, Texas 75202.4499 Telecopy 714.977.9004
214.977.9000
(214) 977-9566
September 21, 1987
I
I
The Honorable Vic Burgess
County Judge
County Court of Denton County
612 Joseph A, Carroll Courts Building
401 w, Hickory
Denton, Texas 76201
Re: Flow Memorial Hospital
Dear Judge Burgess:
The Flow Memorial Hospital Board has authorized me to respond
to your most recent letter, reaffirming their willingness to
negotiate with the County and the City of Denton all aspects of
the future of Flow Memorial Hospital, inoluding the transfer of
the hospital to an entity mutually agreeable to all parties
involved, Specifically, the Flow Memorial Hospital Board wishes
to go on record as favoring a transfer of the County's interest in
the facility to the City of Denton, followed by a transfer by the
most appropriate means from the City to a community-based not for
profit corporation,
As you know, the Flow Memorial Hospital Board has also
instructed us to file a counterclaim in the pending litigation,
wherein we shall ask the court to declare the obligations of the
City and County and the rights of the Flow Memorial Hospital Board
under the 1471 agreement, It is not the Board's intention to
obstruct the course of negotiation among the parties. In the
event, however, that the negotiations are not as fruitful as we
all hope they will be, we do believe that it is necessary for the
court to construe that 1971 agreement.
4.
The Honorable Vic Burgess
September 21, 1987
Page No, 2
Please be assured that the Flow Memorial Hospital Board is
committed to a speedy and fair resolution of this matter.
Sincerely,
clwaad
Edward J. Hopk ns
EJH ck
Cal Members, Denton County Commissioners Court
The Honorable Ray Stephens, Mayor
Members, Denton City Council
Members, Flow Memorial Hospital Board of Directors
Honorable Jim Mattox, Attorney General
Charles R, Linton, Administrator
of Flow Memorial Hospital
Members, H. E. Flow Trust
r ~,fnonk~n~o9~sa~ooi9~ao~e~ss2 sir
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VIC BURGESS
)UDCE
COUNTY COURT OF DENTON COUNTY
812 JOSEPH A. CARROLL COURTS GUILOINO
401 W. HICKORY s j r'
DENTON,TEXAS 76201 D
(817) 585.8585
AUG 181987
CI MM1 r1C g310iii
August 18, 1987
The Honorable Ray Stephens, Mayor
and the Members of the City Council
City of Denton
Municipal Building
Denton, TX 76201
Dear Mayor Stephens and Council Members:
This correspondence is in response to your letter of August 10,
1987 and is intended to notify the City of Denton of the position
of the Denton County Commissioners Court concerning Flow Hospital.
The recent study of Flow Hospital by the accounting firm of Deloitte,
Haskings & Sells revealed that 60.68 of the patients treated at Flow
Hospital are residents of the City of Denton. Further, the hospital
district formation referendum results indicate that voters in the
City of Denton are willing to support Clow Hospital operations with
ad valorem taxes, while residents in the remainder of Denton County
are not. Therefore, it would not be logical or purdent to transfer
the City's ownership interest in Flow Hospital to Denton County.
We respectfully decline your offer.
However, it would be logical to transfer the County's ownership
interest to the City of Denton, especially since this is the apparent
desire of the voters. Denton County, therefore, would offer to sell
its ownership interest in Flow Hospital to the City of Denton for
the nominal sum of One Dollar and the additional agreement by the
City of Denton to assume all liability for all Flow Hospital obligations,
past, present, and future, and to indemnify Denton County, Texas from
any claims regarding Flow Hospital. Unlike your offer, we would not
impose any restrictions on your future use of Flow Hospital.
We have reviewed the request of the Hospital Board of Directors
that Denton County designate three cents of ad valorem taxes and the
City of Denton designate two cents of ad valorem taxes for support
of Flow Hospital. This proposal is contrary to state law and has been
reputiated by the voters. The duty of the Board of Directors, under
Article 44941-1, is to operate the hospital with available revenues,
not ad valorem taxes.
E
The Hon. Ray Stephens and Council Members
Page 2
The City of Denton is hereby notified that Denton County, Texas,
will not budget or provide any funding for further operating losses
at Flow Hospital. Although the City of Denton has failed to meet
its obligations for indigent care services at Flow Hospital, as required
by state law, Denton County will continue to fund its s,,atutory 50%
responsibility for indigent care provided by Flow Hospital. However,
Denton County will not utilize public funds to defray operating losses.
Since the Flow Hospital Board of Directors apparently cannot
opperate the hospital without accumulating additional losses, it is
imperative that we consider other alternatives. Denton County is
prepared to immediately consider the options of lease/purchase, sale
to the City of Denton or other parties, or, if necessary, the closure
of Flow Hospital. Serious consideration of these alternative will
require the commitment of all involved parties, Therefore, we request
that the City of Denton, Flow Hospital Board of Directors, the Trustees
of the H. E. Flow Trust, and the Attorney General of the State of
Texas respond in writing to this request within ten (10) days.
if we cannot resolve the future of Flow Hospital by negotiation,
it will be necessary that we seek relief through the courts. Litigation
will be expensive and will almost certainly result in the closure
of Flow Hospital. We urge all interested parties to commit themselves
to a negotiated resolution.
Si erely,
VIC BURGESS
County Judge
va;~a
cc; Flow Hospital Board of Directors
H. E. Flow Trust
Honorable Jim Mattox, Attorney General
11001009
/ VIC BURGESS
'r. JUDOS
COUNTY COURT OF DENTON COUNTY
BI2 JOSEPH A. CARROLL COURTS BUILOING
401 W, HICKORY
OENTON, TEXAS 76201
(617) 566-0686
August 18, 1987
j Flow Memorial Ho tal Board of Directors
1310 Scripturet
Denton, TX 6201
Dear re of the Board:
The Flow Hospital Board Of Directors was created by Denton
County, Texas and the City of Denton, Texas, pursuant to Article
4494i•1, V.T.CeS., as the joint agent of the County and city
for hospital purposes. Under this statute, the Board of Directors
shall act solely for the joint benefit of said County and City.
It is the duty of the Board of Directors to establish and
collect sufficient chargos for services and facilities, and to
utilize all other available sources of revenue and income, in
order to pay all expenses in connection with the ownership, operation,
and maintenance of its hospital facilities. The County and City
are obligated to provide sufficient funding for indigent health
care. The County and City are not required nor authorized to
dedicate ad valorem property taxes to underwrite operating losses
at the hospital.
The Board of Directors are hereby notified that Denton County,
Texas will not be responsible nor accept liability for debts
incurred by the Board of Directors beyond indigent care.
You s t y,
VIC BURGESS
County Judge
i
VB>ija
cc: Honorable Ray Stephens and Council Members Gam'
H. E. Flow Trust Members
Honorable Jim Mattox, Attorney General
t
VFG BURGESS
Jt1DOE
COUNTY COURT OF DENTON COUNTY
612 JOSEPH A, CARROLL COURTS BUILDING
401 W. HICKORY
DENTON, TEXAS 76201 ~ ~ C•
w,n„,, naw (617) 6668686
September 22, 1987 2 2 1987
f
I t.,
Honorable Ray Stephens and Council Members Cl M Q So~~lr
218 E, McKinney
Denton, TX 78201
I I Dear Mayor Stephens and Members of the Council:
In response to ,your )otter of Septomber 18, 1987 and the attached proposal, the
Denton County Commissioners Court
atte appreciates your willingness and Interest in
mpting to resolve the problems of Flow Hospital by negotiation. We will continue
our efforts to achieve a Joint resolution that will prevent further expenditure of tax
payer funds for operating losses while providing the best opportunity for the continued
existence of Flow Memorial Hospital,
However, we must recognize that the City of Denton and Denton County cannot
negotiate a solution without the cooperation of the Flow Hospital Board of Directors,
Article 44941-1, V.T,C,S,, provides, in part, "said Hospital Board shall not be authorized
to encumber, sell, lease or carry any real or personal property unless such encumbrance,
oft leaComse, pof°sa d County final and theummation thereof, by resolutions
respectively." It is our belief that this statutory g0V°Inir body of said oily,
the Flow Hospital Board of Directors, the City andothe' County requires
volunotiarilycchange
the structure and management of Flow Hospital , Indeed, the statute envisions that the
Flow Hospital Board of Directors will Initiate such proposals. For several weeks, we
have called upon the Flow Hospital Board of Directors to commit themselves to such a
negotiated transfer. They have failed to respond, Without choir cooperation, the City
and County can only proceed by litigation.
Second, your present proposal Is somewhat vague. However, if you are proposing
to transfer the assets of Flow Memorial Hospital to a new, non-profit corporation, while
retaining responsibility for all existing Habillitles With the Flow Board, the City, or
the County, your proposal would violate the Texas Constitution, A governmental entlty
may not transfer assets to a private entity, except for adequate consideration, A
further clarification of your proposal might resolve this difficulty.
We continue our offer to transfer Flow Hospital to the City or any other agreed
solution, We call upon the Flow Board to commit to this goal. We look forward to
continuing these efforts, 1
Ylefeau urs very truly,
~idESGS~
VS.-JA County Judge
cc: Flow Hospital Board of Directors
H. E. Flow Trust
Hon, Jim Mattox, Attorney General
I
ti
rC VIC BURGESS
)UDGE
COUNTY COURT OF DENTON COUNTY
812 JOSEPH A. CARROLL COURTS BUILDING
401 W HICKORY
DENTON, TEXAS 18201
18171 685.8888
September 8, 1987
Honorable Ray Stephens and Council Members
215 E. McKinney
Denton, TX 76201
Dear Mayor Stephens and Members of the Councils
This correspondence is in response to your letter of September 4,
1987. We appreciate that the City of Denton has recognized that the current
ownership structure at Plow Hospital cannot be maintained. We also appreciate
your pledge to cooperatively work with us to transfer ownership from the
County to either the City or another entity. We also pledge to continue
our cooperative efforts in this regard.
We are informed by our legal counsel that the completion of our objective,
without extensive litigation, will require a similar commitment from the
Flow Hospital Board of Directors. In our letter of August 18, 1987, we
requested such a commitment from the Flow Board. We have not received
such commitment.
In the absence of such a commitment, it would not be possible to meet
our mutual goals. Consequently, we again call upon the Flow Hospital Board
of Directors to commit to a negotiated transfer of Flow Hospital to be
completed before January 1, 1988. Until we have this commitment, it would
be premature to address the funding issue. Howover,you may recall from
our discussion and correspondence that any future contributions from the
County must be for indigent care, not operating losses. We are certainly
willing to explore all other sources, including the Flow Foundation, to
ins6re. the continued operation of Flow Hospital during this period of
negotiation.
I am certain that we all eagerly await this commitment from the Flow
board and will immediately pursue further negotiations upon receipt of
such commitment. We respectfully request that such commitment and our
agreement be executed by all parties before October It 1987.
Your Very truly,
VIC BURGESS
County Judge
VBsja
ccs Flow Hospital Board of Directors
H. E. Flow Trust
Hon. Jim Mattox, Attorney General
VIC BURGESS
` JUtl08
COUNTY COURT Of DENTON COUNTY
6f2 JOSEPH A. CARROLL COURTS SUILDINO
401 W. HICKORY
OENTON, TEXAS 76201
9i t"v. lo" w.:;~. 1617 86$8865
September 1, 1987
Honorable Ray Stephens, Mayor
1 and Members of the City Council
City of Denton
Municipal Building
Denton, Texas 76201
Dear Mayor Stephens and Council Memberst
This correspondence is in response to your letter of
t1987wo, in
cents which
the advea est that Denton County allocate fluOnt dsA 26,
losses at Flow Hospital. As ws statedxin ourWrcinued~ualeto
County will not fund further opersting losses previouus s tal, rn
proposed budget submitted by t at Flow Hospital. The rectors
Two Million Dollars (S2,00O0o0e00j°inHcontributions fromithe cit requests
county for the 1987-88 fiscal year. You have proposed the city and
contribute $400,000,00. This would result in $1,600,000 that the city
on county taxpayers for the next fiscal year. Such~~ burden
The present management and ownership structure at Flow Hospital unacceptable.
has been unable to fulfill its obligation to provide
care without placing an unreasonable burden u pital
Count quality health
y does not intend to continue this inefficientestructture. weehave
offored to Cooperate with the City of Denton in pursuing all alternatives
to place Flow Hospital in another management and ownership
'Hopefully, Plow Hospital can continue operation if such transfertisQ•
made quickly.
However, we cannot continue to subject our taxpayers to enormous
potential liablilities by ignoring the reality of the economic conditions
at elOW Hospital, Consequently, the Commissioners court has instructed
me to extend our negotiations until October 11 1987, if
concerning the transfer of, Flow gaspital is not executed an agreed rO
parties by October 1, 1987, our legal counsel has been instruall ctedstontial struc by court order, we lookp orward° o continuin our mutual of plow
Hospitalt
to reach a negotiated resolution to save flow gHospital.
efforts
sin eel
VIC gURC3E3S
COS City Council County Judge
Flow Hospital Board of Trustees
H, a. Flow Trust
Non, Jim Maddox, Attorney General
JOHNSON & SWANSON,Qe
ATTORNEYS AND COUNSELORS
A Parlne7shlp fncludfn; Prolesllonal Corparalfans
100 Founders Square
IsMWS Direct Dlal Number 900 Jackson Street
214 - 977-9566 Dallas, Texas 15202.4499 Teles ss It72
2!4.977.9000 Teleca Dy; 214.977.9001
August 28, 1987
VIA COURIER
The Honorable Vic Burgess
County Judge
County Court of Denton County
612 Joseph A. Carroll Courts Building
401 W, Hickory
Denton, Texas 76201
Dear Judge Burgess,
This firm represents the Board of Directors of Flow Memorial
Hospital ("Plow Board,,). The Board has authorized us to 'respond
on its behalf to your letter datad August 18, 1987 to the Mayor
and City Council of the City of Denton. We wish, specifically, in
this response to address the position of the Denton County
Commissioners Court concerning both its perception and the reality
of its financial obligation (as well as the City's) to support
Flow Memorial Hospital.
The Flow Memorial Hospital Agreement, which took effect
October 1, 19710 (11 1971 Agreement") and which created the Board,
is unequivocal in setting forth the financial responsibilities of
both the County and the City to support the Flow Board. On page
2, the third full paragraph of the 1971 Agreement states)
" All funds transferred by the City and County to, or
for the benefit of, the Hospital shall be based upon a
written detailed budget, as described below, and no
special transfer of City or County funds within a budget
year may be made without the submission and approval of
a budget amendment or supplement prior to any such
transfer, The said UILti Aild Cc ,n .v agree gyp, prOVidA All
jydg 11%u ary 10 bal~_,anaa budge" after said budget
is examined, accepted and approved by t h 0 said City and
County,
Emphasis supplied.
The next paragraph in the 1971 Agreement is the one commonly
cited by the County in support of its contention that the
obligation to balance the Flow Boards budget was for one year
only, See, for example, Paragraph III of the County's Original
Judge Burgess
August 28, 1987
Page No, 2
Petition For Declaratory Judgment filed earlier this summer,
cited That
paragraph, totally separate from the obligation to balance
- the budget, states only thatr
The City and County shall transfer funds to the
Hospital in the following proportions;
For each dollar transferred, the City shall commit
g0 2%L_"= and the County shall commit 50 ftr n
after the amount of each transfer has been authorizednby
both, This percentage of funding is valid only for the
year October 1, 1971, through September 300 1972, to be
renegotiated thereafter,
Thus, under the 1971 Agreement, the County's and City's
obligation to provide the funds necessary to balance the budget of
Flow Memorial Hospital is unambiguous and unqualified, T'he only
matter left to speculation year-to-year is the portion of such
financial assistance each party will bear. That is the real crux
of the lawsuit filed by the County.
Moreover, the Indigent Health Care and Treatment Act ("Act"),
Art, 4438f, V, A, T, S. , passed in 1985 does not delimit the county's
and City's obligations to the Board under the 1971 Agreement,
Indeed, the Act reinforces the obligations of the County and City
under the Agreement,
Title 3 of the Act governs the provision of health care
services to persons who reside within an area served by a public
hospital. Flow Memorial Hospital is such a public hospital, The
Act requires public hospitals to "provide the inpatient and
outpatient hospital services a county is required to provide
under, , , this Act," Art, 4438f §11.01(a), V, A, T, S. , and further
requires aa0h a____rnmfinW entity that owns a
"nravide su f ciant. , = A~ t111 public hospital to
hed g~ ct AMU" ohs
~.&1.~ D= assistance as prescribed by Section on 12.03 of
this Act," Art. 4438f 910,02(x), Emphasis supplied,
Section 10.02(x) does not say that such governmental entities
will contribute only what they perceive to be necessary to provide
indigent care, It says clearly and unambiguously that each such
entity will provide stf +aAAnt funding to alto the hospital to
provide such care. Clearly, if, in this case, the County and City
do not provide the level of funding necessary to balance the Flow
Board's budget, they will not have allowed Flow Memorial Hospital
to provide the services required under the Act.., because Flow
M
Judge Burgess
August 28, 1987
Page No. 3
Memorial Hospital will eventually have to cease operations if
without the funds necessary to allow it to operate.
On the basis of the foregoing, the Board of Directors of Flow
Memorial Hospital reiterates '.to request upon submission of its
budget earlier this year for sufficient funding from the County
and City to allow it to provide the health care services required
under the Act, and further insists that the County and City honor
their earlier 1971 Agreement to balance the Flow budget,
If such assistance is not forthcoming, the Board will have no
option but to participate actively and aggressively in the
County's declaratory judgment action to enforce its right to such
level of funding, Indeed, we have also been authorized by the
Board to answer the suit and to so aggressively prooeed to a
resolution thereof.
One more comment, Sixteen hospitals in this state have
already closed this year. There is a real prospect that Flow
Memorial Hospital also will close if the County and City do not
provide the level of funding they are required by law and by
agreement to provide, Already, due to the critical laok of
funding, the Flow Board has had to make painful decisions to close
the obstetrics department and to terminate the nurse midwifery
program, The problem of indigent health care in Denton County
will not go away if Flow K)morial Hospital goes away, Indeed, the
financial problem will increase for the
County, Hospital closes, and, thus, no public s exists in
Denton County, the responsibility to provide indigent care will
devolve upon the County alone, Art, 4438f 92.02(a), V, A, T. S, One
thing the County can be sure of in that instanoe is that the cost
of indigent care provided in the area's private hospitals will
certainly be no lower than the cost to Denton County taxpayers of
providing that care through Flow Memorial Hospital,
On behalf of the Board of Directors of Flow Memorial
Hospital, we urge the Denton County Commissioner's Court to
reconsider its position articulated in your August 18 letter, and, '
with the City's assistance, to fund the operations of Flow
Memorial Hospital at the level previously requested, Please
inform us of your response as soon as possible so that this matter
can be resolved quickly, and so that all of the people of Denton
Judge Burgess
August 28, 1987
Page No. 4
County can be assured of the level of health oars they are
entitled to under the ,law.
1 Sincerely,
9.
Edward J. flOpkina
EJHi ck
ooi Members, Denton County Commissioners Court
The Honorable Ray Stephens Mayor
Members, Dsuton City Council
Members, Flow Memorial Hospital Board of Directors
Honorable Jim Mattox, Attorney General
Charles R. Linton, Administrator t
Flow Memorial Hospital
Members, H. E. Flow Trust
r
VIC BURGESS
b JUDGE
COUNTY COURT OF DENTON COUNTY
B 12 JOSEPH A. CARROLL COURTS eUIL01NG
401 W. HICKORY
DENTON, TEXAS 76201 r
7
D{8t71688geg6 li AUG
i99t ( {
August 181 1987 CI MA o RS,OifICE
The Honorable Ray Stephansl Mayor
and the Members Of'
f the City Council
City of Denton
Municipgl Building
Denton, TX 76201
Dear Mayor Stephens and Council Members,
This correspondence is in response to your letter of August 100
1987 and is intended to notify the city of Denton of the Position
of the Denton County Commissioners Court concerning flow Hospital.
The recent study of Flow Hospital by the accounting firm of Deloitte,
Haskinge & sells revealed that 60.68 of the patients treat at Flow
Hospital are residents of the City of Denton. Further, the hospital
district formation referendum results indicate that voters in the
City of Denton are willing to support Flow Hospital operations with
ad valorem taxes, while residents in the remainder of Denton County
are not. Therefore, it would not be logical or purdent to transfer
the City's ownership interest in Flow Hospital to Denton County.
We respectfully decline your offer.
However, it would be logical to transfer the County's ownership
interest to the City of Denton, especially since this is the apparent
desire of the voters. Denton County, therefore, would offer to sell
its ownership interest in Flow Hospital to the City of Denton for
the nominal sum of One Dollar and the additional agreement bl; the
City of Denton to assume all liability for all Flow Hospital obligations,
p
ast, present, and future, and to indemnify Denton County, Texas from
any
imposeclatas regarding o on Hospital. UnlOo
us.,ofo plow offer,
Hospitalwould not
We have reviewed the request of the Hospital Board of Directors
that Denton County designate three cents of ad valorem taxes and the
City of Denton designate two cents of ad valorem taxes for su
of Flow Hospital, This proposal is contrary to state law and hasrbeen
reputiated by the voters. The duty of the Board of Directore, under
Article 44941.1, is to operate the hospital with available revenues,
not ad valorem taxes.
The lion. Ray Stephens and Council Members
Page 2
The City of Denton is hereby notified that Denton County, Texas,
wi1F1lownotHosp budgetitalar Altho provide any funding for further operating losses
. ugh the
at City of Denton has failed to meet
its obligations for indigent care services at Flow Hospital, as roquired
by state law, Denton County will continue to fund it
responsibility for Ind
en on ou y w not utilize Flow Hos Its However,
public funds to de ray operating losses.
i5 i~ Since the Flow Hospital Board of Directors apparently cannot
opperate the hospital without accumulating additional losses, it is
imperative that we consider other alternatives. Denton County is
prepared to immediately consider the options of lease/purchase, sale
to the City of Denton or other parties, or, if necessa
of Flow Hospital. Serious consideration of these alternative willure
require the commitment of all involved
that the City of Denton, Flow Hospital Boardeof Directorat the Trustees
of the H. E. Flow Trust, and the Attorney General of the State of
Texas respond in writing to this request within ten (10) days.
w e ca n n ~
ot resolve the f tune
it ----"Q . Flaw F7dgM Hal h
w11 tje1 ate' a the I elinf fhN~-~""''^-•r-rry ot1 tion
pensive and will almost certainly result inn thhee closure gation
Of Flaw Hospital, We urge all interested
to a negotiated resolution. parties to commit themselves
Si erely,
VIC BURGESS
County Judge
VBtja
cot Flow Hospital Board of Directors
H. E. Flow Trust
Honorable Jim Mattox, Attorney General
;,";,~,.i,~" mac' ~ j.~-~. G~e~~ ~
Cdr- G~aG~4~
L , VIC BURGESS
JUDGE
COUNTY COURT OF DENTON COUNTY
812 JOSEPH A. CARAOLL COURTS BUILDING
401 W,H,(1XonY
DENTON, TEXAS 782oI
f81r~586.8685
(11\YA ^~,eWO y
i' :MaN
August 18, 1987
-1
Flow Memorial Hospital Board of Directors
1310 Scripturo,-Street
Denton, TTXX/48201
Dear-060 bers of the Boards
The Flow Hospital Board of Directors was created by Denton
Countyli V.T Texas
4494i` prticle
C.Sd,tas theyjointeagent ofxthe Couunrsutyantt andoCAit
for hospital purposes, Under this statute) the Board of Directors
shall act solely for the joint benefit of said County and City.
It is the duty of the Board of Directors to establish and
collect sufficient charges for services and facilities, and to
utilize all other available
order to pay all sources of revenue and income, in
expenses in connection with the ownership, operation,
and maintenance of its hospital facilities, The County and City
are obligated to provide sufficient funding for indigent health
care, The County and City are not required nor authorized to
dedicate ad valorem property taxes to underwrite operating losses
at the hospital,
The Board of Directors are hereby notified that Denton County,
Texas will not be responsible nor accebr liability for debts
incurred by the Board of Directors beyond indigent care,
You 8 truly,
~C
VIC BURGPSS?
County Judge
VBtja
cot Honorable Ray Stephens and council Members Ly„,.... '
H, C. Flow Trust Members
Honorable Jim Mattox, Attorney general
J
( ~ le,
J
Q -oar-~
&One
12~
y
000"
CITY'S POSITION REGARDING PLOW HOSPITAL
1. If a long-term lease with a 501(c)-3 is desired, this could
best be achieved by joint, direct action by the City and
County.
II. Before the City is willing to consider direct ownership and a
resulting lease with a S01(c)-3, the following conditions
must be satisfiedi
A. All legal work must be accomplished and the SOl(c)-3
! Board be In place so that the hospital operation can be
leased immediately upon the City assuming ownership,
B. A realistic short and long term financial plan must be
filed with the City Council which:
1. Illustrates that the hospital has a reasonable chance
for long-term financial success.
I
2. Illustrates how the current liabilities of the
hospital will be met and what obligations will be
assumed by the City.
3. Illustrates the extent of the estimated annual
financial subsidy required for indigent health
care,
4. Illustrates the extent of the estimated annual
financial subsidy required for general expenses of
the hospital, over and above that required for
indigent health care expenses,
5. Enumerates the types of services which Plow Hospital
will be able to offer under a reorganization
involving City ownership and the operation under a
501(c)-3 corporation.
6. These financial plans should be complete, realistic
and be able to withstand independent review by
outside third parties,
C. The City receives adequate assurance from the financial
plan and the immediate lease that it is not assuming
liabilities which are beyond the capability of the City
Government to effectively handle.
3641M
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HENDERSON gRYANT 6 W
OLFE
ATTORNEYS 6 COUNSELORS
JAMES r. 200 NORTH TRAVIS STREET, FIFTH FLOC) '
. HENL oLn n(p-
WILLIAM R, BClY< P, O. BOX 23b
. pi9iU]91 STACI
CRRH W. WOI.FI. 3HERMAN, TEXAS >ESo91 s. JOHNSON
CURRY H. VOGI +'up T. 6C0'1 SMITH
W. ROBERt E55 IONW 9939421 "%CY O, WILLIAM$
RICHARD E. "A,,,,,. "N FAX f214! 8922391 JAMES CORLCY HENDERSON RONALD H CLARK DEBORAH S. BURLESON
, OEBORAH L. M
~ C6RCOORY
J
X,
June 15, 1990
Debra Dirayovitch
City Attorney
City Of Denton
Municipal Building
Dgfiton, TeXas 76201
3 RE; Flow Regional Medical Center, Inc,
1 Dear Debra; enclose a Order in h eiBankbof Lincolnwood case filed in federal court here
copy of the Court's
in Sherman, We received a copy of this order today,
As you can sea, Judge Brown held that the leases were
unconstitutional and that Plow was not part of a "Joint venture$l
on behalf of the city.
Yours very truly,
HENDERSON BRYANT & WOLFE
T, Scott Smith
TSS/bhs
1096-0005
cat Mayor Bob Castleberry
O'ity Manager Lloyd Harrell
C flltY lUr'IIGYt...
crrnr,F~..snrrrc~
_
EOI~~ JINN
5
F I L F 0
IN THE UNITED STATES DISTRICT COURT e,,-rtv.•co.-re ' r
FOR THE EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION JUN ? i990
SANK OF LINCOLNWOOD S
V R\ /
S 5-89-65-CA oe p
CITY OF DENTON S
S
egg
Pending before the Court is the Motion for Summary Judgment
filed by the defendant City of Denton ("City"). After carefully
reviewing the Motion, the briefs in Support of and in opposition
to the Motion, and all the pleadings on file in the case, the Court
finds that the Motion should be granted.
The plaintiff seeks to recover damages for the alleged broach
of an equipment lease between the plaintiff and Flow Memorial
Hospital ("Hospital"), The plaintiff contends that the City is
liable for payments due on the lease under either a joint-venture
or quantum-meruit theory of liability. The City denies that it was
a joint venturer with the Hospital and contends that the lease is
void under the Texas Constitution.
The Hospital was created by the City and Denton County, Texas
in 1971 pursuant to Tex. Rev, Civ. Stat, art, 49941-1 (Vernon
1976), xggU ed, now Tex. Health and Safety Cade S 265.031 of seq.
(Vernon 1990). The statutes provide that the the Hospital "shall
constitute a separate entity in the exercise and performance of the
powers, duties, and functions authorized by the Act, and . , ,
shall act and proceed Independently, and may sue and 10r4 sued
separately, in its own name, capacity, and behalf, Tex. RFrv', Civ.
S9965.ORD 1
Stat. art, 4494i-1 5 2 (Vernon 1976).'
Under these statutes, the Hospital had the power to enter into
equipment leases such 6 t}te- one at issue in this case, k, at
art, 44941-1 5 4, The record reveals that the Hospital, and not
the City, executed the lease, and thus, it is the Hospital that is
liable for payments due on the lease. The Court finds that under
i
Texas law, the City and the Hospital were not joint venturers, and
the City is not responsible for the equipment lease executed by the
Hospital under either a joint-venture or quantum-meruit theory of
liability.
The Court also finds that the lease is unenforceable against
the City because of Tex. Const. art, 11 5 5.' The equipment lease
is a "debt" within art. 11 5 5 since the lease is a "pecuniary
obligation imposed by contract". Om City of H+ust on y. West, 563
8-W-2d 690, 69° (Tex. Civ. App. Houston, writ ref Id n,r.a.). it
is undisput that the City made no provision for payment of the
lease over its 60-month term as is required by art. 11 5 B. Since
the lease was for a term of five years, ancA the City was not even
a party to the lease, it could not have been "within the lawful and
reasonable contemplation of the parties" that the lease payments
would be paid enues for he year
in which he pease was_ax~ eaQd, &Qg,
The plaintiff contends that the City had a budget surplus from
which the lease payments could have been made, That the City
"might" or "Could" have paid the lease payments frr.:: some
',M Tex. Health and Safety Code S5 265,034(b) rind 26' 035,
4
88965.ORD 2
r
unidentified source of funds does not satisfy the provisions of
art, 11 S 5. The plaintiff failed to sustain its burden to plead
that the lease was executed-ln accordance with the provisions of
art, 11 5 5. agg Brodhead v, City of Fornev, 538 S.W,2d 873, 875
(Tex Civ. App. Waco 1976, no writ). Furthermore, the plaintiff has
failed to sustain itd burden to come forward to designate specific
facts showing that there is a genuine issue for trial concerning
whether payment of the lease payments was provided for in the
manner required by art. 11 S 5 or that the parties reasonably
contemplated that the lease payments would be paid from the City's
current revenues. MM Celotex Corp-,_v, C ett, 477 U.S. 317, 324,
106 S.Ct. 2548, 2553 (1986). Accordingly, it is
ORDERED that the Motion for Summary Judgment filed by the
defendant City of Denton is GRANTED, and the plaintiff's claims
against the defendant are DISMISSED WITH PREJUnICE.
Signed this/,~ay of June, 1990.
r'
U ED TATS DISTRICT JUDGE`
.
r
58965.ORD y 3
gon
IN THE UNITED STATES DISTRICT COURT Le
FOR THE EASTERN DISTRICT OF TEXAS ff
SHERMAN DIVISION EASIES DIS IC aF RT
SCIENTIFIC LEASING, INC.- S
S ! ~J 1 9 4 19yt1
V* S 5-89-64-CA
5 AYI.MARRIS,QK
CITY OF DENTON S
ORDER
I 1
Pending before the Court is the Motion for Summary Judgment
filed by the defendant City of Denton ("City"). After carefully
reviewing the Motion, the briefs in support of and in opposition
to the Motion, and all the pleadings on file in the case, the Court
finds that the Motion should be granted,
The plaintiff seeks to recover damages for the alleged breach
of an equipment lease between the plaintiff and Flow Memorial
f Hospital ("Hospital"). The plaintiff contends that the City is
11 liable for payments due on the lease under either a joint-venture
or quantum-maruit theory of liability. The City denies that it was
a joint venturer with the Hospital and contends that the lease is
void under the Texas Constitution.
The Hospital was created by the City and Denton County, Texas
in 1971 pursuant to Tex. Rev, Civ, Stat. art, 44941-1 (Vernon
1976), r@pealgd, now Tex. Health and Safety Code 5 265,031 at seq.
(Vernon 1990). The statutes provide that the the Hospital "shall
constitute a separate entity in the exercise and performance of the
powers, duties, and functions authorized by the Act, and ,
shall act and proceed independently, and may sue and be sued
separr.tely, in its own name, capacity, and behalf. Tax, Rev, Civ.
88964,ORD 1
Stat, art, 44941-1 S 2 (Vernon 1976).1
Under these statutes, the Hospital had the power to enter into
equipment leases such as'thb--one at issue in this case, ,L at
art. 44941-1 S 4. The record reveals that the Hospital, and not
r- the City, executed the lease, and thus, it is the Hospital that is
i
liable for payments due on the lease. The Court finds that under
Texas law, the City and the Hospital were not joint venturers, and
the City is not responsible for the equipment lease executed by the
Hospital under either a joint-venture or quantum-meruit theory of
liability.
The Court also finds that the lease is unenforceable against
the City because of Tex, Const. art-. 11 S 5, The equipment lease
is a "debt" within art. 11 S 5 since the lease is a "pecuniary
obligation imposed by contract". SAg City -of RoujLton , 563
S,W42d 6d0, 685 (Tex, Civ, App, Houston, writ refId n,r,a,), it
is undisputed that the City made no provision for payment of the
lease over its 60-month term as is required by art. 11 S S. Since
the lease was for a term of five years, and the City was not even
a party to the lease, it could not have been "within the lawful and
reasonable contemplation of the parties" that the lease payments
would be paid by the Citv from its c~~rrent ravenuao f the year
Sn which the pease was eu ,red, Eft IL
The plaintiff contends that the City had a budget surplus from
which the lease
payments could have been made, That the City
"might„ or "could" have paid the lease payments fr,m eome
1,9g~ Tex, Health and Safety Code SS 265.034(1 and 21:.035.
68964.ORD 2
1
unidentified source of funds does not satisfy the provisions of
art. 11 5 5. The plaintiff failed to sustain its burden to plead
that the lease was exeantedyin accordance with the provisions of
art, li 5 5, L" ~adhead
y Gity of Fb na~.r 538 S,W,2d 873, 875
(Tex Civ. App, Waco 1976, no writ), Furthermore, the plaintiff has
failed to sustain its burden to come forward to designate specific
facts showing that there is a genuine issue for trial concerning
whether payment of the lease payments was provided for in the
i manner required by art, 11 S 5 or that the parties reasonably
contemplated that the lease payments would be paid
from the City's
current revenues, MM
QIUMS2rgj_v ~j 477 U.S. 317, 324,
106 S,Ct, 2548, 2553 (1986), Accordingly, it is
ORDBRED that the Motion for Summary Judgment filed by the
defendant City of Denton is GR71MD, and the plaintiffs claims
against the defendant are D2smassD wITH pRgJt7DIC6,
signed this /-O ay of June, 1990.
U TED 3TA Dr TR T D E
S0964.pRD
3
'J
r~
• DJ .J
1 ♦I
♦ D
V
O ♦
I ♦
1
°i~voocv%~'`g'
BOB CASTLEBERRY CITY OP DENTON
MAYOR 215 EAST MCKINNEY STREET
DENTON, TEXAS 76201
Mrs. Ann Pomykal
Chairman
Board of Directors
Flow Health Care Foundation
RE2 In re: Flow
Ann, the City Council considered your latter at
our meeting last week.
After careful deliberation, the Council 1
determined that because of the potential
liability to the taxpayers of the City of Denton,
it would not be in the best interests of the y
citizens to accept your offer.
Sincerely,
Bob Castleberry
Mayor
1992 August 26
w
MAIL T0i
Mrs. Ann Pomykal
Texas Instruments
P.o. Box 405, M/3 3406
Lewisville, TX 75067
r
~y' U g
HOW 1 13 10 Scripture Street
Denton. HOSF't1'A[, TX 76201
(817) 387.58(31
October 8, 1991
Bob Castleberry, Mayor
! City of Denton
215 East McKinney Street
Denton, Texas 76201
Dear Bob,
Today, members of the Flow Health Care Foundation met to discuss
the proposal outlined in your letter of October 3rd. Mary
Williams, Chairperson of the advisory board, also attended the
meeting.
As you are aware, our board always has been sensitive to the
contingent security interest which the City of Denton exercises
over the assets resulting from the dissolution of Flow Hospital.
We clearly affirmed and protected this interest in the bankruptcy
procoadings, and we rewrote our bylaws and articles of
incorporation to prohibit any distributions of principal
specifically with the protection of the City of Denton's security
interest in mind.
When attorneys for the City of Denton proposed an escrow
arrangement to further protect the City's interest, our board
voiced no objection provided the agreement met three conditions.
1) Investment and reinvestment of Foundation funds were
unrestricted,
2) Expenditure of net income was unrestricted.
3) Any fees or other, charges resulting from the escrow
would be paid by the City.
After reviewing your proposal, the position of our board remains
unchanged. While we wish in any reasonable fashion to protect
your interests, we do not feel that the contingent liability
issue should be used b the City of Denton to dictate how
Foundation funds (net income) will be allocated until 2008. Flow
Hospital was removed from the political arena in 1988, and we
believe the principle was a sound one then and now.
Accordingly, we propose and would consent to the following
C changes in the escrow agreements
I
Page 2
October 8, 1991
Change 1
1. The following assets are tendered to the Escrow Agent
pursuant to tho terms of this agreement, and shall be
referred to herein as the "Escrowed Funds".
A. $370,000 in face amount of U.S. Government
obligations currently held in safekeeping at First
State Band of. Denton for the benefit of Flow.
H. The promissory note from Notami Hospitals of Texas,
Inc. payable to Flow in the current principal amount of
$937,188.63 and with an imputed interest rate of 8%.
(Amortization schedule attached)
Change 2
4. Nothing herein shall prohibit the Escrow Agent from
releasing any interest earned on the Escrowed Funds to Flow,
as directed by Flow,
I appreciated the opportunity to meet with you, Lloyd, Harold,
and Mark and certainly hope that you can look at the situation
from our angle and resolve this slight difference.
Cordial
s~dJ~rj i09i4
Sennett Kirk
SK/at
oat Lloyd Harrell
Members Flow Health Care foundation
Mary Williams
Miller Davidge
C
-
Jr _r r __rr r r_ _r r r r rr _rrr_ r -r
H5ALTHCARE Iw{PIr_C 07-29-1991 M 17e2p Pg 1
rrr_.--------------------------- ------w--...rw r...
;ompounding intervals Annual
Innual percentage rate...0.41 5.000%
effective annual rate....,..' S.000%
tats per compounding periods S.O00G'/.
equivalent daily rate..:...,e 0402192%
)aluation datai 07-14-1959 ValueJ $ 981,814.67
;ASH FLOW DATA
.--------------------r------------------ --_----r
'irst data Payment amount -0- interval r Last date
)7-14-1990- 100,000.00 20 Annual 07-14-2009
)7-14-2009 # 0.31- 1
IMORTIZATIdN SCHEDULE - Normal amortization
- Dare -r_rrr
,r-rrrr_r-__ Payment Interest Principal Balance
rr--------r-------r----_ ---------------r----_----_---------
Salance at 07-14-1959 881,814.67
1 07-14-1990 100,000.00 78134°1.17 21,434.83 960,339.84
2 07-14-1991 100,000.00 769828,79 23,171.21 937,188.65
3 07-14-1992 100,000.00 74,975.09 25,024:191 912,163.72
4 07-14-1993 100,000.00 72,973.10 27,026.90 885,136,82
3 07-14-1994 1000000.00 70,810.95 29,189.03 8330947.77
6 07-14-1998 100,000.00 680475.52 31,524. 1S' 924p423.S9
7 07-14-1996 1000000.00 65,953.89 34,046,11 790,377.46
8 07.14-1997 100,000.00 6'3,230.20 36,769.80 7330607.68
9 07-14-i99e 1000000.00 600288.61 390711,39 713,896.29
10 07-14-1999 100,000.00 87,111.70 42,858.30 671,007.99
11 07-14-2000 100,600.00 53,680.64 460319.36 624,688.63
12 07-14-2001 100,000.00 49,97.09 S0,024.91 874f663,72
07-14-2002 100,000.00 45,97;J.10 34,026.90 3200636.82
4
~I N
i
;a
- - - - - - - - - - - - - -
EPIC rHEALTHCARE
07-29-1991 13117129 Pg 2
W---__
Pint Data Payment Internet
14 07-14-2003 1000000.00 41F650.95 Principal Balance
58,~3494.05 462p287.77
15 07-14-2004 100,000.00 360983.02 630016.98 3999270.7=
16.07--14-2005 ,1009000.00 31,941.66 6800158.34 331,212.4
17,07-14-2006 100,000.00 26,497.00
730803.00 237,709,41c
18 07-14-2007 100,000.00 20,416.76
79,3e3.24 178, 376.21
19,07-14-2008 100,000.00 14F266,10
850733.90 92,592.31
li 20 07-14-2009 100,000.00 70407.38
21 07-14-2009 0.31_ 92, E592, 62 0.31
2009 totals 99,99'9.63 7i407
ial 0.0t
0.00 .38 32,g32r131
Grand totals 1,9991999.69 1,418,385.02 9B1,B14.67
t
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BOB CASTLEBERRY CITY OF DENTON
MAYOR 21. EAST McKINNEY STREET
DENTON. TEXAS 76201
Sennett Kirk
Chairman
Board of Directors
Flow Health Care Foundation, Inc,
Reg Escrow Agreement for City's security Intere9t
Sennett, I am writing on behalf of the City Council to let you
know of the Council's response to your request that Flow deposit
approximately $3700000 into an escrow account, pursuant to the
terms of a contract drafted by the attorneys, and thereafter,
make annual deposits in accordance with the amortization schedule
you provided. As you know, the Bankruptcy Judge has scheduled a
hearing on the City's Motion for Protection of Security Interest
for October 90 1991, after continuing the hearing on three
occasions at the request of the attorneys pending the parties
working out an agreement. The contents of this letter are for
settlement purposes only and do not constitute any admiselon by
the City,
The City has tried to satisfy your concerns with the Escrow
Agreement and has agreed to bear the annual cost of funding the
escrow account, As we discussed last week, we oontinue to
maintain our earlier stance that there would be no need for an
escrow agreement or a security interest if Flow purchased an
insurance policy to cover the possible claims against which the
security interest to designed to protect. However, without such
a policy, the Councilmambors feel a responsibility to the
taxpayers to ensure that the security interest remains secure in
accordance with the terms of the original transfer agreement.
We were not aware that Flow had imputed an interest rate of 8% to
the $2,000,000 and had understood that the City's security
interest was in the proceeds from the sale, We were very
surprised to learn of this but understand your position that you
want to distribute as much of this money as possible to provide
for the pressing health care needs of Denton County, We share
this concern, which is why we supported your move to consolidate
the glow interests last spring.
Therefore, the City will accept your offer to resolve this matter
provided that Flow agrees to amend, for the duration of the
agreement, its articles of incorporation or provide some other
legally enforceable agreement to provide that 411 of the income
from the corpus be appropriated for direct health care naedo of
Denton County, not to include health field scholarships. In
addition, the Council would ask to receive a detailed, yearly
report as to grants which are made to such agencies.
Sennett Kirk
October 3, 1991
Page 2
As you are aware, there are serious health care needs within our
community. A number of private agencies such as the Prenatal
Clinic for Denton County, The Pediatric Clinic for Denton County,
TWU Cares, AlDenton, and Ann a Haven Hoapics are attempting to
most these health care needs, but are detsperatelye short of
resources. If the Council can be satisfied hat thes at
a encies and the individuals whom they serve will reoelve
willing to limit the Cit~~N ,nourity interest. If suchoassurance
cannot be provided, we er ~~reaa forward to guarantee maximum
liability protection fc>• „ r •;itizene.
Please let me know as soon as possible if you wish to accept this
offer for if we have not reached agreement byy next Wednesday, we
will attend the hearing and abide by the iudwa ruling. Thank
you for your consideration.
Very truly yours
f
Bob '
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