UMMC to lease hospital; take on long-term debt

GRENADA — The University of Mississippi Medical Center plans to lease Grenada-Lake Medical Center for at least 20 years, paying for the lease by taking on the hospital’s $35 million in long-term debt.

The College Board’s Finance Committee discussed the plan in a closed session today and the board is expected to vote tomorrow.

The Grenada County Board of Supervisors, which owns the 141-bed hospital, voted late last year to enter into talks with UMMC after seeking proposals.

Under the agreement, UMMC would start managing the hospital Sept. 1, with the hospital paying the university $26,000 a month for four months. The larger lease would begin in 2014, and could extend up to 50 years, if both sides agree. It would cover $24.3 million in debt principal and $11.2 million in interest. UMMC would also pay for future capital improvements, maintenance, insurance and utilities.

Gov. Phil Bryant had signed a law earlier this year that would allow UMMC to buy the hospital, but the parties chose another route after protracted negotiations.

Vice Chancellor for Health Affairs Dr. James Keeton said UMMC will expand services and use the hospital to train more physicians as the medical school expands. Keeton said the hospital has lost a little money in some years while making a small profit in others.

“We think we can make it better,” Keeton said, saying UMMC would try to draw patients from nearby counties. “We can improve the admissions and number of patients.”

He said many patients are already referred from the Grenada area for more extensive treatment in Jackson, and that UMMC may be able to steer more patients from that part of the state to UMMC instead of seeing them go to Memphis, Tenn., hospitals.

“We’re trying to keep Mississippians in Mississippi for their health care,” he said.

UMMC says it plans to contribute $10 million to $12 million in working capital at the start of the lease, recouping that money from patient revenues. It says it also plans to refinance Grenada-Lake’s debt from a variable interest rate to a fixed interest rate within 18 months.

In addition to its hospital complex in Jackson, UMMC also owns the Holmes County Hospital in Lexington. Local governments that control other hospitals, including in Natchez and Starkville, are considering leasing or selling hospitals currently. Keeton said UMMC is willing to consider taking over other hospitals.

“We will only go into an area if we’re asked to go there,” he said.

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