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A 'win-win deal' for rural health care
by
Heather B. Hayes
Virginia Business
February 2005
It’s
déjà vu all over again for Carilion Health
Systems. Just one year after disposing of its minority
share in Wythe County Community Hospital, the Roanoke-based
nonprofit corporation is now negotiating the details
of an arrangement that would allow it to take over hospital
operations. Wythe County, though, isn’t selling.
Instead, it has agreed to lease the hospital to Carilion
for the next 30 years (with an option for a second 30-year
lease). Carilion will pay the entire lease upfront,
purchase all operating assets and invest $20 million
to update and expand the building during the first eight
years of the agreement.
“We
realized that we needed a significant amount of capital
if the hospital was going to add services and grow over
time,” says Jerome Horn, president and CEO of
Wythe County Community Hospital, a 104-bed hospital
with 450 employees. In seeking a partner, though, the
hospital board wanted to retain ownership of the facility
“so that it would remain a community asset,”
he adds. Horn says that the contract is likely to be
signed by the end of February.
As for Carilion, leasing rather than purchasing provides
two key benefits: running the hospital on its own terms
and realizing a faster rate of return on its investment.
“It’s really a win-win situation for everyone
involved,” Horn says.
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