Sac Osage Hospital adds addendum to letter of intent

Posted August 28, 2014 at 4:51 pm

Last week the Board of Directors for Sac-Osage Hospital in Osceola signed a Letter of Intent to enter into a cooperative affiliation with Citizens Memorial Hospital (CMH) of Bolivar. During executive session on Monday, July 28, the board signed an addendum to the Letter of Intent defining the exclusivity of the proposed transaction limiting it to 45 days starting from July 15.

According to a press released dated Friday, July 27, Sac Osage CEO Chris Smiley addressed the decision to enter into a cooperative affiliation by saying, “I sincerely believe that the timing of these actions is critical. The old model healthcare is just not sustainable in today’s healthcare reimbursement environment. Taking action now gives us an opportunity to define stable healthcare services that will meet the long-term needs of this community.”

Sac-Osage Hospital has been struggling financially for several years.

Board Chairman Brandon Baker commented that, “Our affiliation with CMH will strengthen the ability to provide high quality healthcare in Osceola by ensuring crucial serves that are vital to our community are offered. Those services include strong primary care providers, full service outpatient services, a walk-in clinic and an ambulance service.”

Some of the provisions of the Letter of Intent include – CMH would, subject to continued and sufficient patient demand, offer to citizens of Sac Osage’s service area a walk-in clinic with hours from 9 a.m. to 8 p.m. seven days a week; and outpatient lab; outpatient imaging; outpatient rehab; Telehealth services; retail pharmacy and ambulance services.

Under financial provisions, CMH will pay Sac-Osage at closing $415,000 for the Tri-County Clinic building and real estate. CMH will pay Sac-Osage the cost of all supplies located in the Tri-County Clinic at CMH’s cost. At closing, CMH will pay Sac-Osage the cost of demolition of the hospital facility with the cost not to exceed $250,000. CMH will pay Sac-Osage for the disposable supplies accepted at CMH’s cost and as part of the Emergency and Ambulance Service Agreement, Sac-Osage will supplement the operating loss of providing the ambulance service by paying CMH 1/3 of the proceeds of the levy each year. ($111,973 pursuant to the 6/30/13 audit report.

All exiting patient charts and records shall be transferred to CMH.

CMH will offer employment to all employees providing services at the Tri-County Clinic and ambulance service that are active and in good standing, subject to CMH’s routine employment screening and verification process.

While the board was in executive session about 50 concerned citizens and hospital employees met in the hospital lobby to discuss possible options. Representative Warren Love was present and explained to the group that Sac-Osage’s money problems started seven or eight years when the hospital didn’t make the move to a critical access hospital. That severely limited their reimbursements and created a money struggled that lead to the cooperative agreement with CMH.

The citizens were mostly concerned about the economic impact that the closing would have on their senior population, the Boy Scout Camp and the federal prison that is in Osceola.

Tuesday, Missouri Hospital Association spokesman Dave Dillon said, “This is not particularly good news. If there is a canary in the coal mine this is particularly good example.”

He said that being a critical access hospital gives you a more favorable Medicare and Medicaid reimbursement, but would not have insured Sac-Osage’s survival,

“Communities need to rally around their small hospitals. I think we’ve seen decent leadership out of Sac-Osage hospital, but the economics are important.”

He concluded, “The situation in Osceola is a concern for all rural providers. The thought is, if it can happen there, could it happen here?