Lee Health takes step on privatization debate: Hires consultants for analysis due Feb. 27
Lee Health has hired consultants to examine the benefits and drawbacks of converting from a publicly-run hospital system to a private nonprofit organization.
The Chicago-based Kaufman Hall firm will do a detailed analysis that will be due by Feb, 27.
The publicly-elected board of directors on Aug. 31 gave Dr. Larry Antonucci, president and chief executive officer, the authority to negotiate and hire a consulting firm that does not currently do work for Lee Health.
The vote in late August started a 180-day deadline to get the evaluation back, post it on Lee Health’s website and hold a public hearing.
The contract with Kaufman Hall is on a month by month basis; a rough estimate in total is $900,000, said Michael Nachel, the system's vice president of government relations.
“This exploration will be educational for all of us as we look at the needs of our community and the services Lee Health offers to support all of our residents and visitors,” Antonucci said in a news release.
Lee Health is one of the largest public hospital systems in United States and in Florida that does not receive direct tax support to operate as a safety-net system caring for all patients regardless of ability to pay. It has nearly 15,000 employees.
More: Weighing a change to Lee Health’s governance
More: Lee Health looking at converting to a private nonprofit entity
Public hospitals face headwinds from for-profit systems with more commercially insured patients with higher reimbursement, lower charity-care volumes and broader market options to boost revenue.
In 2022, Lee Health provided $165 million in community benefits after adjusting for foregone taxes of $84 million. Charity care came to $82 million last year.
The system operates four hospitals with a combined 1,744 acute care beds, the 135-bed Golisano Children’s Hospital that serves a five-county region, and a 60-bed rehabilitation hospital.
Lee Health’s total operating revenue in 2023, which ends Sept. 30, is projected to be $2.9 billion with a margin of 1.8%.
New year budget projections
For fiscal year 2024 which starts Oct. 1, Lee Health anticipates total operating revenue of $3 billion and a projected 93,000 acute-care admissions that would be roughly 2% more than 91,333 admissions in 2023.
Outpatient services that include emergency room visits, physician visits, home health and trauma care for 2024 is projected to exceed 3.9 million for a 5% increase from 2023
The state Legislature in 2019 eliminated the certificate-of-need requirement for new hospitals to meet a threshold of patient demand and growth projections before the state would grant licenses.
The for-profit HCA Healthcare System intends to build a 100-bed hospital in Fort Myers on Colonial Boulevard. Nearby, Lee Health plans to build a new hospital to replace the aging Lee Memorial Hospital.
More: Lee Health examines pros and cons of changing to private, nonprofit system
What are the conversion steps?
At its regular board meeting Thursday, the 10-member elected board of directors discussed when to hold a public hearing on a potential conversion, with consideration of having one in January and another in March.
Another idea is having sessions in each of the five hospital districts. No decision was made.
Legislation was passed this past state Legislative session on behalf of Lee Health that spelled out detailed steps for consideration to convert from a public system to a private nonprofit organization.
Once the consultant's report is delivered by the Feb. 27 deadline, the Lee Health board has 120 days to review it and consider if a conversion is in the best interests of citizens.
If the board votes to move forward, the next step is to negotiate an agreement with the Lee County Commission that spells out the terms, such as how assets would be transferred to a new nonprofit entity and how health care services will continue to be provided.
In an August memo to the board, in-house attorney Mary McGillicuddy said the system’s commitment to being a safety-net system caring for all patients will not change.
If an agreement is reached with the Lee commission on converting, the Lee Health board must approve it by a majority vote plus one. The Lee commission likewise must approve the document.
The public can learn more and see documents at www.LeeHealth.org/LookingAhead.
This article originally appeared on Naples Daily News: Lee Health hires consultants to look at going from public to private
