Ephraim McDowell Health trying to keep Russell County hospital

September 15, 2004|TODD KLEFFMAN

Concerns about money and management practices of Ephraim McDowell Health have led the board that oversees Russell County Hospital to seek to sever relations with the Danville health care corporation that has operated the hospital in Russell Springs for five years.

Wayne Medaris, chairman of the Russell County Hospital Taxing Board, said today that he did not think that Tuesday's decision by Ephraim McDowell Health's CEO Clark Taylor to repay a $1.7 million loan to the hospital would be enough to persuade the board to change its mind about taking action to terminate its lease agreement with EMH.

"No, I think there are other issues they need to work out also," Medaris said. "We just think we can provide better health care for our community if we were on our own and, at this point, that's what were working toward."

Taylor said today that he remains hopeful that repaying the loan and further negotiations with the board will smooth out the differences between to two entities.


"We want to continue to provide care to the folks in Russell County," Taylor said. "Every now and then, issues come up in any relationship, but people of good will can always work them out. We believe we can work things out."

EMH signed a 21-year lease in 1999 to operate the Russell County Hospital, which is owned by the county. When the lease was signed, EMH borrowed more than $1 million of the hospital's working capital to help with start up costs. The loan was originally scheduled to be repaid in September 2002, but, according to EMH, the board agreed to defer repayment indefinitely.

Board declares EMH in default

In May, the board demanded the loan be repaid in full within 90 days so it could move forward with plans to expand the hospital and because it felt EMH was slow in upgrading equipment. After that deadline passed, the board voted unanimously last week to declare EMH in default and move to terminate the lease.

According to an article in last week's Russell County Times Journal, EMH offered to repay $50,000 of the loan last week, but that was rejected by the board, which demanded repayment in full. Taylor said today that EMH would repay the entire loan, roughly $1.7 million in principal and interest, "prior to the default date." It was unclear today when that deadline is.

Medaris said that the board has other concerns about EMH's operation of the hospital. In the Times Journal article, board members and hospital staff said that while medical care has been good at the facility, EMH has not been as solid in getting new equipment and expanding services in Russell County. They contend that EMH, which also operates Ephraim McDowell Regional Medical Center in Danville and Fort Logan Hospital in Stanford among other health care businesses, is directing money that should go to Russell County Hospital to its other endeavors.

Taylor disagreed with that assessment.

"The fact is, Ephraim McDowell Health has invested substantial dollars in capital and other improvements and is committed to millions more in the years to come," he said. "These are improvements that a hospital the size of Russell County will be hard-pressed to make if it stands alone.

"We dispute the notion that EMH is in default of the lease. Working together will be less costly than legal wrangling that would be involved in breaking our agreement."

Medaris said that the board, which consists of five members appointed by the Russell County Fiscal Court, is not scheduled to meet again until November but could hold a special called meeting if one was needed to further discuss its relationship with EMH.

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