DATE: February 28, 2012

It is again that season when politicians unleash their mudslinging tactics. Add to this phenomenon, recent comments from the editorial page of the Rome News-Tribune about Floyd Medical Center. The jabs about the requests for proposals (RFP) and selection processes for Polk Medical Center and the joint city/county clinic include the catchy phrases “something smells”, “power-play”, “bad attitude”, “return of arrogance”, “backroom dealings”, “imperial right”, “muscling”, “bully boy”, “hicks in Polk County”, “amateur proposal”. The list goes on…

Joint City-County Clinic

First, let’s address the joint city-county clinic. It is entirely up to the city and county as to whether they want to consider Floyd Medical Center’s proposal. We submitted a proposal to the city and county two years ago in response to their RFP, but we were not selected. The RFP process has continued for two years, and the city and county have a much clearer idea about what they want in the clinic. Unlike a sealed bid process, the RFP process always involves information that flows back and forth, and a lot can change during the process. Floyd both asked to submit new information and was asked by Commissioner Garry Fricks to do so. After all, shouldn’t the best deal be sought out? One important element in Floyd’s revised proposal is that we don’t have any capital cost to build out the necessary space for this clinic, and we can start services within a month. There is nothing “backroom” or otherwise inappropriate about our request to submit new information or for any official who decides to look at it. Certainly there needs to be a cut off at some point. And, if the city and county choose not to entertain our proposal, that is their choice. We will accept that.

Polk and the RFP Process

Next, let’s look at Polk Medical Center. As an aside, many may be interested to know that in the Polk Medical Center RFP process Redmond asked to submit new information after formal presentations were made and the time for submitting proposals had closed. The Cedartown-Polk County Hospital Authority agreed to let them submit new information, which is dated June 2011. This was four months after Floyd Medical Center’s initial proposal. Floyd Medical Center was fully apprised of this accommodation to Redmond. We appreciated the notification, and we did not raise an issue, because we realized that RFP processes are just that: Processes to get information upon which to base a decision.

Polk: Why It Matters

The Cedartown-Polk County Hospital Authority was very thoughtful and deliberative in making their decision to choose Floyd Medical Center as their partner. As a part of that process, 15 hospital organizations were invited to propose. Fifteen organizations! I submit to anyone, what would have happened if one of those out of the area organizations had won? It was a very real possibility. Let me tell you. An Atlanta based provider, for example, would build relationships that would ultimately steer Polk County patients towards Atlanta. What would that mean to us? Here in Floyd County, we would lose patients. Our entire medical community would suffer and shrink. Health care is this community’s number one business, and it would have had dramatic negative consequences for the entire local economy. It would have meant lost jobs and less economic vitality. People would have then asked, how could we have allowed this to happen? The answer is, obviously, that we didn’t. Floyd Medical Center put together a strong proposal that addressed the short and long-term health care needs of Polk County citizens, and insured that Polk County residents would continue to rely on health care providers in Rome for their specialty health care needs. Keys to Floyd Medical Center’s proposal are such elements as a promise to build a new hospital, local governance and a commitment to charge no management fee. Floyd Medical Center operates as a not-for-profit organization, and we argued, Polk Medical Center and Polk County residents should also have this benefit. We promised to make them a part of the Floyd family and as such all profits would be dedicated towards the mission of the organization, and not to benefit investors. Health care dollars, we argued, should stay local. Many don’t know that management fees and other funds in multiple seven figures annually were leaving the Polk community and going out of state under the previous arrangement. Under Floyd’s new contract with Polk Medical Center, we estimate $3 million annually will stay in the community.

Tax vs. PILOT…Who Pays and Why

During the RFP process, the issue of local property taxes had to be addressed. It doubtless would have arisen if an Atlanta provider had been selected. Recognizing this, a commitment was made to make a Payment in Lieu of Taxes or PILOT. The PILOT commitment is spelled out in an agreement between Cedartown-Polk County Hospital Authority and Polk Medical Center Inc. (PMCI). PMCI is the non-profit corporation created to initially manage Polk Medical Center and to ultimately be its licensed operator when the new hospital is completed. The PILOT agreement has been available to the public ever since signed, and a copy was given to the media. Along with other key documents, this is available to anyone who is in interested in reading it at www.polkhospital.org and can also be accessed from www.floyd.org. We established this website soon after the memorandum of understanding with the Cedartown-Polk County Hospital Authority. The PILOT agreement states that payments are intended to be made annually, but they are voluntary and will be made at the discretion of the Cedartown-Polk County Hospital Authority. Further, PILOT payments are made by PMCI only, NOT BY FLOYD MEDICAL CENTER and NOT GUARANTEED BY FLOYD MEDICAL CENTER. This is an important distinction. The PILOT payments will be funded entirely from Polk Medical Center’s revenues. Floyd Medical Center will have no obligation in this regard.

Details of the PILOT agreement have their origin in what the local Cedartown-Polk County Hospital Authority desired. As we negotiated this agreement, leadership from Polk County made the decision that they wished to devote a portion of the cash flow from their own hospital in Polk County to a PILOT. Consistent with our commitment that local governance is important, we agreed that if the Polk leadership wished to dedicate a portion of their cash flow from their hospital, that it was fine with Floyd Medical Center. We agreed in principle and they crafted the details to which we also agreed. Further, discussions are now underway regarding the extension of sewer and water lines to the new Polk Medical Center site on US Highway 278, which is 3 miles from the existing hospital. Leaders in Polk County realize that this will be expensive and the PILOT may go to help with that expenditure. So, in a very real sense, the PILOT may also benefit the hospital just as the hospital benefits the Polk community. Leaders in Polk County understand that having a brand new hospital to serve all of Polk County is going to be a real shot in the arm for growth and vitality, and we all have hopes for a great partnership in the years to come.

Floyd Medical Center’s “Tax”

Rome News-Tribune editorials have asked, why not a PILOT for Rome and Floyd County?

First, Floyd Medical Center is a safety net provider with one of the highest proportions of unreimbursed indigent, charity and Medicaid costs in the state of Georgia. We provide almost all of the indigent and charity care in Floyd County and over 50 percent of the total to Floyd and contiguous counties, and there are 5 total hospitals in this area. Floyd Medical Center provides the lion’s share. Our commitment is demonstrated. Floyd Medical Center meets any community benefit standard that is out there. In a very real sense, in addition to providing very low margin services such as neonatal intensive care, medical training such as our Family Medicine Residency program, and a high proportion of services to Medicaid patients, this is our “tax” we pay on behalf of the residents of Floyd County and surrounding areas.

Second, coming under the umbrella of Floyd Medical Center has many benefits for Polk County and for Floyd. And, while Floyd Medical Center is neither making the PILOT payment nor guaranteeing it, Floyd Medical Center is guaranteeing both the construction and the operations of Polk Medical Center. To do such, in addition to meeting the needs and demands of the whole Floyd system, we have to continually strive to be financially strong. Floyd Medical Center must meet its financial obligations, which include meeting operational needs, servicing debt, and planning for the future. To do so we must be operationally strong, and we are. We also must build our cash balance. External experts validate this. Floyd Medical Center’s financial advisors, Public Financial Management, and Floyd County’s advisors, Merchant Capital, have noted that the primary financial issue Floyd Medical Center has to work on is building what is termed “days cash on hand”. That is accomplished through deployment of good strategic plans and strong operational performance, which means having a good positive operating margin each year. We have been able to accomplish that and must continue to do so. Our only source of revenue is from patients and physicians who choose to utilize us. Floyd Medical Center receives no tax dollars.While making a PILOT payment locally may appear appealing to some, Floyd Medical Center is already making a substantial contribution by carrying out its mission. Further, in today’s volatile health care environment, Floyd Medical Center needs to pursue financial strength as recommended by two independent financial advisors, one of which is Floyd County’s own experts. Pursuing financial strength does not include making a PILOT locally. In fact, this would detract from our strength. Lastly, in deployment of our strategies, such as Polk Medical Center, it should be noted that as the number one employer in Floyd County, as we strengthen Floyd Medical Center, we are also strengthening the local economy. Not only does it help insure the future for Floyd Medical Center, it also brings patients from outside of Floyd County into our local economy. This helps everyone: local businesses and local government.

In the end, both these proposals are about one thing: Doing the right thing for the right reasons. I encourage those interested to look for updates to important health care issues at www.floyd.org such as where to read important documents regarding Polk Medical Center.