Finalizing a lease agreement has become a snag in the process of transitioning to 501(c)(3) status for the Magnolia Regional Medical Center.
Chief Executive Officer Rex Jones told the Board of Commissioners on Monday that there have been several unsuccessful attempts to set up a meeting between subcommittees of the board and the Magnolia City Council to discuss the lease agreement.
“The mayor said on the advice of the city attorney that none of the City Council members would be attending the meeting,” Jones said.
“I sent the lease to the mayor and he sent it back with a lot of concerns that he had on the lease,” Jones said.
“Which is the whole reason you have a meeting of the subcommittees is to discuss what those concerns are and we can iron that out ahead of time.”
“I think there are some things that had to be written into the lease because of the fact that the hospital receives sales tax money to cover maintenance and operations,” Jones said. “That money still has to flow to the hospital. I think there’s some language in there about the city and the maintenance that (the mayor) may have misunderstood that they’re on the hook for the maintenance of the hospital.”
Jones said there is language in the lease that says the city is responsible for the maintenance which would allow the $600,000 in sales taxes to be passed through from the city to the new corporate owners for the maintenance.
“The mayor said until we can provide a lease that puts no financial obligation on the city, we will not be signing a lease,” Jones told the board. “If it weren’t for the tax money the language could be written a little bit different.”
“The City of Magnolia is on the hook for every dollar of the maintenance expense for this facility right now, if you want to look at it that way,” he said. “It’s their hospital, their board, their everything. They’re in for 100 percent of the obligation. The maintenance in the lease is that the leasor has to make sure that the building is maintained. But it is written that it obviates the City of Magnolia from any responsibility for the maintenance.”
Jones told the board that they mayor said he was not going to a 25-year lease for $1 per year, which was in the original proposal.
“The mayor doesn’t want a long-term lease,” Jones said. “He wants a five-year lease only. It makes no sense for us to go through all this process for only a five-year lease.”
Jones told the board that MRMC, Inc. has been authorized as the new corporate name for the hospital.
In other board news:
-- The hospital ended the month of September with a negative EBITDA of $9,414. Net revenue for the month was $1,589,709. The hospital had a non-operating income of $62,548, including $54,287 in sales tax revenue.
-- For the fiscal year 2019, the hospital has a negative EBITDA of $496,581. It has a net loss for the year of $2,462,465.
-- Gross revenue is $46,968,849, with a net revenue of $19,085,133 after contractual allowances and charity care deductions of $387,074.
-- The net labor expense is $12,222,137. Non-operating income for the year is $832,472 including $622,977 in sales tax revenue.
The board heard a presentation about employee health insurance but no action was taken.
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