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Public hearing set on hospital sale

By Seth Schmidt

 

A public hearing on the possible sale of the Tracy hospital and clinic buildings to the Sioux Falls-based Sanford Health Network will be conducted by the Tracy City Council Monday.

Time for the hearing is 6:45 p.m.

The Tracy clinic and hospital facilities are now municipally owned.  Sanford Health manages and operates the clinic and hospital through a lease agreement that dates from the 1990s.  The proposed sale would make Sanford Health the owner of the clinic and hospital buildings, and responsible for all future maintenance and capital improvement expenses on the building.

Broad terms of the proposed sale, announced in August,  call for the City of Tracy to give Sanford Health  $1 million from a city hospital reserve fund.  Sanford would use the money to make future clinic and hospital improvements.  The city would retain about $200,000 in a council-controlled fund, to be used for local health-care needs.

The council and Sanford had also agreed that Sanford Health would repay to the city $250,000 of a $545,605 debt related to 2010 clinic improvements, with the balance forgiven.  A Sanford loan debt of  $32,294 to the city would also be forgiven.

Council members have said they’d like Sanford to own the clinic and hospital because they are concerned that the city won’t be able to afford the future upgrades that the buildings will need. A December, 2013 Sanford facilities assessment report estimated hospital and clinic capital improvement needs over the next 10 years at $1.9 million.  City leaders have said they accept the accuracy of the report.

Negotiations continue

Since those sale terms were announced in August, Sanford and Tracy leaders have exchanged proposals to iron out further details.

The council asked for a 10-year commitment that Sanford maintain present clinic and hospital services.  Sanford has offered a commitment “through 2022,” which the city has accepted.  However, Sanford and the city had not agreed on language specifying what medial services will be provided.

Differences have also emerged on the amount of city money Sanford would receive, and how and when the money would be conveyed to Sanford.

In its latest proposal, Sanford asked for the balance of the city’s medical reserves, minus the $200,000.  The council has proposed that transfer remain at a flat $1,000,000.

In the city’s latest proposal to Sanford, the City of Tracy would retain its medical reserve funds until an improvement request is made by Sanford.

City council members also want a condition attached to the city reserve funds.  The council wants assurances that 80% of the $1 million in city money would be used for needs listed on the hospital-clinic facilities assessment report.

Other discussion has involved a right-of-first-refusal” clause that would allow the city to match any third-party offer that Sanford received for the hospital and clinic.

 

Existing lease

The current lease between Sanford and the city runs through June of 2017.  Sanford is now making lease payments totaling about  $135,000 a year to the city.