A lawsuit filed in July to halt the sale of Hardin Memorial Health to Baptist Healthcare Systems failed in Hardin Circuit Court, but has succeeded delaying the closing of the deal by two months.
Hardin Circuit Judge Kelly Easton last month denied a request for an injunction to stop the sale of Hardin Memorial Health to Baptist Health. In a 20-page document, Easton approved the method by which the county sold the hospital.
Dr. Larry Hall, who filed the suit, appealed the decision.
Judge-Executive Harry Berry said in a news release from his office the litigation and appeal is not only expensive for Hardin County and Hardin Memorial Health, but it also is taking money away from HMH employees.
The release said the initial suit pushed back the planned closing date of Dec. 1 to Feb. 1.
The two-month delay, which postpones providing promised pension payouts to HMH employees, so far has cost an estimated $15,000 in additional monthly legal and professional fees related to HMH employee pension closeouts, according to the release.
Postponing the pension payouts will cost the county as much as $45,000 per month in additional interest. For the initial two months of delay, this totals an estimated $120,000 in additional HMH employee pension expenses alone to Hardin County, the release said.
Up to this point, Berry said the county did not pay pension contributions for HMH employees. Those contributions were paid by HMH.
“Now that the pension fund is closed, the county has the obligation to fund the shortfall,” he said.
At closing, according to the asset purchase agreement between Baptist Health and the county, Baptist Health will pay the county $60 million, less the amount used to fully fund all liabilities associated with HMH’s defined benefit pension plan – estimated to be around $35 million. The balance remaining from the $60 million will be retained by the county.
While the fund is frozen, Berry said interest will need to be paid because the funds are no longer growing.
“This interest will adversely impact the settlement payment to the county,” he said.
Even further delay is possible depending on the finality of the decision that denied the request for an injunction.
The longer the sale closing drags on, the greater the risk of increased staff turnover, the release said, noting each 1 percent of turnover for registered nurses costs the hospital more than $30,000, the release said.
The release also said potential delays caused by an appeal also will cause a lag in plans to expand the Intensive Care Unit and to increase the number of surgical suites.
Development of a larger cancer center and the renovations and upgrade of obstetrics now are on hold. Construction of medical office space also is postponed pending the litigation outcome, the release said.
“The capital to fund these renovations, expansions, modernization and upgrades will come from Baptist Health. Baptist Health is not going to invest in these items until they actually own HMH. Delays in these improvements cause a loss in revenue resulting from the improvements,” Berry said.
“(These are) costs that will not be recouped. Also, business patterns to other providers may occur from the extended lack of providing the improved services that will result from these actions,” he said. “Again, causing lost revenue that can be used to grow and improve facilities even more.”
The release said while some other direct impacts to professional fees, legal expenses and pension costs can be estimated at more than $60,000 per month to the county, the monetary impact of delays in renovations, expansion and facilities modernization upgrades cannot be easily quantified.
“Judge Easton issued a comprehensive and detailed decision approving the method used,” the release said. “In the unlikely event Judge Easton’s opinion is reversed and the board is required to revisit this process, the final outcome will most certainly be the same.”