Commissioners Pull Plug on Hospital Lease Negotiations with CHS

Posted on September 20, 2016
Author Mary Perren, WKVI

The fate of Starke Hospital is in question following action last night by the county commissioners. They voted unanimously to cease all negotiations with Tennessee-based Community Health Systems on a new lease for the building and land on which it sits.

“That means that the latest extension of the six-month notice period ends at midnight on Sept. 30th, and Community Health Systems may renew for an additional 10 year extension, or not, as per the current agreement,” Commissioner Kathy Norem said.

County attorney Marty Lucas will now notify CHS of the commissioners’ decision. If they not to renew the lease in its current form, they have to give the commissioners a six-month notice of their intent not to renew. Norem says that will dictate the county’s next steps.

The commissioners’ action comes amid reports that CHS is looking to sell its business. “Bloomberg” last Friday quoted anonymous sources “with knowledge of the matter” who said CHS has enlisted advisors to consider its options. The process is said to be in the early stages, with no certainty of a deal.

Negotiations between CHS and Starke County officials for a long-term lease to clear the way for construction of a new hospital apparently stalled last month, based on the abrupt cancellation at the request of hospital officials of three public meetings scheduled by the commissioners to share details of the proposed arrangement. The commissioners reluctantly granted the latest 30 day lease extension to give CHS time to request a tax abatement from the City of Knox. No formal request was ever made, according to city officials.

Last week officials confirmed the departure of Starke Hospital President Craig Felty but said it should not hamper the negotiating process.

The Bloomberg report notes the value of CHS stock has plummeted 75 percent in the past year. The company posted a second quarter net loss of $1.43 billion last month.

An agreement between IU Health LaPorte Hospital, Community Health Systems and Indiana University Health announced late last year gave Indiana University Health 20 percent ownership of IU Health LaPorte and Starke Hospitals. CHS subsidiaries own 80 percent, and IU Health shares in equal governance of the new organization.