Citizens of Blount County, Tennessee:
I am writing this letter to share with you my thoughts regarding our Hospital and the current issues the County is dealing with relative to the Hospital. As Mayor, I have fiduciary responsibility for our citizens.
As you know, the Hospital chose to sue Blount County and it is usually not wise to comment on pending litigation. I will not directly address the lawsuit, but given the misinformation that is being shared, it is important for the citizens of Blount County to have accurate information on this important matter.
It is helpful to clarify what these recent issues do NOT relate to.
- This is not about the County trying to take control of the Hospital to seize its revenue for the benefit of the County.
- It is not about personalities or personal disagreements.
The concern is simply about the continued viability of the Hospital.
On several occasions over the past few years, I have received information relating to poor management practices at the Hospital. Some of them have been addressed by letters from me to the Hospital or by joint letters from myself and the Mayors of Maryville and Alcoa. No cooperation was forthcoming from the Hospital from these private requests and, more importantly, no improvement was made.
The situation at the Hospital reached what I felt was a critical point last year and it was determined that public action on the part of the County was necessary to save the Hospital. Set forth below are a series of the circumstances that have prompted the recent actions:
- Consistent track record of operating losses for the last 12 out of 15 years, with cumulative operating loss of $77.4 Million over that time period. (Total losses of $39.9 Million by the Hospital just for the fiscal year ending June 30, 2022.)
- Default by the Hospital on the bond covenants relative to over $60 Million in revenue obligation bonds obtained in the name of Blount County on behalf of the Hospital which could adversely affect the County.
- The sudden replacement of the former Hospital’s administrator and CEO by the Hospital board in a meeting that lasted just four (4) minutes and for which no public notice was given, in violation of the state open meeting law.
- The Hospital’s proposal to sell the Springbrook/Wellness Center facility for $22.25 Million and then immediately leasing the facility back from the buyer up to a 25-year lease period and paying lease payments exceeding $56 Million over this period, plus all maintenance expense, property tax expense and insurance expense and at the end of the lease not even owning the facility. The County has recently been advised by Hospital leadership that this transaction is necessary to save the financial viability of the Hospital.
- All of these above-named issues are a direct result of poor management and the lack of oversight by the Board of Directors. The primary responsibility of the Board of Directors is to provide effective management and oversight of the Hospital’s operations.
Faced with these facts and after conferring individually with each of our County Commissioners, I sent a letter to the board members of the Hospital where I requested that two (2) steps be taken immediately to address this situation. First, I proposed that the County would immediately take steps (with the Hospital’s cooperation) to retain a qualified, nationally recognized consulting firm, acceptable to the County to help develop a long-term financial plan for the Hospital. I requested that the Hospital staff immediately contact my staff to develop a request for qualification for such a consulting firm. Secondly, I asked that we quickly restructure the Board of Directors so that it is composed of directors who understand the fiduciary obligations of Blount County and its citizens and to get some fresh eyes on the management of Blount Memorial Hospital.
These two requests were met with vigorous opposition by the Hospital. The Hospital’s refusal to agree to an independent qualified consulting firm to evaluate the situation caused more concern. Ultimately, the Hospital, rather than cooperate, decided to file (and did file) a lawsuit against the County.
As can be seen from the above-explained scenario, there is no revenue at Blount Memorial Hospital that the County could seize, even if it wanted to do so. The County’s only concern is in helping our Hospital regain its financial and operational foundation, so that it can continue to provide health care services to our community.
In recent weeks, my administration has been exploring all possible options to achieve this goal. I want to maintain Blount Memorial and maintain it as a County-owned Hospital. The ultimate decision about how to proceed with our Hospital will lie with our Blount County Legislative Body, and I look forward to working with our County Commission to accomplish the same.
It has and always will be my intention every day I come to work as your Mayor, to serve each and every citizen of Blount County to the very best of my ability and to always strive to do what is in the best interest of Blount County.
Blount Memorial is very important to me personally. I am also a 6th generation Blount Countian, born and raised here, with a love for our community and for our hospital. My grandmother went to work there as a switchboard operator when it opened and spent almost 30 years in that role. I have had other family and close friends that have worked at the hospital for their entire careers. Blount Memorial is a valuable part of what we are as a community.
Thank you for the opportunity to serve you.
Sincerely,
Ed Mitchell
Blount County Mayor