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Paynesville Press - February 13, 2002

PAHCS approves purchase agreement with Good Sam

By Michael Jacobson

Last week, the Paynesville Area Hospital Board of Directors unanimously approved a purchase agreement with the Good Samaritan Society to buy the Good Samaritan Care Center in Paynesville and the Hilltop Good Samaritan Center in Watkins.

The board approved the purchase agreement at a special noon meeting on Thursday, moving the merger between the local health care system and the two long-term care facilities a step closer.

The agreement calls for the Paynesville Area Health Care System (PAHCS) to pay the Good Samaritan Society $1.8 million, less any liabilities like carryovers for sick time, vacation time, scholarships, etc. PAHCS will pay $1.6 million to the Good Samaritan Society on April 1, when the deal is closed, CEO Willie LaCroix explained to the hospital board last week. Then PAHCS will have $200,000 to pay for these liabilities, when they get figured at the time of the sale in April.

PAHCS will borrow the $1.8 million to complete the sale, LaCroix added.

The Good Samaritan Society and PAHCS have discussed long-term care options in the community for a couple years. The current deal for PAHCS to purchase the Society's homes in Paynesville and Watkins was made public in October, when a letter of intent for the purchase was announced. The hospital board approved pursuing the merger in October and approved the final version with little discussion.

The board's Building and Grounds Committee met a week earlier to review the agreement and spent 90 minutes reading the document line by line. "This documentÉ has been back and forth on the Internet five or six times," LaCroix told the board, "and it's been back and forth in the mail more than that."

The negotiations went well, according to LaCroix, and the Good Samaritan Society was great to work with, but the complexity of the deal, of merging staffs, of melding procedures, took time. Originally, in October, the merger was planned to take effect on Feb. 1.

LaCroix said, "I was pleasantly surprised how well it really did go."

With the merger, PAHCS will have 175 nursing home beds (65 at Hilltop, 64 at the Koronis Manor, and 48 at the Good Samaritan) and have more than 450 employees.

PAHCS also operates a main clinic and a 30-bed acute care hospital in Paynesville, with outreach physicians, radiology, pharmacology, laboratory, and physical therapy. It also has five satellite clinics, including one in Watkins. And it has a 30-unit congregate housing unit, 700 Stearns Place.

Long-term care has not been very profitable for anyone in the state in recent years, as an abundance of empty nursing home beds has left many providers running in the red. In recent months, the Koronis Manor has had up to 15 empty beds, which at $100 minimum charge per day amounts to $45,000 per month in lost revenue.

Both Hilltop and the Good Samaritan have beds on layaway and have cash flowed but failed to turn a profit in recent years. "Just buying these facilities and leaving them as is is not the thing to do," said Tom Kooiman, the administrator at Hilltop and the Good Samaritan, who will become the COO at PAHCS after the merger. "We need to move forward, and I think that will happen with PAHCS."

PAHCS has received a $13,000 grant from the state to study long-term care market needs in the area, including assisted living and a dementia unit. PAHCS has also received a $3.2 million exception to the state moratorium on nursing home construction, which will be used within the next two years to add a wing of private rooms and private baths to the Koronis Manor, pending board approval. These type of amenities will be needed to keep nursing homes functional, LaCroix has told the board on many occasions..

To get the exception, PAHCS will have to decertify up to a quarter of its current 175 nursing home beds and transform at least one facility to another type of care, with assisted living a leading contender.

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