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Paynesville Press - May 8, 2002

PAHCS, Good Samaritan merger delayed until May 31

By Michael Jacobson

Washburne Court, former Pay. Good Samaritan Paynesville Area Health Care System's purchase of the Good Samaritan Care Center in Paynesville and Hilltop Good Samaritan Care Center in Watkins ran into a last-minute snag last week that prevented the finalization of a purchase agreement.

But PAHCS has effectively taken over the two long-term care facilities. PAHCS will lease both facilities for the next month, and the purchase agreement should finally be finalized on May 31.

The snag was in the financing. PAHCS has agreed to pay $1.8 million for the facilities, but $200,000 will be the assumption of sick time and vacation time for the employees. PAHCS needed to borrow $1.6 million, at 4.75 percent interest, to complete the transaction, which proved to be a problem due to technicalities.

For starters, as a public entity, the board needed to approve the purchase agreement within 60 days of closing. The board had approved the purchase agreement on Feb. 7 at a special meeting, with the intention at that time to close on April 1. When the closing was moved back until May 1, PAHCS no longer complied with the 60-day limit.

Secondly, the Paynesville Area Hospital District - the governing body of PAHCS - needed to pass a resolution authorizing this expenditure and hold a public hearing to seek public comments on borrowing funds for the purchase.

The hospital board held a special meeting on Wednesday, May 1, to take care of these glitches. The board unanimously reaffirmed its purchase agreement with the Good Samaritan Society, passed a resolution to spend $1.8 million on the purchase, and set a public hearing for Wednesday, May 22, at 8 p.m. in the Blakely Room at the hospital.

"It's been an exciting couple of days trying to close," PAHCS CEO Willie LaCroix told the board last week.

The deal became impossible to close, but the actual facilities were already up and running as part of PAHCS. Staff at the two Good Samaritan Centers had spent the last few days cleaning out files, throwing away manuals, and getting ready for the merger, said Tom Kooiman, who was the administrator for the two facilities and now will be chief operating officer (COO) for PAHCS.

The deal not going through created lots of problems, LaCroix told the board. PAHCS had already installed computer systems, changed payroll, and gotten a new state license in its name. "We turned everything over," said LaCroix. "Now we had to reverse all that if we weren't going to close."

Instead, PAHCS and the Good Samaritan Society arranged a lease agreement, whereby PAHCS will pay $12,000 for one month. That way, PAHCS will retain operational control on the two facilities until the deal is finally closed on May 31.

The setbacks in finalizing the merger have not taken from its value, according to LaCroix. "This is a popular project, I think," he said. "I've heard positive things about it."

With the merger, PAHCS would have 175 nursing home beds (65 at Hilltop, 64 at the Koronis Manor, and 46 at the Good Sam) and over 400 employees. PAHCS is looking at remodeling the Koronis Manor to add more private rooms and at remodeling facilities to add assisted living and possibly a dementia unit. (See separate story)

With the lease in place, the Good Samaritan Care Center becomes Washburne Court, and Hilltop Good Samaritan becomes Hilltop Care Center.

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