ST. PETERSBURG — After months of tense negotiations and weeks of political impasse, the City Council on Thursday derailed a proposal that would have changed the ownership structure of the city’s largest hospital, Bayfront Health St. Petersburg.
The 5-3 vote scuttled a deal that would have allowed the Foundation for a Healthy St. Petersburg, a nonprofit that owns 20 percent of the hospital, to sell its share, separate from Bayfront and expand its charitable mission. The hospital’s majority owner, Nashville-based Community Health Systems, would have paid the foundation $26.5 million.
The deal also would have eliminated about $1.5 million in costs the foundation incurs annually from its partial ownership of the hospital, according to Randall Russell, the foundation’s CEO. He said it would have allowed the foundation to focus on programs to significantly improve the overall health of residents in southern Pinellas County.
But after two hours of debate at Thursday’s council meeting, as hospital and foundation officials urged approval of the deal, a majority of council members grew suspicious of the hospital’s refusal to guarantee a certain amount of charity care.
The council had the final say over the proposed transaction because the city owns the land under the hospital and leases it to the hospital’s owners under 50-year agreement signed in 2013. That lease requires the hospital to continue providing charity care to St. Petersburg’s poorest residents, though it does not set a specific amount.
Mayor Rick Kriseman’s administration contends the proposed deal warranted reopening the lease, with new terms including a provision requiring CHS to provide at least $10 million in charity care each year.
While the company says it provides $60 million in charity care annually at Bayfront and was willing to put the $10 million pledge in its sale agreement with the foundation, it was unwilling to reopen the lease.
That refusal made several council members question the possible motivations at play.
"The only place I can go is a suspicious place," council member Charlie Gerdes said. "It’s a provision in the lease that a purchaser wouldn’t like."
Council member Lisa Wheeler-Bowman had a similar take.
"Why is the hospital so reluctant to put it in the lease agreement?" she said. "One of my obligations is that the community continues to receive charity care. I don’t understand why the hospital won’t commit."
A commitment letter from the foundation promised $1.25 million to promote access and use of health care by poor city residents through 2022 with an additional $250,000 to pay for a study of charity care needs in the city. But that offer expired Friday.
It wasn’t enough for council members Gerdes, Wheeler-Bowman, Amy Foster, Ed Montanari and Steve Kornell, who voted against the sale.
Council members Karl Nurse, Darden Rice and Jim Kennedy voted in favor.
After the vote, Russell declined to comment.
Swirling around the debate was the fact that the deal would have consolidated the hospital’s ownership, making it more desirable to potential buyers.
CHS is one of the nation’s largest owners and operators of hospitals with 137 of them in 21 states. But the company has struggled financially in recent years, posting heavy net losses quarter after quarter and has sold dozens of under-performing hospitals from its portfolio. The company sold its Bayfront Dade City hospital to Florida Hospital earlier this month.
But Bayfront Health CEO John McClain said there were no plans to sell and the hospital would continue to work with the city.
"We’re making a lot of infrastructure investments, capital investments, commitments in the community," he said. "And we’re making those investments to better serve the community."