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VOL. 124 | NO. 122 | Wednesday, June 24, 2009

Health Centers Could Acquire MED Clinics by September

By Tom Wilemon

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Two health center operations have identified the clinics they would like to acquire from The Regional Medical Center at Memphis, and Claude Watts, the hospital’s interim CEO, remains hopeful that an agreement can be reached by early to late September.

However, officials want to make sure that people who depend on the Health Loop Clinics still have the services they need when The MED spins them off to Christ Community Health Center and the Memphis Health Center. Each party is submitting operational and financial takeover plans for review and comment.

Claude Watts

The clinics are currently running a $9.8 million annual operating deficit that is being partially offset by a $3.8 million subsidy from Shelby County. The two federally qualified health center operations can receive subsidies from the U.S. government.

“We consider this a partnership,” Watts said. “The goal is to ensure that access remains in the community.”

Forward movement

Representatives of the hospital, the two clinic operations and the Memphis and Shelby County Health Department have been engaged in continuing discussions about the proposed spinoff. The Health Department has a presence in some of the clinics with special initiatives, such as one to combat infant mortality.

“We need to continue to make sure the services are there, but we need to take the redundancies out of the system,” Watts said.

Officials did not name the clinics that may be acquired because of a non-disclosure agreement. Some of the Health Loop Clinics could be closed.

Burt Waller, the executive director of Christ Community Health Center, said once any agreements are reached they will have to receive federal approval from the Bureau of Primary Health Care within the U.S. Department of Health and Human Services. That process could take a minimum of six weeks or longer, depending on whether the bureau has questions.

More details of the proposed acquisition remain to be addressed before a legal agreement is struck.

“We have shared with The MED and with the county our financial projections, which reflect what we believe we can operate the locations of interest to us so that they can be self-sustaining financially,” Waller said. “It will take it almost two years to get to the point of self-sufficiency. There is a financial shortfall course for the first 18 to 24 months. That’s really been the focus in the last few weeks of our discussions with The MED.”

Greater efficiencies

William Jackson, the chief executive officer of Memphis Health Center, said coordinated partnerships between the hospital and the clinics, which will qualify for federal funding, could result in an improved system.

“What we are trying to do is work with The MED and obviously in conjunction with Christ Community Health Center to ensure that the divestiture of the Health Loop clinics from The MED can be done in such a way that it will not result in any decrease in service or adversely impact continued services to the low-income and uninsured that are currently served by the Health Loop clinics,” Jackson said.

“Secondly, by Memphis Health Center and Christ Community absorbing or acquiring these clinics, (it) puts us in a better position to work toward an improved and enhanced way to get reimbursement that the Health Loop clinics have not previously been able to get.”

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