College Bails Out Hospital with $2 Million Bid

Oberlin dodged another bullet this week. Earlier this week, the College put $2 million on the table in a deal to keep the Allen Memorial Hospital alive. If the deal goes through, the College will purchase the Hospital property for $2 million and then lease the property to the Community Health Partnership for $1 per year.

Community Health Partners will put down $2 million in credit in addition to a modest donation from the city of Oberlin, at most a couple of hundred thousand dollars.

Acting president Clayton Koppes said, "This is really an amazing moment because for months our fears have been that the hospital was doomed. Since the Community Health Partners has come forward... we have a fighting chance and that's a wonderful outcome for the College and the community."

Since early spring, the hospital has been trying to find a bidder to purchase their financially strapped medical facility. The current bid would affiliate the hospital with Community Health Partners in Lorain and allow for the College to purchase the land. "Our objective is to secure enough cash and management to make the adjustments for the hospital to become profitable," said James Zinzer, president of the Oberlin Medical Center board of trustees.

Before the deal goes through, however, the city of Oberlin has to transfer the property over to the hospital. College Vice President of Finance Andrew Evans said, "You have to have the city willing to make a quit-claim deed transfer" in order for the deal to go through, in addition to final approval from Community Health Partners.

Evans said that the $2 million necessary to purchase the property will come from the College's $600 million endowment.

"It makes sense for us to buy the land because we want to support having a hospital in the community for our students, staff and community in general. One way to do this is to buy the land and the building that we gave to the city 30 years ago," Evans said. The College owned the hospital property until 1970 when the College transferred the land to the city of Oberlin so the "city could float revenue bonds on the market," according to Evans.

The money generated from the bonds went to improve the portion of the hospital visible from West Lorain Street. The bonds were paid off during the 30 year period.

Director of College Relations Scott Wargo said, "It's a way for us to give them money and get something in return, but in essence we'll never have it." Wargo said that although the College would own Allen Memorial Hospital, the hospital would still be responsible for any improvements and for daily operations.

James Schaum, CEO of Allen Memorial Hospital said, "The deal will affect the hospital's losses in three main ways. First, the hospital will be able to recruit more doctors, equalling more patients. Second, it will give the hospital access to contracts that we don't have now. Third, because the hospital is smaller than others, we receive less payment for the same work as larger hospitals. This would allow better payment for what we do."

Over the past few years, the Allen Memorial Hospital has been on a downward spiral, losing millions of dollars every year. Schaum cited factors such as lack of access to insurance contracts and reduced reimbursement for Medicare patients, as well as a lack of patients as contributing to the financial problems of the hospital.

According to Michael Henle, Oberlin Medical Center board of trustees member and professor of mathematics, as of early November the hospital has approximately 60 days before they are forced to close the doors. Koppes said, "It's very true that the hospital will close in January if the deal can't be arranged. That's not a scare tactic, that's the absolute truth." If the hospital closes, the nearest facility available is Elyria Memorial Hospital Regional Medical Center, a 20 minute ride.

However, with the passage of Issue #39, the central Lorain County ambulance district levy, the residents of Oberlin and Oberlin College students will still be ensured emergency care, regardless of the Allen's financial matters.

Koppes said that as a stand-alone hospital, the Allen faces a difficult task in Oberlin. Just to break even the hospital needs approximately 30 overnight patients staying every night. An average night this year saw approximately 15 patients remaining overnight. "There is a reasonable chance for the Allen to make it if they're partnered with Community Health Partners. CHP can direct business to the hopsital and it can increase referrals from positions there," Koppes said.

Community Health Partners estimated that it will take between 12 and 18 months to restore the Allen to financial viability. Schaum said that with Issue #39 passing and with the community's support, the Allen Memorial Hospital is in good standing.

Fran Baumann, President of Oberlin city council, said, "The Allen has become very important for Oberlin and surrounding community. It's a good drawing card for economic development. It's also a plus for the College to have the hospital here," Baumann said.

However, if the hospital ever goes bankrupt, the property will revert to the College. Koppes said, "That property is very important to us as a way of protecting the integrity of the College." For years the hospital has served as the western boundary of the College.

On Nov. 27, the city of Oberlin will hold a public hearing to address the situation and by early December a decision concerning the fate of the hospital will be made public.