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Polk hires special attorney to help with St. Luke’s property request

Architect’s drawing of the proposed addition at St. Luke’s Hospital, phase one. The addition is shown to the left of the main entrance, and a planned geriatric courtyard is shown on the right. In order to obtain financing for the addition, St. Luke’s has asked Polk County, which owns the hospital property, to deed the property to the St. Luke’s Hospital Foundation.

If Polk County has questions regarding whether they can deed St. Luke’s Hospital property back to the St. Luke’s Hospital Foundation, they have probably hired the man to help them.
Polk County has hired John Crill of Parker Poe Adams & Berstein, LLP, in  Raleigh, at a rate of $395 per hour. Crill specializes in hospital finance.
The county’s move to hire special counsel follows a request by St. Luke’s Hospital asking the county to deed the land and building, which is currently owned by the county, to the St. Luke’s Hospital Foundation.
The request is being made so the hospital can construct an estimated $6.5 million addition.
Questions have been asked about how the county can deed public property to the hospital without putting the property out for general bids. Crill will guide the county on its options.
Polk County Manager Ryan Whitson signed an agreement to perform legal services with Crill on May 10. Crill’s agreement said his normal rate is $450 per hour, but for Polk County’s engagement he will charge $395 per hour.
The agreement is for Crill to provide advice to Polk for the hospital’s certificate of need application, to prepare the resolution for the county for the hospital’s certificate of need application and to provide general advice to commissioners concerning county owned hospitals.
According to Parker Poe’s website, “John Crill practices in the area of health law, municipal law, tax-exempt financing and nonprofit corporations. For more than 25 years, Mr. Crill has represented hospitals and medical practices. He serves as general counsel to several hospitals and physician practices and has considerable transactional experience involving joint ventures, mergers and the sale and acquisition of health care facilities and medical practices.
Mr. Crill regularly attends hospital board meetings and advises boards on governance matters. In addition to his health care experience, Mr. Crill represents cities and counties, as well as public hospitals, on various aspects of municipal law, including tax-exempt financings.”
Crill graduated with a B.A. degree from Allegheny College in 1964 and graduated from Duke University with an LLB in 1967.
Commissioners held a special meeting on Tuesday, May 10 and gave their approval on the hospital’s certificate of need application, which is required to be approved by the state before the hospital can go forward with its addition. The county’s approval was needed because the hospital leases the property from the county. Hospital officials say they need the county to deed the property back to the hospital in order to use the asset to finance part of the expansion.
CEO Ken Shull met with commissioners Tuesday and reviewed some details of the project.
Shull said the expansion project includes replacing six inpatient beds and constructing a space for therapy. The hospital chose to expand its orthopedic services first, Shull said, because it has the most shortcomings.
The hospital currently leases space for outpatient therapy and plans are to bring all therapy services in the hospital with the addition.
The addition is planned to go on the left side of the hospital  and will be 15,000 square feet. Plans are also to add a geriatric courtyard to the right side of the hospital. (See drawing above.)
The addition will include larger patient rooms and handi-capped-accessible restrooms and showers. Shull said in current rooms, patients are unable to get out of the bed on both sides and have trouble getting in and out of the bathrooms. The new patient rooms will be 280 square feet each and will include space for family members to stay with the patient.
“This is actually a major milestone to a process that’s been going on a long time,” Shull said.
He said the hospital made a presentation to commissioners in 2008 regarding the needed upgrades and created a task force. The hospital has since created a strategic plan.
“The current economic climate requires us to replace our outdated facility on a phased project,” said Shull.
Shull said the addition is being constructed to eventually hold three stories.
Shull said the hospital foundation currently has $1 million to go towards the project with plans to raise 1/3 of the total, with the remainder being financed.
Shull is expected to meet with commissioners again on Monday, May 16 to discuss the plans in more detail.
Polk County Manager Ryan Whitson told commissioners on April 18 that the hospital plans to ask for the deed transfer. Commissioners have not publicly discussed the request in any detail.
Whitson said commissioners plan to speak with Crill at times through online video sessions to avoid paying Crill to travel to Polk from Raleigh.
Polk County Commissioner Ray Gasperson said this week that the county does not plan to make a decision on Monday as to whether to deed the property to the hospital. That decision will likely take some time, officials have said.
The state is not expected to approve the hospital’s certificate of need for six months.
The St. Luke’s Hospital Auxiliary donated the hospital land to the county to construct a new hospital in 1969. The Jervey Palmer building, which was the original St. Luke’s Hospital built in 1929, was given to the county.
The county has used the Jervey Palmer building since the new hospital was finished in 1972 as county offices. The county has recently moved services out of the aged Jervey Palmer building and is expected to vacate the building by the end of October.
A new department of social services is currently being constructed in Mill Spring and the county has agreed to purchase a house owned by the Thermal Belt Outreach Ministry in Columbus to house mental health services.
Other services, including the senior center, were also moved out of the Jervey Palmer building after the county purchased the former Carolina Classical School off Skyuka Road near Columbus.
The current hospital’s assessed tax value is $11,391,253, according to county tax records. St. Luke’s is a non-profit organization.
Polk County in recent years has donated $285,000 to the hospital with economic development funding after the hospital lost money for several years. Hospital officials say the hospital is in much better financial shape currently and partnered with Carolinas Healthcare System to manage the hospital. Carolinas Healthcare does not run St. Luke’s, but helps manage the operations.
The county’s resolution approved on Tuesday includes language saying the county will not be held responsible for any funding of the addition (see resolution below).
Commissioner Renée McDermott noted the clause in the resolution on Tuesday and also read a statement regarding recent rumors that indicate she plans to grant the hospital the deed to the property. McDermott said neither she nor the board has made a decision and that decision must await thorough research of the facts and the law (see statement below).

Polk County’s resolution on St. Luke’s Certificate of Need

WHEREAS, Polk County, North Carolina (the “County”) is the owner of certain real estate and improvements (the “Real Estate”) located at 101 Hospital Drive, Columbus, Polk County, North Carolina; and
WHEREAS, the Real Estate is leased to St. Luke’s Hospital, Incorporated (“St. Luke’s), a North Carolina nonprofit corporation, pursuant to a lease (the “Lease”) dated February 21, 2000 between Polk County, as lessor, and St. Luke’s, as lessee; and
WHEREAS, pursuant to the Lease, St. Luke’s occupies and uses the Real Estate in connection with the operation of a licensed, acute care hospital (the “Hospital”) which operates under the name “St. Luke’s Hospital”; and
WHEREAS, St. Luke’s is authorized, pursuant to the terms of the Lease, to make capital improvements and additions to the improvements located on the Real Estate and to finance the construction of such capital improvements and additions, and the Lease further provides that the County shall not be responsible for the payment of any such financing or for deficits in the operation of the Hospital; and
WHEREAS, St. Luke’s intends to apply to the Certificate of Need Section of the Division of Health Services Regulation for a certificate of need for a project (the “Project”) which includes the relocation and/or replacement of six medical/surgical acute care beds along with therapy services (physician, occupational and speech) to a new one-story building located adjacent to and connected to the existing Hospital building, and the project also includes the construction of a courtyard for use by the existing geriatric psychiatric unit; and
WHEREAS, there has been presented to the Board of Commissioners at this meeting a proposed Certification (the “Certification”) which describes the Project and which indicates that the Project is consistent with the duties and powers of St. Luke’s and that the Board of Commissioners supports the Project.
Section 1.That the Board of Commissioners of the County (the “Board”) hereby finds and determines that the Project is consistent with the duties and powers of St. Luke’s under the terms of the Lease and the Board hereby indicates its support of the Project.
Section 2.That the form and content of the Certification presented to the Board at this meeting is hereby approved and the County Manager is hereby authorized and directed to execute the Certification on behalf of the County, and to deliver the Certification to St. Luke’s to be included in the Certificate of Need Application.
Section 3.That this Resolution has been adopted upon the understanding and condition that the County is not and will not be responsible for any portion of the costs of the Project.
Section 4.That this Resolution shall become effective on the date of its adoption.
ADOPTED this 10th day of May, 2011.

McDermott’s statement on St. Luke’s Hospital request
Editor’s note: Following is a statement read by Polk County Commissioner Renée McDermott regarding a request by St. Luke’s Hospital for the county to deed the hospital property to the hospital in order to obtain financing for a $6.5 million expansion.
At some point the board of commissioners will need to address St. Luke’s Hospital’s request that the hospital building and the land on which it sits be donated to the hospital.
That decision has not been made yet, either by the board of commissioners as a whole or by me. That decision must await thorough research of the facts and the law.
Nevertheless, I have heard from a number of people that they have been told that I have already made such a decision and that I am in favor of donating the building and grounds to the hospital. I have not made any such decision.
If you have been told that I have already made such a decision, your source is either badly misinformed, or he or she is intentionally telling you something that is untrue.
-Polk County Commissioner Renée McDermott