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  • Writer's pictureCraig Moreau

Hospital Center of Excellence Transparency Report July 17-25

Hospital Center of Excellence Transparency Report

July 17-25, 2023

Hospital Center of Excellence HCOE and St. Marks Medical Center Transition Update:

Community engagement and communication efforts ramped up even more this week, as St. Marks Medical Center Employees continued to offer insight and advice on future plans. In total 125 hours were donated this week. At this point almost every employee and every department has been interviewed and asked for input on future operations. We met with 32 individuals directly related to SMMC and 47 individuals and organizations that are not a part of SMMC representing investors and interested community members. Presentations and details of our business plan were presented to four foundations, five philanthropist. The La Grange City Council hosted HCOE as an agenda item for an update and a question and answer time. HCOE’s Sam Wilson met with the Fayette County Judge to answer questions and discuss possible support from the County. HCOE’s Craig Moreau met with four local mayors. Local government remains helpful and informative as past and present elected officials lent advice and insight to operations.

HCOE’s Craig Moreau and Sam Wilson met with a consortium of nine local banks including banks from Carmine, Giddings, Roundtop, and La Grange to discuss the possibility of a participation loan that would refinance the current Housing and Urban Development (HUD) insured 242 Hospital Program loan. Several ideas were discussed but no definitive agreement was reached. Discussions are continuing on a variety of loan refinance approaches. HCOE is also continuing down a parallel path to secure a transfer of the Hud-backed loan which has to be approved by the lender, LUMENT and HUD. A HUD Transfer of Physical Assets application was drafted and conveyed to the LUMENT/HUD attorneys (required to be funded from HCOE) for the attorney review. This package consisted of 33 files addressing a 24-item checklist from HUD.

The bulk of the volunteer man hours donated by HCOE officers this week were dedicated to crafting the best possible financial strategy for the hospital, investors, and staff. Commitment requests have begun and local philanthropist that have expressed interest in investing in the future of our rural community are now being asked to commit to a funding level. To aid in this effort, HCOE officers have completed development of a 36-page Workout Strategy and 5-Year Plan. This is a comprehensive document that addresses in detail ten strategies that HCOE will deploy once the transition has occurred, and details business plan activities that will be implemented to return the hospital to profitability after SMMC reopens general surgery and orthopedics. Among other things the plan identifies the third-party expertise that HCOE has retained to supplement the HCOE officer team including Transwestern, a nationally based real estate leasing company specializing in health care facilities around the country, ACP Health for medical revenue cycle management and emergency department operations, and Grey Reed, healthcare legal counsel. This document has information that is subject to the CHC and SMMC Non-Disclosure Agreement and according to the Term Sheet between HCOE and SMMC this information for the time being has to remain confidential. HCOE intends to release a version without confidential information in the future. The development of this document involved 44 hours over the weekend drafting and finalizing an the 36-page plan with a financial pro forma model. The financial pro forma model is a complex spreadsheet-based model with 20 worksheets that calculate among other things Computer Aided Drafting (CAD) measured areas for all leased spaces, real estate income and expense, hospital operations for REH emergency room and surgical operations, staffing with salary information for all staff, lease cost and building operating expense, uncompensated care payments, investor debt service, mortgage amortization, hospital valuation, surgical and hospital capital needs, a 5-year income summary projection and a 5-year projected balance sheet.

We are thrilled to announce the first philanthropic donations to the transition effort. St. Marks Foundation, and a generous anonymous donor have contributed $75,000 to the Hospital Center of Excellence Fund at the Fayette Community Foundation. The contributions will assist with the anticipated community relations, website, legal and other consultant expenses associated with the due diligence effort, previously committed to be paid out of pocket by HCOE officers. HCOE has committed to a full accounting of all funds donated to Hospital Center of Excellence Fund at the Fayette Community Foundation. None of these funds will got to provide any compensation for HCOE officers, and HCOE has agreed that any unused funds at the time of transition will be returned to the donors.

This week HCOE is working hard to firm up equity funding support from a 42 member investment roster. Of these potential investors HCOE has been able to make contact with 31 of them at the start of the week. 7 members have declined to participate for a number of reasons which include geography related to foundation/investment purpose, risk in the endeavor, the lack of collateral associated with the investment, and their own health reasons. Of the 36 remaining on the roster, 24 have been contacted and discussion are ongoing and being scheduled. HCOE believes that this remaining investor group has the potential willingness to fund in full and at the time of writing of this report $225,000 has been committed. So we have a ways to go, but we are working diligently to firm up commitments this week. Unfortunately this is a tough time to get in front of folks with vacation. A number of these potential investors are traveling and even out of the country. For information on how to invest in your local community and enhance critically needed hospital services contact Sam Willson 713.408.3317 or Craig Moreau 832-692-6034.

The necessity of a rapid transition has been diligently explained to investors and stakeholders. An operation of this magnitude would normally require six months or greater, but financial considerations require a transition from St. Marks Medical Center to Hospital Center of Excellence by the first week of September to avoid losing even more critical medical resources.

Fayette Community Foundation maintains an account for tax deductible contributions for anyone that wants to help support our efforts. Any money contributed will go 100% towards direct expenses in completing the transition and no funds will be used for any salary or labor efforts by HCOE representatives. The link to the Foundation page is

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