To the Board:
There are several issues to be considered in taking our hospital back from Ormond. These issues can be divided into two groups, legal and financial.
The two major legal issues are whether Ormonds fake board may meet out of the sunshine, and whether the lease is legal at all. On both of these matters, we can take guidance from the rulings of courts which have addressed the matters.
On whether Ormonds fake West Volusia board can meet out of the sunshine, the current wisdom is or should be the 5DCA ruling in the News-Journal case. The court has held that Ormonds group can not meet out of the sunshine.
This may be the less interesting of the two issues, considering the likelihood that the West Volusia group is provided with full, accurate, and timely information. I would guess that the West Volusia board is allowed to handle such important issues as declaring Ice Cream Social day; the minor details of capital investment, maintenance, services, personnel, and accounting are delegated to Ormond. Of course, they are meeting out of the sunshine so it is hard to be certain.
The second legal issue may render the first moot. We do not know whether the lease agreement is legal. We do know that a nearly identical lease was found in Palm Beach v Everglades (4DCA) to be an illegal delegation of power. Our legal staff farmed the work of writing the lease to the same firm that wrote the agreement in Palm Beach, so the similarity in language is unsurprising.
The Board may wish to seek Attorney General opinions on either or both of these matters. Should you do so, I would expect a reply of the form the courts have ruled on these very issues; here are the cases. It is very unlikely that he will do other than cite the findings of the courts.
You may also seek advice from your attorney, whose prosperity has in the past been augmented by advising you in the way opposite from the courts rulings. It may be that he has knowledge of the law which is not available to the Judges. I am of the view that his opinions are of about the same reliability as the honesty in his expense bills, and I am of such short memory that I can not recall the last time he actually went to court for us.
When we do take the hospital back, either through Ormonds voluntary departure or by taking up our legally specified authority, we will be faced with several financial issues. First, Ormond will desire money to cover their expenses in construction. Second, we will have to be prepared to operate a hospital which has been run into the ground, working to restore the facilities and recover some business.
Ormond claims approximately $40 million in construction expenses; a person experienced in such things places the actual figure between $12 and $13 million. Before any money could be paid to Ormond, a full and accurate accounting of all expenses would be required.
From the amount of construction, we must subtract the value of equipment which Ormond has looted or destroyed, because we will have to replace it. From their cost, therefore, subtract for the kitchen, the computers, the laundry, the employee day-care, and so on. If we were able to compute the cost, we should also include the good employees lost.
We must also subtract the amount of subsidies which we have paid to Ormond. Additionally, we should consider subtracting for the lost value between an accredited hospital and one which lost accreditation; to determine the value lost, compare the daily census in 1993-94 to the current census, and multiply by the expected per-bed revenue. We will have to find a way to make this up until we can re-build the business.
Without full access to cost figures, which Ormond has to date failed to provide, we can not determine the exact amount which might be due them for construction. It is clear that, net of charge-backs, they will be entitled to very little.
Of more pressing concern will be the on-going operation of the hospital. I do not believe that the Board is prepared to handle the daily operation and administration of the facility, nor do I feel it appropriate for them to do so. The Board was elected as a group of sound policy makers, which should set goals and directions that an administration will follow.
I believe that the daily management of the facility should be hired out to a management company. The Board should seek proposals from various groups operating hospitals in the Central Florida area, being careful that such proposals in no wise preclude exposure to full sunshine.
The evidence available to the public suggests that Ormond is borrowing heavily to fund operations on both sides of the County. At some point, perhaps soon, the banks may discover the size of the debt and refuse to extend further credit. At that point, if we havent already taken the hospital back, we had better be prepared for a sudden and disorderly return. I submit that it would be better to start the process now, while it can be done on our schedule and in an orderly manner.
I generally prefer that the Authority not borrow money. However, to cover the costs of replacing the looted and destroyed equipment, I feel that we may have to borrow. Please keep the term down to a couple of years, paying the note promptly, that our children not be stuck with the debt of our foolishness in the matter of the lease.
Because we have little chance of passing a bond referendum, it might be best to consider a balloon note subject to the time limitations in the Enabling Act. It may be necessary to re-issue such a note once or twice, for much smaller amounts, in order to avoid a large tax increase.
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P.O. Box 1208,