The city is starting the process of assigning a value to Tallahassee Memorial HealthCare as it works on selling the community hospital to Florida State University.
During a special city commission meeting on October 1,commissioners instructed the city managerapproved in a 3-2 vote to start evaluating the hospital property and assets so the city can proceed with a possible sale. The objective is to create an academic medical center model, similar to UF Health, thatimproves healthcare in Tallahassee.
City authorities have a plan that would not involve a single large payment, but instead would require FSU to make annual payments over a period of time.
During their scheduled meeting on October 22 regarding the subject, commissionerswill be covering the assessmentand what city officials have discovered regarding the hospital and its resources. They will, however, not be voting next week to establish a particular value for the hospital.
The suggested step is to hold the public hearing planned for the meeting and to approve an additional public hearing after a final price is determined and the formal agreements between FSU and TMH are completed.
Hospital assets in the city are estimated to be between $26 million and $220 million.
The medical facility is managed by TMH's non-profit organization,but all of the resources connected to TMH's primary campus— including the 75-acre site, a two-million square-foot structure, hospital beds, X-ray equipment, and other facilities — remain under city ownership through a $1-per-year lease contract.
The city employed Ankura Consulting Group, a private consulting company, to determine the value of the hospital, and they carried out six separate assessments that yielded a variety of prices the city's hospital assets might fetch.
The evaluation aims to determine the value of the land, structures, and associated permanent improvements that the city owns and is responsible for maintaining," according to a city report. "This separate review was essential to ensure that any suggested transfer accurately represents the value of the community's longstanding public investment and that the city receives compensation based on these physical assets.
The hospital's worth has been established beforehas been reported to be approximately $1 billion, but City Manager Reese Goad stated to the Tallahassee Democrat that he is uncertain about the origin of that figure, as the estimates presented are significantly lower.
As per a city agenda item, when debt is considered, the value is estimated between approximately $26 million and $220 million. Without including debt, the price increases, ranging from about $109 million to $584 million.
"While it is common to factor in debt when calculating equity, the staff has verified that in the proposed agreement between TMH and FSU, the existing debt of $364 million will stay as TMH's responsibility and will not be transferred to FSU," the agenda documents state.
A city-hired law firm concludes that state law governing municipal hospital sales is not applicable.
Goad mentioned he didn't believe it would follow a standard "buying and selling" process, but rather would involve the transfer of assets under specific terms—specifically financial contributions and a commitment to focus on providing care for those in need.
The city obtained a legal review from the law firm Nabors, Giblin & Nickerson P.A., which concluded that the sale and transfer of assets was...would not activate a Florida lawthat regulates the selling of city hospitals.
The law outlines various requirements that must be met for a sale to take place, such as the hospital's board reviewing the advantages of the sale, publishing all documents examined by the board, and engaging a certified public accounting firm to independently assess the hospital's value.
The legal team concluded that the hospital is not classified as a "municipal hospital" covered by the law.
Considering the above, it is reasonable for the City to determine that Section 155.40, Florida Statutes does not apply to the sale of the City's stake in the Hospital to FSU," the firm stated in its report. "This opinion does not ensure any specific result in legal proceedings, and is specifically limited in relation to the use of judicial discretion.
Goad stated that if the commission proceeds with the sale or transfer of assets, it would not interfere with the current discussions between FSU and TMH. He mentioned that the institutions can continue finalizing the terms of their agreement even after the university acquires the hospital from the city.
"The deal is significantly wider than just the transfer of assets," he said to the Democrat.
The city is currently in discussions with the university to determine a mutually acceptable price and finalize its own Memorandum of Understanding to transfer the lease and assets, though it remains unclear how long the process will take to conclude.
"We'll use whatever time is necessary," Goad stated.
City analysis ignores FAMU concerns, request to halt decision
The city's report outlines the connected history of Tallahassee and its hospital dating back to the 1940s. It emphasizes the dangers of the current situation and promotes the advantages of the FSU-TMH collaboration, which followed several months oftense negotiationsinitial claims that the city and FSU wereengineering a hostile takeover of the hospital.
The rise of academic medical centers (AMCs) poses a threat to Tallahassee by potentially causing a loss of funding, patients, and healthcare professionals to cities where AMCs are expanding," according to the city staff report. "The FSU-TMH collaboration enables the region to directly compete with these expanding academic networks, address workforce shortages, research requirements, and changing community needs. The partnership would provide FSU with access to state and federal funding sources that are exclusively available to university-owned or affiliated facilities.
Overlooked in the city report is any referenceof Florida A&M University's concernstheir exclusion from the hospital governing board, which made headlines following a special Board of Trustees meeting last week. FAMU officials state that discussions are ongoing with FSU, aiming to secure Rattler representation and a "voice at every table" where decisions about the future of healthcare in Florida's capital city are being made.
Since the negotiations have the potential to overturn the current agreement and establish a three-way Memorandum of Understanding involving Florida A&M, FSU, and TMH, FAMU officials have given President Marva Johnson permission to request that the city delay any final decisions. Trustees also mentioned that it might be essential for FAMU supporters to attend the Oct. 22 meeting in large numbers to make sure the university's issues are addressed.
Local government oversight journalist Elena Barrera is available atebarrera@tallahassee.com. Follow her on X:@elenabarreraaa.
This piece first was published on Tallahassee Democrat:City starts to assign a monetary value to TMH hospital for the FSU sale