Ty Cobb Officials Outline Sale to St. Mary’s

By MJ Kneiser, WLHR Radio, Lavonia

Ty Cobb Healthcare officials said they had no choice but to sell the Ty Cobb Regional Medical Center to St. Mary’s Healthcare System.

That was the message at a state-required public hearing on the proposed sale last Thursday.

Ty Cobb CEO Greg Hearn said during the hearing that the hospital had been losing money to the tune of a million dollars a month since the doors opened in July 2012.

Hearn said one reason for that was the changing healthcare climate in the U.S.

“From the time this project was conceived, until the time it opened, the environment of healthcare changed drastically,” Hearn said. “You had new federal laws that came out; you had an economy that deteriorated suddenly and didn’t recover as quickly as people thought it would.”

Hearn said other problems included out-migration of services. In other words, patients in the area continued to seek healthcare from sources outside the area such as in Athens or Gainesville instead of coming to the new hospital.

“The complexity 0f revenue cycles for rural hospitals had taken the market to such a place that for a rural hospital to stand alone, it would need about $50-million a year and this hospital only has revenue of about $25-million,” Hearn said.

Hearn said another problem was it took about six months after the hospital opened to get its Medicare and Medicaid reimbursements coming in.

He said it then was not long before Ty Cobb Healthcare System began supplementing the hospital’s revenue out of its own reserves.

According to Hearn, there was not enough money to keep Ty Cobb Regional going even after selling off the system’s three nursing homes and assisted living homes and a financial feasibility study showed that Ty Cobb Regional Medical Center could not continue on its own.

In fact, Hospital Board chair Fort Oglesby said that if for some reason, St. Mary’s backs out of the deal, Ty Cobb Regional’s doors will close.

The State Attorney General’s Office must approve the sale of Ty Cobb Regional Medical Center and if it does, St. Mary’s could close on the deal as early as June 1st.

As for the terms of the proposed sale, St. Mary’s would pay $12.95 million for Ty Cobb Regional.

That is far less than the $39 million in bonds still owed by the hospital.

Hearn said that means Ty Cobb Healthcare walks away with nothing, but he said the service provided to the community is what is most important.

“The debt on the property far exceeds the proceeds. So, the proceeds will go to extinguish a portion of the debt and the remainder of the debt will be cancelled,” Hearn explained. “And then Ty Cobb Healthcare System will walk away from its $26.9 million investment in the hospital with the knowledge that we were successful in bringing a first-class facility to the community. And although we tried very hard to make this hospital successful, we could not. But we still will be pleased to offer this to the community so the hospital can continue to serve this community. Even though we’re not getting any proceeds and we’re walking away from a very large investment, we feel like that’s very much in keeping with our mission.“

The proposed agreement also requires St. Mary’s to continue to operate Ty Cobb Regional Medical Center as an acute care hospital and provide community and charity services.