The private company that runs Key West’s public hospital has money trouble, according to its own financial reports. And a group of concerned residents is asking the local board appointed to oversee the community’s hospital to find a different operator for Lower Keys Medical Center rather than renew the lease with the current operator.

But the clock is ticking.

It’s been 25 years since a series of long, late-night meetings ended with the decision to let a private, for-profit company run Lower Keys Medical Center, the public hospital on College Road.  

Only five years remain on the 30-year operating agreement under which the for-profit Community Health Services, or CHS, based in Franklin, Tennessee, operates the hospital. And it could take nearly that long to find a new operator for Lower Keys Medical Center and negotiate an agreement, said Key West resident Spencer Krenke, who recently formed the citizens advocacy group, Our Hospital Key West, (ohkw.org).

After researching the history of the CHS agreement with Lower Keys Medical Center and the crippling debt that has forced CHS to sell 65%, or 135 of the 206 hospitals it once owned, Krenke, who calls himself “Citizen Spencer” on the website, and others formed OHKW to warn the community and the appointed board charged with overseeing the community’s hospital against renewing the agreement with CHS. 

“While five years may seem like a long way off, to achieve a new, best-in-class hospital group to replace the current operators, our work as advocates needs to begin now,” Krenke, a successful entrepreneur who has worked as CEO and CFO of multiple companies, writes on the OHKW website. “Why would anyone renew our hospital agreement with CHS given there are numerous other hospital operator alternatives to consider who haven’t divested the majority of their hospitals, and aren’t self-disclosing ‘significant financial risk’? It’s a reasonable question, right?” Krenke writes on the OHKW website. 

In addition to CHS’ debt problems, the company is under federal investigation, according to a Feb. 24 article in Becker’s Hospital Review, which states the Department of Justice is investigating CHS for practices related to inpatient admissions, inpatient dialysis and other matters.

“CHS told Becker’s the system is familiar with the facts and circumstances around the information request and previously investigated them ‘to satisfaction. We believe the CID stems from allegations by a former employee at one of our hospitals,’ the health system said in a statement to Becker’s.”

“‘We are cooperating with the DOJ and look forward to bringing this inquiry to closure. Community Health Systems and our affiliated hospitals are committed to ethical business practices and to following the laws governing our operations,’” the company told Becker’s.

Krenke presented his concerns about CHS, as did City Commissioner Sam Kaufman, at the Feb. 12 meeting of the Lower Florida Keys Hospital District board, whose members are appointed by the governor to oversee the community’s hospital. 

The Lower Florida Keys Hospital District is a state-chartered special taxing district created in 1967 that exists solely to provide and maintain a hospital for the people in that district, which stretches from Key West to the Seven Mile Bridge.

The hospital district board is authorized to, and in the past has, levied a special hospital tax within the district to fund the public hospital. That tax has not been levied since 1999, when the lease with a private operator began. The appointed board members who oversee the hospital district are not paid, and many of them have changed since the 1999 vote to lease the hospital to a private operator.

The Our Hospital Key West group aims to educate the community about CHS’s current financial problems, crippling debt and the risks associated with renewing its operating agreement for Lower Keys Medical Center, which last year showed a profit of about $31 million, according to financial records obtained by Kaufman, who reported them at a commission meeting last year.

At the Feb. 12 hospital district board meeting, Krenke warned the board members of CHS’s indebtedness and its sale of 65% of its hospitals. Given the profitability of Lower Keys Medical Center, granting CHS a new long-term lease, or operating agreement, could make the local hospital a more attractive asset and thus increase the likelihood that CHS would sell Key West’s hospital to an unknown entity, given the increased value that comes with a long-term operating agreement, Krenke said.

He emphasized that his concerns have nothing to do with the dedicated doctors, nurses and staff of Lower Keys Medical Center, but rather with the corporate management company of CHS, which, he said, answers to shareholders and creditors, who could demand that CHS sell off more hospitals to service their debt, rather than patients. 

“With only five years left on the operating agreement, our hospital isn’t an attractive asset for CHS to sell, but if that lease gets renewed, then Lower Keys Medical Center becomes a prime target for sale,” Krenke told the Keys Weekly on March 4. “It is unreasonable to renew a lease with a company that has self-identified, in its own federal SEC filings, as a financial risk. CHS is not building a health care empire in Florida; it’s abandoning it.

“We insist that the local hospital district board consider financially sound hospital operator alternatives and to open these discussions to the public,” he said.

Meanwhile, at City Hall…

Kaufman also has raised concerns about the local hospital, namely about last year’s closing of a dedicated cancer treatment center and the hospital’s failure so far to find a new provider. Kaufman and Krenke were due to meet March 6 with David Clay, who, as CEO of Lower Keys Medical Center, is employed by CHS.

“Lower Keys Medical Center is committed to the health and well-being of this community,” Clay said. “It is our strong desire to be part of the community for many years to come. We are very interested in renewing the lease when it expires in 2029.”

Clay also sent the Keys Weekly the report he gave at the Feb. 12 hospital district board meeting that detailed $45 million in investments and improvements CHS has made at the local hospital since 2016. Such improvements included the addition of robotic surgery, recruitment of physicians, more than doubled their mental health beds from 11 to 25, established a housing stipend for full-time employees and “improved the hospital’s quality performance, resulting in a 4-star rating for overall hospital quality from the Centers for Medicare and Medicaid Services (CMS).

“Regarding Community Health Systems (CHS), I have pulled CHS’ year-end volume stats from the earnings report released two weeks ago, indicating growth across the organization — growth that has outpaced that of the majority of American health systems. This growth and ongoing initiatives have CHS well-positioned to make future investments in Lower Keys Medical Center. The company has continued access to capital and plans additional investment in Lower Keys Medical Center as part of its lease renewal,” Clay wrote.

“I don’t think people realize what a critical time we’re in with only five years left on this lease,” said Kaufman, who is forming a separate task force to investigate options with the hospital and alternative operators. “I’d like to be able to make a recommendation from the city that the hospital district board members do the right thing, and go out for competitive bids to seek a potential new operator for our hospital, which is a crucial resource for this community.” To get involved with the task force, email Kaufman at skaufman@cityofkeywest-fl.gov,