Can one Miami businessman prohibit the Lower Keys community from selecting a new company to operate its only public hospital because he makes millions of dollars from a 30-year-old financial arrangement with the current company? Does that man’s financial interest supersede the authority of a hospital district board that was appointed by the governor to support “the preservation of the public health, for the public good…?”
Yes. To all of the above, yes.
What’s going on?
So here’s the deal.
Twenty-five years ago, a series of long, late-night meetings at Lower Keys Medical Center on College Road ended with a decision by the hospital district board to lease the College Road hospital facility for 30 years to a private, for-profit company, which would run it as a private business.
That lease with Community Health Services, based in Franklin, Tennessee, ends in 2029 and a growing number of concerned residents want the local hospital district board to use the next few years to explore its options and consider a different operator for Lower Keys Medical Center rather than renew the lease and be tethered to CHS for another 30 years, especially given CHS’s financial struggles and debt.
Key West resident Spencer Krenke last year formed the citizens advocacy group, Our Hospital Key West, (OHKW) and spent time researching CHS, the history of its agreement with Lower Keys Medical Center and the debt that has forced CHS to sell 65%, or 135, of the 206 hospitals it once owned. Krenke and others formed OHKW to warn the community and the appointed board charged with overseeing the community’s hospital against simply renewing the agreement with CHS without considering other options, including Baptist Health or Mount Sinai.
“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, wrote last year 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?”
So what’s the issue?
A troubling reality of the Lower Keys’ hospital hostage situation came to light at the Jan. 7 meeting of the Lower Florida Keys Hospital District board. Its members are appointed by the governor, unpaid and apparently powerless to even consider a different hospital operator when the hospital’s current lease agreement with the Tennessee-based Community Health Services (CHS) expires in 2029.
Why? Because there’s another, private entity involved in that lease agreement. But more on that in a moment.
First, 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 the district, which stretches from Key West to the Seven Mile Bridge.
The hospital district board is authorized to levy, and in the past has levied, a special tax within the district to fund the public hospital. That tax has not been levied since 1999,
when the hospital district board decided to lease the hospital on Stock Island to a private, for-profit health care company.
The lease between CHS and the Lower Florida Keys Hospital District includes more than the public hospital on College Road. The agreement also includes dePoo Hospital on Kennedy Drive, which is owned by Miami businessman Roberto Sanchez through his company,
Kennedy Drive Investments. And Kennedy Drive Investments Ltd. is inextricably linked with Lower Keys Medical Center and Community Health Systems.
How did we get here?
Nearly 30 years ago, Key West had two hospitals — the public Florida Keys Memorial Hospital (now Lower Keys Medical Center) on College Road, and the private dePoo Hospital on Kennedy Drive.
It was eventually determined that a community this size could not support two hospitals, and combining the two entities into a single rural, public hospital would yield greater Medicare and Medicaid reimbursements.
That combination of the two hospitals worked just fine — until the 30-year lease with CHS ends in 2029.
“Back then, we struggled with what would happen at the end of the 30-year lease because Kennedy Drive Investments then would no longer have a license to operate its dePoo Hospital, since it was combined into the one license,” attorney Lew Fishman told the hospital district board and a group of concerned residents at the Jan. 7 meeting.
“So we’re burdened now with a problem that wasn’t solved 30 years ago?” asked local philanthropist and health care advocate John Padget.
Then came the kicker from Fishman: Kennedy Drive Investments — and Sanchez — have veto power over any potential new agreements and leases with other hospital operators.
“My initial discussions with Kennedy Drive Investments and Roberto Sanchez is that they were interested in retaining CHS,” Fishman said to the dismay of community members at the meeting.
“If the hospital board doesn’t have the absolute right to select a new hospital operator without the approval of Roberto Sanchez, then what the hell are we doing here?” asked community activist Peter Batty.
Business owner and former city commissioner Mark Rossi then wanted to know the details of Sanchez’s arrangement with CHS and what it would take for the hospital district to buy him out of his agreement so the public hospital board would be free to select whatever hospital operator it chooses for the good of the community.
Fishman said the details of the deal between Sanchez and CHS have never been disclosed.
“I think the next move should be for you, Lew, to start negotiations with Kennedy Drive Investments because their contract with CHS is not advantageous to our residents and our community.” The next meeting of the hospital district board is Feb. 4 at 3 p.m. with the location to be determined. For more information about Our Hospital Key West, which contains a detailed history of the hospital lease agreements, visit ohkw.org.
