CONCERNED CITIZENS OF PETERSBURG
PEOPLES VOICE & PATIENT ADVOCATES
P. O. BOX 183
PETERSBURG, VA 23804
March 6, 2003
Honorable Jerry Kilgore
Attorney General
Commonwealth
of Virginia
900 E. Main
Street
Richmond,
Virginia
23219
SUBJECT: Stop the
sale of SRMC.
Dear Mr. Attorney General:
We are writing to bring to your attention certain facts,
which, in our opinion, demonstrate that the Hospital Authority of the City of Petersburg’s proposal to
sell out our public hospital, SRMC, is not in the public interest.
- The
law states that it is in the public interest that adequate hospital
facilities be provided in concentrated centers of population, so as to
allow for the care of the public health, for the control and treatment of
epidemics, and for the care of the indigent. In 1948, because, by the operation of
private enterprise, adequate hospital facilities were not available in Petersburg, by resolution of the Petersburg City
Council, the Hospital Authority of the City of Petersburg was created (Exhibits 1-3).
- For
the last 50 years operating as a public non-profit hospital, SRMC, has
fulfilled its public mission and also been financially successful. For example, in 1999 in addition to
providing Petersburg
with over $7 million of charity care, SRMC’s net income was over $10
million (Exhibit 4). The Authority
has years of retained earnings from the hospital at its disposal - over
$30 million in public funds in its Funded Depreciation account (Exhibit 5)
as well as about $5 million of public funds which the Hospital Authority
speculated in the stock market without proper statutory authority (Exhibit
6).
We are mystified that with adequate
financial resources available, the Hospital Authority and its hospital
management team would attempt to sell the hospital while totally ignoring the
obvious adverse impact a sale would have on the hospital’s solvency. The Hospital Authority’s municipal bonds are “A”
rated and investment grade. According to
the prospectus of Community Health’s year 2000 IPO, Community has a 73% debt to
equity (Exhibit 7). Community’s bonds
are not investment grade, they are junk bonds.
This sale proposal is nothing but a
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Stop the Sale
leveraged buy out by management
which puts the public’s access to healthcare at risk by saddling the hospital
with a huge debt load.
By simply declaring that the
hospital’s existence is no longer necessary and by not even bothering to study
the impact the sale would have the health of Petersburg (Exhibit 8), in our opinion, the
Hospital Authority has violated its fiduciary responsibility to the public and
its sale plan of questionable bonafides.
- In our
opinion, this particular sale proposal is a result not of the Hospital
Authority’s concern for the public health, but rather is meant to distract
the public from the real issues confronting the hospital, namely
addressing the conflicts of interest, medicare/medicaid
fraud, misconduct and malfeasance which are happening at the
hospital.
A)
The Hospital Authority’s attempts to move the
hospital facility away from its downtown Adams Street location are nothing
new. From 1999 to 2001 the Hospital
Authority attempted to move the hospital to two back parcels of swamp land
owned by Hospital Authority insiders. This swampy hospital site was directly
across I-95 from a chemical plant and within a FEMA designated Regulatory
Floodway where Federal Regulation prohibits any encroachments including fill
and new construction (Exhibit 9-10). The
swampy hospital site was selected by the Hospital Authority’s ad hoc committee
on site selection which was composed of the Authority Chairman, hospital
President, and the Authority’s General Council (Exhibit 11). The front parcels, on which new medical
office parks and subdivisions were to be built, were not swampy and fronted on Crater Road and Wagner Road. The front parcels belonged to the same
Hospital Authority insiders who owned the swampy back parcels. The first parcel of swamp land was jointly
owned by the father of a Hospital Authority member and the immediate family
members of the local Congressman. In
this particular option contract the Authority agreed to purchase this swampy
back parcel for $1.2 million or $27,273 per acre (Exhibit 8). The City of Petersburg assessed this swamp for $5,998 per
acre. The second parcel of swamp land
was owned by Roslyn Farm Corporation, an entity controlled by the
brother-in-law of the Hospital Authority Secretary and using the Hospital
Authority’s General Counsel as its own legal counsel. On January 6, 2000 the Authority received a consultant’s
report which studied the feasibility of building a hospital on these two back
parcels of swamp land (Exhibit 9 and 10).
On January 6, 2000
Roslyn Farm Corporation purchased the only portion of this proposed hospital
site not owned by Hospital Authority insiders for $400,000 or $14,880 per acre
(Exhibit 11). On February 2, 2000 Roslyn Farm Corporation
borrowed $1.84 million from the Bank of Southside Virginia, a bank controlled by a Hospital
Authority member (Exhibit 12). This
document was mailed to the Hospital Authority’s General Counsel. On May 4, 2000 the Authority entered into an option contract
with Roslyn Farm to purchase the second parcel of swamp land for $1.26 million
or $34,351 per acre (Exhibit 13). It is
interesting to consider the aforementioned loan, a contract between a Hospital
Authority member and Roslyn Farm Corporation, in the context of Roslyn Farm’s
overall financial obligations with respect to this proposed speculative land
deal. Roslyn Farm’s obligations are as
follows; $400,000 for the swampy back parcel, $220,000 of roadway construction
costs, plus $1.2 million for the land fronting Wagner Road equals a total of $1.82
million. The $1.84 million loaned to
Roslyn Farm by a Hospital Authority member comfortably covers all of Roslyn
Farm’s expenses in this proposed Hospital Authority land deal, with the extra
$20,000 meant possibly to cover the
corporation’s legal expenses in the transaction. None of the aforementioned conflicts of
interest were ever recorded in the minutes of the Hospital Authority as
required by The State and Local
Government Conflict of Interest Act.
B) There
are serious problems with Medicare and Medicaid fraud at SRMC. For example, there are many instances where,
at the intervention of the hospital President, patients who were admitted into
hospital were discharged without completing their treatment and were again
readmitted in order to extract from the government additional Medicare and
Medicaid funds. There are also many instances of certain doctors performing
unnecessary medical procedures on unknowing patients for the purpose of
claiming additional Medicare and Medicaid reimbursement.
C) There
is a serious problem at the hospital with maintaining adequate nursing staff.
This is no surprise considering senior management creates a hostile work
environment by not only condoning, but also actively participating in, the
sexual harassment of employees and medical staff (Exhibit 14). Not only did the hospital President bring
strippers into the operating room for his personal sexual indulgence, the
President promoted a doctor to SRMC Chief of Staff after dozens of nurses
complained that this particular doctor had groped them(Exhibit 15).
D) As
a result of policies put in place by the hospital President, there is a serious
problem at the hospital with people being denied treatment because they have no
health insurance coverage (Exhibit 16).
The hospital should not deny treatment to anyone.
E) This
proposed sale has also created a serious problem at the hospital with the
unlawful termination of long time and loyal hospital employees (Exhibit 17). Contrast
the shabby way employees are treated with the 50% bonuses lavished on senior
management by the Hospital Authority (Exhibit 18).
We have brought to your attention these facts, in the hope
that they will convince you that this sale is not in the public interest and
that you will stop the sale of SRMC.
Sincerely,
George Brown Lloyd Hines Lokesh
B. Vuyyuru
Emma Whitehead Christopher White Dorothy Taylor
Victoria Gray-Adams
.