California system mulls lease alternatives amid frustrations with Tenet

The board of Palm Springs, Calif.-based Desert Healthcare District approved a motion directing staff to seek a consultant who can advise the district on "taking back" Desert Regional Medical Center amid frustrations with Tenet Healthcare, the Palm Spring Desert Sun reported Dec. 7.  

Dallas-based Tenet proposed another 30-year lease of the hospital in September, according to the report. Its current 30-year lease expires in 2027 and under its new proposal, the for-profit system would have the opportunity to purchase the hospital from the district at the end of the new lease.   

Under Tenet's proposal, it would make a $75 million payment up front, followed by annual lease payments beginning in 2027. At the end of the lease, Tenet is proposing an option to purchase the hospital by making a final $75 million payment, something the board was not anticipating, according to the report. 

Steve Hollis, a consultant who has been working with Desert Healthcare during the renegotiation process, said the board is hoping to get a lease that looks similar to the current lease, which was paid up front and expires at the end of 30 years with the district still owning the hospital. 

In addition to approving the search for a consultant, the board sent a letter to Tenet outlining its frustrations and concerns in the negotiation process, according to the report. 

Among the other concerns, Desert Healthcare is seeking clarification of Tenet's strategic investment plans throughout the Coachella Valley and wants specificity regarding seismic retrofit upgrades. It also is requesting data from Tenet so it could seek proposals from other hospital operators, but Tenet previously declined to provide the information, citing confidentiality and liability issues.

The board said in its letter that it has been more than two months since the concerns were communicated but it has yet to receive a formal reply from Tenet, according to the report.   

Tenet told the news outlet in a statement that it has been responding to the detailed questions posed by Desert Healthcare and it remains "actively engaged and are committed to providing an updated proposal."

A lease agreement will require a public vote, which could be held in November at the earliest, but only if "everything goes remarkably smoothly," Mr. Hollis told the Desert Sun. 

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