Crain’s Health Pulse
May 29, 2014
LICH Back at Square One
SUNY broke off talks with The Peebles Corp. yesterday after the negotiations failed to yield a satisfactory handover of Long Island College Hospital, whose emergency department SUNY has kept open voluntarily since last week.
The Peebles Corp., which partnered with North Shore-LIJ to bid for the hospital, disagreed on the specifics for LICH’s continued operation and environmental impacts from the project. In a letter sent to SUNY Monday, Peebles’ lawyer refused to cover possible malpractice issues from LICH’s continued operation, and proposed that NS-LIJ operate the emergency department under SUNY’s license until the deal closes. The letter also suggested that the bidder reach a “cost-sharing arrangement” with SUNY for possible environmental costs arising from the site.
“This is unacceptable,” SUNY’s lawyer replied to both proposals. Under the suggested timeline, SUNY could “continue to provide care, bearing the cost of facility malpractice, for at least six months and possibly indefinitely,” the lawyer, Ruth Booher, wrote. She also called the environmental cost-sharing suggestions “an attempt to impose a condition on the purchase price.”
In a statement issued yesterday, SUNY said, "Several portions of the Peebles proposal have dramatically changed, including the possibility of long delays in the manner and method in which health care will be provided at the site." SUNY also called Peebles' "cost-sharing agreement in which taxpayers would be partially responsible for environmental remediation" outside the scope of the original request for proposals.
SUNY said it will now begin negotiations with Fortis Property Group—the third-scoring bidder and the initial favorite—which is partnering with NYU Langone Medical Center and Lutheran Health Care. It’s unclear what will happen to the agreement that community groups had negotiated with the Peebles Corp. last week. The groups agreed to drop their motion on the condition that Peebles, the presumptive winner, would conduct a community-needs study and add more health care services if those were found necessary. Now that Peebles is out, the agreement appears void. The plaintiffs are meeting with their attorney this morning to hash out the next steps.
Capital New York
May 29, 2014
SUNY Ends LICH Talks With Peebles
By Dan Goldberg
SUNY officials on Wednesday announced they were ending negotiations with The Peebles Corporation over the purchase of Long Island College Hospital, according to a letter obtained by Capital.
The two sides had been negotiating a purchase agreement for the financially-troubled Cobble Hill hospital over the last three weeks, but talks stalled over the weekend because SUNY and Peebles, partnered with North Shore-LIJ and others, could not agree on who would be responsible for any potential environmental remediation costs, and over when SUNY could exit the property.
SUNY will now begin negotiating with Fortis Property Group, which had come close to acquiring the hospital last December before a deal was tabled in the hopes that incoming mayor Bill de Blasio could negotiate an amicable and expeditious solution that would lead to a full-service hospital.
The Peebles Corporation had offered $260 million for LICH, which sits on a prime real estate in Downtown Brooklyn, and inked a deal last week with community groups to provide health care during the transition, but could not solidify that deal with SUNY.
"Unfortunately, your proposed resolution of the major open issues is contrary to SUNY’s interest and outside the letter and spirit of the R.F.P.," SUNY attorneys wrote in a letter to Peebles representatives, which was obtained by Capital.
The first issue pertains to how long SUNY must continue to pay for the operations at LICH, which had been reduced from a full-service acute-care hospital to a freestanding emergency department with no I.C.U. and, for the time being, no ambulance service.
SUNY has been trying to sell the property for more than a year, and state officials say the hospital has cost them hundreds of millions of dollars.
A legal settlement between SUNY, labor unions and community advocates, ended a year of litigation and was supposed to allow SUNY to close the hospital on May 22.
SUNY officials have kept a skeleton crew on staff for the last week, hoping to get a deal done with Peebles, which had offered for North Shore-LIJ to pick up the cost of staffing while the deal was finalized.
SUNY's letter alleges that Peebles reneged on that part of the deal and was asking SUNY to bear at least part of the cost of keeping the emergency department open.
"Your client proposes that SUNY not exit but rather continue to provide care, bearing the cost of facility malpractice, for at least six months and possibly indefinitely based on your client’s request for extensions of the closing," read the letter. "This is unacceptable."
The second issue is who would be responsible for any environmental remediation should medical or toxic waste be found on the site.
"The environmental provisions of the RFP were clear and unambiguous," the letter says. "Your proposal for a 'cost-sharing arrangement' with respect to the environmental indemnity is an attempt to impose a condition on the purchase price. This is also unacceptable."
Fortis Property Group finished with the third-highest score among nine proposals that were evaluated by a committee made up of SUNY, labor and community representatives.
Brooklyn Health Partners finished with the highest score but they were disqualified earlier this month when questions arose over their ability to finance a deal.
Fortis, which is partnered with NYU Langone Medical Center and Lutheran Medical Center, has maintained that it could quickly ramp up service and take over the emergency department within 30 days.
SUNY chair Carl McCall endorsed a deal with Fortis Property Group last December. He brought their proposal to SUNY trustees but pulled the plan before a final vote was cast after some trustees expressed hope that Mayor Bill de Blasio could secure a better deal for the community advocates who had been pining for a full-service hospital.
At the time, de Blasio said the proposed agreement which had Fortis partnered with ProHealth, "is by no means enough to meet the needs of this community." De Blasio said he was "troubled" by the proposal to convert some of the Cobble Hill hospital's property into luxury condominiums "while failing to preserve essential services like emergency care."
Fortis' new proposal certainly offers more health care and does preserve some emergency services, but also proposed to turn much of the property into luxury condos.
The December deal with Fortis was scratched and a settlement was reached in February that allowed the community advocates to rewrite SUNY's request for proposals. De Blasio heralded that deal as “historic” and “transcendent.”
On Tuesday, the mayor told reports he had no regrets about holding that press conference, nor did the mayor think he celebrated prematurely.
"There were days when it was going to be padlocked, done, no more health care, period," De Blasio said, speaking after a pre-kindergarten announcement in Brooklyn. "We managed to preserve health care for the long term. Final details pending, but I feel good about where it's going."
A SUNY spokesman said the state will keep the hospital open while it negotiates with Fortis. A Peebles spokesman did not immediately provide a comment.