National accounting firm to examine West Jefferson hospital’s books after lease deal inaccuracies surface _lowres

Advocate staff photo by SHERRI MILLER -- West Jefferson Medical Center in Marrero on Thursday, Dec. 18, 2014.

A public hearing set for Monday afternoon is the final hurdle Jefferson Parish officials need to clear before they can finalize an almost $600 million deal to lease the parish-owned West Jefferson Medical Center to a private operator.

The 1 p.m. meeting at the Marrero hospital’s auditorium will provide an opportunity for people to question various officials about the particulars of the deal to lease the facility to LCMC Health for a minimum of 45 years in return for at least $200 million in lease payments, $340 million in capital improvements, $31 million for things such as working capital, and possibly another $20 million, depending on financial performance.

Following the hearing, the state Attorney General’s Office — which has been reviewing the arrangement — will either approve or disapprove of the lease.

Jefferson officials expect to learn the attorney general’s decision on Tuesday. If it is positive, the deal would formally close Wednesday, parish consultant Joshua Nemzoff said Sunday.

Nemzoff said the various parties signed all the necessary closing papers Friday and gave the documents to their respective attorneys. Assuming the attorney general approves the deal, the attorneys involved will exchange the signed papers with one another to close the transaction, and LCMC would take control of West Jefferson at 12:01 a.m. Thursday.

The lease would then be subject to a six-month “true up” process in which all the monetary figures associated with the arrangement are adjusted as needed.

LCMC can technically walk away from the deal if the attorney general doesn’t approve it by Wednesday, but the parties can agree to extend that deadline.

Nemzoff, a hospital mergers and acquisitions specialist whose contract with the parish expires Wednesday, said Jefferson taxpayers are on the cusp of securing “a fantastic deal” for their medical center.

The hospital has been ailing financially for years, and the lease deal improves the facility’s economic outlook while putting it in the hands of the same group operating the $1.1 billion University Medical Center that recently opened in Mid-City New Orleans.

Yet the road leading to Monday’s hearing has been a complicated one. After more than a year of public wrangling over whether to lease both West Jefferson and its east bank counterpart to one or more of three competing health care operators, the Parish Council voted in February to lease West Jefferson to LCMC for at least $225 million in lease payments.

However, that figure relied on unaudited financial data that showed the hospital generated more than $15 million in cash in 2014. An audit completed in June revealed that West Jefferson actually generated only $5.6 million in 2014, and officials also learned that the hospital lost about $3 million in the first half of this year.

LCMC subsequently said it would have to reduce its total lease payment by $25 million, and the Parish Council was left with no choice but to accept that.

There has also been a good deal of feuding between Nemzoff and some members of the Parish Council upset with the $1 million or so the consultant has been paid for his work on the lease deal. Nemzoff has pointed out that he originally proposed a flat fee of $625,000, which the parish rejected, and that his final bill is a fraction of 1 percent of the deal’s total value.

The parish also tried to lease East Jefferson General Hospital, its public hospital in Metairie, to a private operator. But efforts to lease it to Hospital Corporation of America — which operates Tulane University Hospital — fell apart earlier this year.

East Jefferson will remain in the parish’s control for the foreseeable future, officials have said.