The Jefferson Parish Council voted Monday to accept a reduced offer from LCMC Health to lease West Jefferson Medical Center.
Officials also publicly addressed a pair of recent controversies that have sprung up around efforts to lease the parish-owned hospital: questions about the level of detail in the invoices of a consultant advising the parish on the deal, and hefty bonuses that were given to two executives at the struggling Marrero hospital.
According to the new terms approved Monday, LCMC will pay the parish at least $200 million over 45 years, down from its previous offer of at least $225 million.
The Parish Council voted 7-0 to accept the new offer after a closed-door session. LCMC lowered its price after updated financial data showed West Jefferson is in worse financial shape than originally thought.
Under an arrangement initially approved several months ago by the Parish Council, besides the minimum $225 million in lease payments, LCMC was to make $340 million in capital improvements to the hospital. That part of the agreement was not changed by Monday’s vote.
The parish has been trying to lease West Jefferson and its east bank counterpart, East Jefferson General Hospital, because they have been depleting their reserves to offset falling revenue.
A valuation firm reporting to LCMC in early April pegged West Jefferson’s value at between $230 million and $254 million. But that valuation was based on unaudited financial data provided by West Jefferson that showed the hospital generated about $15.1 million in cash in 2014.
An audit completed in June indicated West Jefferson actually generated only $5.6 million last year, and officials recently learned that it lost $3 million in the first half of 2015.
A new valuation completed late last month showed the hospital’s fair market value had fallen to between $184 million and $204 million.
LCMC then notified the parish on Friday it was reducing its lease offer by $25 million. The adjustment represented “a good-faith effort” to resolve issues raised by the hospital’s reduced value, LCMC CEO Gregory Feirn wrote in a letter to parish officials.
During a hearing Monday, two members of the public, frequent Parish Council gadflies Al Morella and Tom Heaney, questioned the competence of West Jefferson CEO Nancy Cassagne and her staff.
Cassagne responded that differences between unaudited figures and audited ones are routine, and she defended the hospital’s bookkeeping.
“It is a normal process,” Cassagne said, noting that the original lease deal was based on 2013 financial data that required updating anyway.
Cassagne also stood by her decisions to give bonuses of $90,000 and $135,000 to Michael Adcock and Angela Greener, despite their annual salaries of $200,000 and $215,000, respectively. Both received the bonuses last year in an effort to retain key personnel after the departure of a high-profile executive, Cassagne said. But Adcock recently stepped down as chief operating officer and was replaced by Greener, once the hospital’s chief strategies officer.
Cassagne said both the hospital’s board of directors and LCMC knew about the bonuses. Hospital board Chairman Harry “Chip” Cahill backed Cassagne’s version of events, but Councilman Paul Johnston — whose district includes the hospital — insisted that his appointee on the board had not been aware of the bonuses until recently.
Meanwhile, in response to a recent WVUE-TV report that questioned whether parish consultant Joshua Nemzoff’s invoices for his work on the lease negotiations were detailed enough, the Parish Attorney’s Office said it had plenty of documentation justifying the work for which Nemzoff was paid.
Standing next to a 2-foot-tall stack of documents, Deputy Parish Attorney Ed Rapier said the papers backed up Nemzoff’s billings for the month of June alone — and were already in the parish’s possession when the story aired.
“Not only did we find that we have enough supporting documentation from what I received ... I found emails showing (Nemzoff) did work he didn’t bill us for,” Rapier said.
Despite Monday’s vote, the deal with LCMC won’t officially close until after the state Attorney General’s Office completes an ongoing review of the arrangement. Officials hope it can close before the end of the month.