VIRGINIA — The future of the Virginia Regional Medical will likely be determined on Sept. 4 — whether the city-owned hospital remains a stand-alone facility or becomes Essentia Health-Virginia.
The City Council voted Tuesday night to hold a special meeting beginning at 6:30 p.m. Sept. 4 on hospital bonds that are currently paid by the city, but would be paid by Essentia through its payments to the city for leasing the VRMC, if an affiliation is approved. That bond hearing will then be followed by a council meeting, with the only item on the agenda an up-or-down vote on a partnership between Duluth-based Essentia and the VRMC.
“We need to move forward with a specific date to act on an affiliation with Essentia to take a vote up or down. They want to know what is their future,” said Councilor Charles Baribeau, who made the motion for the bond hearing. It was then amended by Councilor Don Sipola to include a council meeting immediately following the bond hearing for a vote on the merger.
It would take a two-thirds vote of the council — five of seven members — for the deal to be approved. The Hospital Commission OK’d the partnership more than a month ago, also on a two-thirds vote. It would still take a public vote for any future sale of the hospital.
Under the agreement that followed about two years of talks about the future of the financially-troubled VRMC, the city would retain ownership of all property and assets but Essentia would assume day-to-day operations.
Among other things, the partnership calls for:
• Essentia immediately putting $7 million in the bank for capital improvements at the hospital, which currently has a list of about $25 million of immediate infrastructure needs.
• Essentia promising to increase payroll by $7 million after five years.
• Establishment of a new board, which will be advisory.
• Current VRMC employees will become EH-Virginia employees.
• EH-Virginia will assume all debts (including current bond obligations of about $18 million), accounts payable, claims and other liabilities related to the VRMC.
• The initial term of the agreement is 20 years, with an option to renew it for another 25 years.
• The city would issue $10 million in revenue bonds (to be paid back by hospital revenue) after five years for additional capital improvements and another $15 million in revenue bonds between the 11th and 13th years of the agreement.
• The city has opt-out contingencies, including one after five years of the agreement.