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Jackson Health System a/k/a (JHS) / Steward Health Care System a/k/a (SHC)


I must say that the letter from Ralph de la Torre, MD-Chairman & CEO of Steward Health Care Systems, to Mr. John Copeland, Chair, Public Health Trust appear on the surface to be the much needed transfusion and expertise that JHS is currently lacking but desperately need.

The letter opens by saying that SHC would remove all operational risk from the County for continued potential losses at JHS.

Does this mean that Miami-Dade County Commissioners will no longer be involved in making major critical decisions that are obviously above their skill set and expertise?

SHC stated that adding at least $600 million will result in thousands of jobs.

JHS needs to perform an internal review on the report submitted by SHC to determine if in fact it will be able to bring them out of the red and at the same time create thousands of jobs.

JHS debt is astronomical and while $600 million sounds like a lot of money, it may only be enough to keep JHS from operating in the red.

I certainly think this offer is worth considering, while investigating the legalities of such a partnership. JHS is scheduled to run out of cash in July of this year. It’s already February 22, 2011, leaving only a few months to turn things around.

JHS needs to immediately, tomorrow, actively look into this proposal with their legal counsel and act on it, if the counsel gives them the go ahead by the end of the week.

JHS needs to send a “Research and Development Team” to Boston on Sunday to be ready to shadow SHC Team on Monday and report back to JHS the following Monday. Meanwhile, JHS legal team should perform further due diligence on SHC and its principals.

Further, the report states that as of September 30, 2010, JHS current liabilities exceeded current assets by $72 million. Additionally, based on the same balance sheet date, JHS has over $500 million dollars in debt and liabilities in excess cash and other liquid assets.

So, you see the $600 million offer by SHS would only bring JHS out of the red, but certainly will not be enough to create thousands of jobs. The positive side is that SHC should be able to create hundreds of jobs, if JHS financial statements are accurate. Considering the over and short method in accounting, SHC will probably have just enough for JHS to break even.

The report states SHC will agree to invest at least $600 million over an agreed upon time frame in capital for infrastructure, information technology, equipment and new programs.

However, what happens if JHS liabilities go beyond $600 million? Will SHC bare the additional expenses?

SHC further states that they would provide cash resources for the PHT to create positions, specially designed to monitor their progress and assist the PHT Board in providing this report.

Is this legal for SHC to provide funds for an internal audit of their own operations or should the County/Federal entities be responsible for this review?

SHC is asking JHS to allow them an exclusive 60 day clause, whereby SHC is allowed to undertake its due diligence with respect to partnering with JHS, with JHS receiving a 30 day window to review/and accept the proposals

Since time is of the essence, it would be prudent to give SHC a 30 day exclusive clause and the next 30 days would be open for other competitive considerations, should there be any. JHS should also state that SHC bare their own expenses for submitting their bid should JHS decides to go in another direction.

SHC is asking for feedback from JHS by March 1. JHS should push that date to March 4, 2011.

Okay JHS! Get Busy! Good Luck!!!

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February 23, 2011 - Posted by | Business News | , , , , ,

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