The Observation Deck

I appreciate having the LO print my written article in the latest edition. I submitted the table below along with that article but it did not get printed. I probably made it too difficult to format for print - my apologies to the LO editor(s) and I can't get it to format correctly below. However, I felt it was an important component of the article and wanted to make it available for all as well as in response a Brian Essi email request I first read yesterday evening after returning home from Council.

The end of September 2015 total net assets for the Lakewood Hospital Association indicated $126.5M. This number comes from the Sept. 2015 LHA financial statements, which were long ago made public and provided directly to Mr. Essi. I would be happy to try to scan these 9/2015 statements and provide these on the Deck. We (Council) worked from the thought that this number was at $128M by December due to anticipated appraisals.

Disposition of Lakewood Hospital Association assets -

(in millions) Total Lakewood Hospital Association assets (bricks, mortar, equipment and licenses)
$128.0 Total LHA assets

20.0 Value of hospital site (land still controlled by the City and will be sold in the future for redevelopment)
24.2 New Lakewood Foundation
33.0 Lakewood Hospital Foundation
8.2 850 Columbia Road facility - (appraised for $6.8 million on June 15, 2015 by Charles M. Ritley
Associates LLC)
7.0 Demolition/rehab funds to the city
10.0 Operating losses
3.0 Demolition costs of office building and parking garage at Detroit and Belle – site of the new Family
Health Center, 24/7 Emergency Room and parking garage.
2.5 Investment in new parking facility
20.1 LHA portion of transition costs including insurance, pension obligations, malpractice
insurance, tenant relocation and miscellaneous transition costs

(in millions) Clinic $49 Million Investment

$34.0 Clinic’s cost of new Family Health Care Center and Emergency Room
8.0 Clinic’s additional contribution to new Lakewood Foundation in addition to the $24.2M listed above
7.0 Clinic’s absorption of transition costs not covered by the $20.1 above

(in millions) Other funds to the City of Lakewood

$1.5 Approximated value of homes on Belle and St. Charles being sold. These were owned by the City but
managed by the Lakewood Hospital Association and will rightfully return to private ownership.

Again, because I submitted the table with the article, it was my intention to have it included along with the article which was published. I will do my best to respond to any additional questions on this matter.

David W. Anderson
Member of Council, Ward 1
216-789-6463
Davidwanderson@lakewoodoh.net

Councilman Anderson

Thank you for jumping in, and indeed the numbers are on the bottom of the story online.

http://lakewoodobserver.com/read/2016/0 ... ods-future

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How about Kevin Butler handing over the actual 200 plus PUBLIC records he appears to be holding hostage. We need to see EVERYTHING in order to put this seemingly bogus and alleged illegal hospital deal in order. It appears Mr. Butler must be withholding these records for a reason. It appears there is something he doesn't want us to see!

Trust is earned. Has Summers, Council, LHA members, LHF members really proven themselves honest and trustworthy? I think not!

David Anderson wrote:I appreciate having the LO print my written article in the latest edition. I submitted the table below along with that article but it did not get printed. I probably made it too difficult to format for print - my apologies to the LO editor(s) and I can't get it to format correctly below. However, I felt it was an important component of the article and wanted to make it available for all as well as in response a Brian Essi email request I first read yesterday evening after returning home from Council.

The end of September 2015 total net assets for the Lakewood Hospital Association indicated $126.5M. This number comes from the Sept. 2015 LHA financial statements, which were long ago made public and provided directly to Mr. Essi. I would be happy to try to scan these 9/2015 statements and provide these on the Deck. We (Council) worked from the thought that this number was at $128M by December due to anticipated appraisals.

Disposition of Lakewood Hospital Association assets -

(in millions) Total Lakewood Hospital Association assets (bricks, mortar, equipment and licenses)
$128.0 Total LHA assets

20.0 Value of hospital site (land still controlled by the City and will be sold in the future for redevelopment)
24.2 New Lakewood Foundation
33.0 Lakewood Hospital Foundation
8.2 850 Columbia Road facility - (appraised for $6.8 million on June 15, 2015 by Charles M. Ritley
Associates LLC)
7.0 Demolition/rehab funds to the city
10.0 Operating losses
3.0 Demolition costs of office building and parking garage at Detroit and Belle – site of the new Family
Health Center, 24/7 Emergency Room and parking garage.
2.5 Investment in new parking facility
20.1 LHA portion of transition costs including insurance, pension obligations, malpractice
insurance, tenant relocation and miscellaneous transition costs

(in millions) Clinic $49 Million Investment

$34.0 Clinic’s cost of new Family Health Care Center and Emergency Room
8.0 Clinic’s additional contribution to new Lakewood Foundation in addition to the $24.2M listed above
7.0 Clinic’s absorption of transition costs not covered by the $20.1 above

(in millions) Other funds to the City of Lakewood

$1.5 Approximated value of homes on Belle and St. Charles being sold. These were owned by the City but
managed by the Lakewood Hospital Association and will rightfully return to private ownership.

Again, because I submitted the table with the article, it was my intention to have it included along with the article which was published. I will do my best to respond to any additional questions on this matter.

David W. Anderson
Member of Council, Ward 1
216-789-6463
Davidwanderson@lakewoodoh.net

Dear Councilman Anderson,

Thank you for your responses.

While I prepare a full response to your analysis, I have a few questions:

1. How did you arrive at the “$20.0 Value of Hospital Site”? Is there anything to substantiate that value by way of an appraisal? Mr. Butler has not provided that to me if it exists.

2. What is the $1.5M difference between the $128 and $126.5 numbers you use? You mentioned “anticipated appraisals” –can you share those “anticipated appraisals” with me?

3. Transition Costs. Can you provide any detail for the breakdown of what you claim is “$20.1 LHA portion of transition costs including insurance, pensions obligations, malpractice insurance, tenant relocation and miscellaneous costs”? This is a lot of public money to be explained with such a few vague terms.

4. Clinic’s Absorption. Its seems to me that the “7.0 Demolition/rebab funds to the city” and the “7.0 Clinic’s absorption of transition costs not covered by 20.1 above” are related and may be the same money. Do you have anything to back up the “7.0 Clinic’s absorption” figure?

5. Transition Costs. What is the difference between the term “transition costs” you use and the “wind down” costs in the Master Agreement?

6. Pension Obligations. The 2015 E & Y LHA Financial Statements in footnote 13 describes the pension obligations of LHA and clearly states: “Included in the Hospital’s salaries, wages and benefits is retirement expense pertaining to the defined contributions plans of approximately $2.5 million …in 2015..” In other words, there is no balance sheet liability or other liability for pensions—that amount has been paid and is zero. Can you substantiate any other pension obligations that weren’t paid already? If so, why didn’t E &Y mention or footnote them in its audit that was not completed until May, 2016?

7. Insurance. The Master Agreement Section 9.12 requires LHA to pay a $2.5M premium (to CCF’s for-profit offshore insurance company in the Cayman Islands) to protect CCF employees, executives and CCF Trustees, but Mr. Butler has heretofore refused to produce any evidence by way of public records that such policy even exists or that the premium has even been paid. That $2.5M premium paid to CCF was to cover all of LHA insurance needs. Do you have any evidence that of any other insurance expenses over the $2.5M that would be considered “transition costs”? If so, why didn’t E &Y mention or footnote these insurance expnses in its audit that was not completed until May, 2016?

8. Tenant Relocation Costs. I am told many relocated tenants that they received nothing to relocate and many tenants were CCF affiliates. What is the amount of tenant relocation expenses?

9. Operating Losses. Per the 12/31/15 audited financial statements EBIDA losses for the year were $8.1M and per the 9/30/15 statement they were $ 4.5M through 9/30/15. So the $4.5M was already taken out of the net assets as of 9/30/15. 8.1 minus 4.5 =$3.6. It is clear there could be only $3.6 M of losses in the 4th quarter of 2015. As we know, the hospital shut down quickly by February 4, 2016 and many employees were let go or reassigned at Christmas---the January, 2016 losses could likely not have exceeded $1.2M. So it appears the maximum total losses from 9/30/15 through the hospital closing would be about $4.8M. How did you arrive at the “10.0 Operating Loss” and what period does that cover? Do you have anything to substantiate that amount.

Thank You.

Brian

This is fascinating. When confronted with hard factual numbers the head of SLH( BriAn Essi) has resorted to rounding errors to substantiate his hundreds of claims on the deck. And it took him a full 24 hours after councilmen Anderson post to come up with "I am preparing a response". Nice.

I find it totally ironic that the "Save Lakewood Hospital" folks have pivoted away from saving a hospital, which they knew was never possible, to "keep Lakewood strong". I'm sorry but Lakewood is strong and will continue to be strong.

The only path forward that keeps state of the art medical care in Lakewood is voting FOR 64. The only thing left at the corner of Belle and Detroit if you vote against 64 is a 5 year law suit and a hole in the ground.

The SLH people could help sway reasonable Lakewood voters if they could simply name the hospital that would open a full service hospital on the corner of Belle and Detroit . Is it UH? Is it Metro? If you sue the Cleveland Clinic into oblivion then it would seem reasonable that they would not want to open a site here in Lakewood. Is it Premier Physcians? Lol. Not likely

Back in August of 2015 I suggested ( and it is documented) that we take the deal on the table and try to negotiate it "up". I was ridiculed by Bridget Condent and other on this site because I was suggesting that we should take our position of limited leverage and try and improve our position. They laughed at me. Now, your entire campaign is based on "getting a better deal". I will take that slogan as an admission that you apologize to me. Thank you Bridget and Brian. And thank you SLH leader and chief spokesperson Lori Allen. Thank you, I accept your apology. (I learned that move from Brian Essi, it's a very lawyer'y thing to do ).

You have my vote against 64 if you can name one hospital that will invest and open a full service hospital on Belle and Detriot. I can't wait for your response. Which hospital system will it be? Or is this about law suit $$$$ and not healthcare?

As a side question, how many people actually come to the Deck that haven't made up their mind on issue 64? My is guess is zero. So my post above has likely fallen on deaf ears. That's ok. No biggie.

VOTE FOR 64. It's the only path forward that keeps Quality Healthcare in Lakewood.

Patrick Wadden wrote:I find it totally ironic that the "Save Lakewood Hospital" folks have pivoted away from saving a hospital, which they knew was never possible, to "keep Lakewood strong". I'm sorry but Lakewood is strong and will continue to be strong.

What evidence do you have the "Lakewoood is strong and will continue to be strong"?
City Hall loves to trumpet our increased housing assessments. The Mayor's budget plan is to use increased property tax collections from homeowners to offset the loss of the hospital (see his debate on Cleveland.com).
As we already learned in 2008, the real estate market is fickle...when the next recession hits we're going to have a problem. (side note: If Trump wins, that will be on November 9). The declining perception of our schools, which I personally think is unfair, will erode our real estate values going forward.
The growing reliance on residential property tax to fund the city and schools will increasingly burden homeowners in the future. Our tax rate here is already extremely high, and it will need to go higher to sustain city services.


The hospital loss also fuels the already-widespread perception of Lakewood as a "declining suburb", which is losing people and assets to the "growing" outer suburbs such as Avon.
City Hall can continue to yell "Solstice Steps" all it wants, but this growing perception will impact housing values.

Patrick Wadden wrote:Back in August of 2015 I suggested ( and it is documented) that we take the deal on the table and try to negotiate it "up". I was ridiculed by Bridget Condent and other on this site because I was suggesting that we should take our position of limited leverage and try and improve our position. They laughed at me. Now, your entire campaign is based on "getting a better deal". I will take that slogan as an admission that you apologize to me. Thank you Bridget and Brian. A

Your position has consistently been "The Clinic will outspend and outlawyer you", which means "bow down and do what they say". Many of us believe in fighting for justice and fighting to keep our assets.
Some folks are like Captain Kirk, while others are like Dr. Smith on "Lost in Space". Oh the pain, the pain.

Patrick Wadden wrote:And thank you SLH leader and chief spokesperson Lori Allen.

Lori has complained about SLH even more than you. In fact, I bet she's ready to post something about my earlier "Trump" reference.

Patrick Wadden wrote:As a side question, how many people actually come to the Deck that haven't made up their mind on issue 64? My is guess is zero.

Again with the Deck-bashing. If this were true, then why did Anderson post this thread?

Patrick Wadden wrote:You have my vote against 64 if you can name one hospital that will invest and open a full service hospital on Belle and Detriot. I can't wait for your response. Which hospital system will it be?

City Hall continues to hide critical information, so how can you expect private citizens to bring a new operator here during this campaign? An open bidding process is needed...and has never occurred.

Back in August of 2015 I suggested ( and it is documented) that we take the deal on the table and try to negotiate it "up". I was ridiculed by Bridget Condent and other on this site because I was suggesting that we should take our position of limited leverage and try and improve our position.

You joined here October 2015.

Let's see your documentation.

Patrick Wadden wrote: You have my vote against 64 if you can name one hospital that will invest and open a full service hospital on Belle and Detriot. I can't wait for your response. Which hospital system will it be? Or is this about law suit $$$$ and not healthcare?

Mr. Wadden,

Mr. Anderson's presentation is new to me--I am trying to understand his "accounting"--I have 30+ years working in economics, finance and accounting matters and I want to understand his unorthodox way of presenting numbers you somehow accept as "hard facts" before I carefully present my facts. This is not a matter of rounding errors as you will see if Mr. Anderson can back up his numbers.

To answer your question above:

Without advertising, solicitation, or and an RFP, there is at least one--Surgical Development Partners --see below.
Will you honor your word and pledge to Vote Against 64?

A simple yes or no will do.

Michael Deneen wrote:

Patrick Wadden wrote:You have my vote against 64 if you can name one hospital that will invest and open a full service hospital on Belle and Detriot. I can't wait for your response. Which hospital system will it be?

City Hall continues to hide critical information, so how can you expect private citizens to bring a new operator here during this campaign? An open bidding process is needed...and has never occurred.

For my understanding, what is SL's plan if the vote goes your way on November 8th? On November 9th begin a "wait and see" campaign to see if anyone is interested in the hospital? Or what is the plan for November 9th on for SL?

Corey Rossen wrote:For my understanding, what is SL's plan if the vote goes your way on November 8th? On November 9th begin a "wait and see" campaign to see if anyone is interested in the hospital? Or what is the plan for November 9th on for SL?

Corey

Not a a member of SLH, or BL, or whatever, but...

I would think we see where they lawsuit falls, right now it has received positive ruling after positive ruling, and is uncovering more and more daily.

It is my understanding that CCF could be made to pay damages, and/or LHA.

That could, I stress could, give the community as much as $350 million.

This is why the City's stance makes no sense. Of course the money would go to the city, not a private yet unformed or named group.

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Jim O'Bryan wrote:
I would think we see where they lawsuit falls, right now it has received positive ruling after positive ruling, and is uncovering more and more daily.

.

Okay, how far off is that? How long will the wait be? What do you mean by "positive ruling?" What will come from a "positive ruling" and how far off will that come? What happens in the meantime?

Jim O'Bryan wrote: It is my understanding that CCF could be made to pay damages, and/or LHA.
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Is this just your concocted pipe dream to receive money as part of "your understanding?" Where do you suspect this money go within the City? Will it help open a hospital or reopen the old hospital? What will it pay for? In "your understanding" what is your guess?

Let me get this straight. In response to a post where a public official misrepresents and can't explain the economics of a governmental transaction which does not account for the dissipation of $128M of public assets, the question is asked: What do we do if the voter say this stinks and we don't want it?

Is that the question the PR gurus are posing to run from the bad facts exposing a corrupt "deal"?

Brian Essi wrote:Let me get this straight. In response to a post where a public official misrepresents and can't explain the economics of a governmental transaction which does not account for the dissipation of $128M of public assets, the question is asked: What do we do if the voter say this stinks and we don't want it?

Is that the question the PR gurus are posing to run from the bad facts exposing a corrupt "deal"?

2889FC02-E805-4465-AB49-5FF9E3223FE5.JPG

Please don't interfere with questions unless you have answers, or simply answer the questions - don't derail. This is what has been told to me so this is what I am to expect in return.

How's this for an idea of the disposition of any settlement-----First of all, Lakewood Hospital was built and made valuable with Lakewood community resources over the course of a century. It is certainly unclear as to the possibility of any kind of substantial hospital in the future. And, yet how could any settlement be returned to the community that it belongs to?
First and foremost it can't be put in the hands of a city government or zombie hospital foundation that was responsible for losing it in the first place.
One investment that the Lakewood community as a whole needs is investment in sewers to the tune of 200 to 300 million dollars. This is a community wide and therefore equitable need or condition.
Therefore, I would propose that any settlement be put under the jurisdiction of a court appointed trustee with the sole purpose being the expenditure of funds to the sewer infrastructure.
It might not sound really exciting but I can't think of any other responsible way to equitably and fairly return money assets back to the Lakewood community that generated them originally.
Stan Austin

This whole LH debacle is just another case in many throughout history of the danger of government that Washington was attributed as saying, "Government is not reason, it is not eloquence — it is force. Like fire it is a dangerous servant and a fearful master; never for a moment should it be left to irresponsible action." Unfortunately, the LH fiasco is just one incident of City apparatchiks misspending our money. I'm still perplexed how St. Ed's still manages to be one of the best schools in the nation and yet has not needed a brand spanking new building; many of the windows on the front of the school seem to be original. Yet the public schools in the area are in the habit of needing a new building every 8-10 years. The incestuous relationship with the City and area businesses is also suspect. I'm sure it was complete coincidence that Siley lands a job at Liberty Development almost immediately after they received the deed to the former McKinley school site. So shady...

What this City needs is a comprehensive, third part forensic audit! I would consider that an excellent investment!