The Observation Deck

Buried somewhere in the discovery process are statements by the Mayor that the City did not do any financial analysis of the Hospital closure.
There was no appraisal of assets,
no appraisal of real estate except for the bespoke appraisal of the Columbia Road property,
no appraisal of other Hospital assets,
no appraisal of the going concern value of the Hospital,
no financial analysis of the economic effect of the Hospital closing,
no analysis of Metro’s offer and
no analysis of the Clinics offer
no analysis of the City’s beneficial interest in the Lakewood Hospital Foundation

The only hint we have of any consideration of the financial aspects of the deal is the statement by Subsidium that there was no material benefit to the Community in the Clinics offer.

I’m going to go out on a limb and state that I am sure that the Cleveland Clinic did a lot of financial analysis. That would explain why they reported a substantial gain as a result of the closure of Lakewood Hospital.

One small part of the Clinics analysis probably included the cash flows provided by ambulance service.

I have a copy of a recent EMS bill from for transportation from Lakewood Hospital to Lutheran Hospital in the amount of $835 from Donald Marten and Sons.

In another post Jim O’Bryan reported that there were 5,387 calls to or from Lakewood emergency room. That’s potential revenue of $4.5 million. How many more calls were there that were not included in the 5,387? Does the Cleveland Clinic get a piece of that action?
How much more will the people of Lakewood pay for EMS services now that they are being transported out of town instead of being treated at Lakewood Hospital?



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As we think about direct impacts to the revenues and expenditures of the City of Lakewood we can identify three specific changes:

1. Loss of current and long-term lease revenues paid to the city under the contracts with Lakewood Hospital Association;

2. Loss of current and long-term employee income tax revenues from the closure of the hospital that will only partially be off-set by future employee taxes at the new medical office building under construction;

and,

3. Increased costs related to EMS operations.

There may be other direct impacts that I am unaware of. For example, you have identified a $2.5 million wind-down cost related to new parking facilities. I need to double check the Master Agreement to confirm whether this is a city cost or a non-city cost.

At the time the Master Agreement was adopted, the lease for the hospital had another decade to run. Obviously, any opportunity to lease Lakewood Hospital on a long-term basis after 2026 has also ended.

Future direct revenues to the City of Lakewood on the order of tens of millions of dollars have been permanently foreclosed though a private, but conflict-tainted, process that essentially has transferred (or will transfer) the vast bulk of the assets of Lakewood Hospital to private third-parties.

This post does not even attempt to address the indirect losses to the city and the community. They are substantial and others have written about them.

Bill Call wrote:Buried somewhere in the discovery process are statements by the Mayor that the City did not do any financial analysis of the Hospital closure.
There was no appraisal of assets,
no appraisal of real estate except for the bespoke appraisal of the Columbia Road property,
no appraisal of other Hospital assets,
no appraisal of the going concern value of the Hospital,
no financial analysis of the economic effect of the Hospital closing,
no analysis of Metro’s offer and
no analysis of the Clinics offer
no analysis of the City’s beneficial interest in the Lakewood Hospital Foundation

The only hint we have of any consideration of the financial aspects of the deal is the statement by Subsidium that there was no material benefit to the Community in the Clinics offer.

In two separate public interest lawsuits, the city administration could not (or would not) produce documents that would show that the city had done any basic financial work on the impacts to the City of Lakewood on the liquidation and closing of its hospital.

Aside from increased EMS costs, Mr. Call has identified fundamental problems of competence (or, more likely, incompetence) on the part of the city leadership. The city administration had three years (2013-2015) and two separate consultants to figure this all out, but, at the end of the day, the city has no documents than would establish any sort of competent review of the effects of the hospital closure on the city itself.

There also seems to be a bad faith aspect to this as well considering that all the work of the public trustees of the Lakewood Hospital Association and the consultants was directed at supporting the closure of the hospital irrespective of potential negative affects on the financial well-being of the city itself (and irrespective of other viable proposals to operate the hospital as a going-concern.)

And, on top of that, the city then funded a public relations campaign to promote the interests of LHA in closing the hospital.

The interests of the sole member of LHA were carefully looked after; the interests of the City of Lakewood, well, not so much.

Others (Mr. Essi) have previously written about the city's lack of its own LHA-related documents.

If basic financial analytical documents exist about the economic or financial impacts of the closure of Lakewood Hospital on the city and its finances, I would encourage the city administration to post them on the city website forthwith. Lawyers have not been able to obtain them (as far as I can tell). Or, what they have obtained so far, demonstrates a kind of willful incompetence on the part of the city administration.

In fact, one of the documents used by the city in the Skindell v. Madigan used erroneous numbers to describe the financial benefits to the city. These figures were later corrected substantially in a subsequent document used in one of the other public interest cases.

The city leadership has both a competency and a credibility problem that no public relations effort will ever be able to mitigate.

Mark Kindt wrote:

Bill Call wrote:Buried somewhere in the discovery process are statements by the Mayor that the City did not do any financial analysis of the Hospital closure.
There was no appraisal of assets,
no appraisal of real estate except for the bespoke appraisal of the Columbia Road property,
no appraisal of other Hospital assets,
no appraisal of the going concern value of the Hospital,
no financial analysis of the economic effect of the Hospital closing,
no analysis of Metro’s offer and
no analysis of the Clinics offer
no analysis of the City’s beneficial interest in the Lakewood Hospital Foundation

The only hint we have of any consideration of the financial aspects of the deal is the statement by Subsidium that there was no material benefit to the Community in the Clinics offer.

In two separate public interest lawsuits, the city administration could not (or would not) produce documents that would show that the city had done any basic financial work on the impacts to the City of Lakewood on the liquidation and closing of its hospital.

Aside from increased EMS costs, Mr. Call has identified fundamental problems of competence (or, more likely, incompetence) on the part of the city leadership. The city administration had three years (2013-2015) and two separate consultants to figure this all out, but, at the end of the day, the city has no documents than would establish any sort of competent review of the effects of the hospital closure on the city itself.

There also seems to be a bad faith aspect to this as well considering that all the work of the public trustees of the Lakewood Hospital Association and the consultants was directed at supporting the closure of the hospital irrespective of potential negative affects on the financial well-being of the city itself (and irrespective of other viable proposals to operate the hospital as a going-concern.)

And, on top of that, the city then funded a public relations campaign to promote the interests of LHA in closing the hospital.

The interests of the sole member of LHA were carefully looked after; the interests of the City of Lakewood, well, not so much.

Others (Mr. Essi) have previously written about the city's lack of its own LHA-related documents.

If basic financial analytical documents exist about the economic or financial impacts of the closure of Lakewood Hospital on the city and its finances, I would encourage the city administration to post them on the city website forthwith. Lawyers have not been able to obtain them (as far as I can tell). Or, what they have obtained so far, demonstrates a kind of willful incompetence on the part of the city administration.

In fact, one of the documents used by the city in the Skindell v. Madigan used erroneous numbers to describe the financial benefits to the city. These figures were later corrected substantially in a subsequent document used in one of the other public interest cases.

The city leadership has both a competency and a credibility problem that no public relations effort will ever be able to mitigate.

Before we return to the topic of increased EMS costs, here is another document that illustrates this fundamental lack of competence. It's another consultant report that was commissioned by the city administration and artfully informs the city administration of its largest employers. I was happy to read that the Cleveland Clinic is still our largest employer and that RTA has moved its headquarters to Lakewood! So now, we've had 5 years (2013-2017) and three consultant reports to get this right and it all still has that wonderful feel of the "bogus".

In an epic case of closing the barn door after the cattle have left the ranch, we learn of the launch of another study that I will call "Study No. 4".

http://www.cleveland.com/lakewood/index ... or_da.html

Before this study is even completed, I will suggest some findings.

1. Most municipalities in Ohio fight to prevent the loss of hospital services.

2. In Lakewood, we reject the one major proposal to save our hospital and then years later begin to study the city's healthcare needs.

This is now an utter absurdity.

You be the judge.

Mark Kindt wrote: There may be other direct impacts that I am unaware of. For example, you have identified a $2.5 million wind-down cost related to new parking facilities. I need to double check the Master Agreement to confirm whether this is a city cost or a non-city cost.

From the Master agreement:
2.2 (a) …..The parties agree that the wind down costs ….. shall include $2.5 million to fund the construction of such structure (parking facility) and the work contemplated by the parking lot lease.

Wind-down costs are paid by the LHA to the extent of all LHA assets. Since all LHA assets are City assets all wind-down costs are paid for by the City. LHA and Mayor Summers were very careful to hide the true extent of the City’s liability.

3.3 (a) LHA will receive all revenues and incur all expenses, whether direct or allocated, associated with the continued existence and operations of the LHA between the effective date and the final dissolution of the LHA.
That section makes the City liable for all losses of the LHA up to the total value of LHA assets. The really clever word is “allocated”. Allocated costs are the Clinics overhead costs listed as “administrative services”. The administrative services charged to Lakewood are unrelated to revenue or patient load. They are whatever the Clinic says they are.