Lee Health board to vote on business structure conversion measure

When the Lee Health board of directors gather for a special meeting this week, they are expected to vote to approve a new business structure for the health care system, converting it from a public nonprofit to a private nonprofit. This could mean some major changes in how it operates and how health care is delivered in Lee County. 

A “yes” vote from the board at the meeting scheduled for June 13 will start the clock on 120 days for the Lee County Board of County Commissioners to decide whether to accept the recommendation and enter into a binding mission agreement with Lee Health to operate under the new structure. Commissioners would have until mid-October to make its decision. 

The citizens of Lee County own and operate Lee Health through the board of directors, serving as the “safety net” hospital system for the uninsured and others unable to pay. Last year, it provided $150 million in charity care/community benefit. The system, which currently has a $3 billion operating budget, maintains the safety net provision would remain in effect in perpetuity in the case of a conversion to a private nonprofit structure and that this would be codified in the final agreement with the county. 

A transition to a nonelected board not subject to state’s Sunshine Law requiring public meetings and public records of meetings leads to questions about how a planned oversight committee would provide accountability to the citizens of Lee County. 

Financially, the system’s 10-year projections starting in 2025 show growth of more than $1 billion in that time under a conversion, according to an April board presentation by Chief Financial Officer Ben Spence. In the short term, Spence said the system could lose about $60 million in supplemental payments related to being a Federally Qualified Health Center even though it will continue serving its safety net mission. 

Another key change that could have long-term implications would be Lee Health’s loss of sovereign immunity, which limits negligence lawsuits and caps damages awards, because it would no longer be a public entity. 

Concerns raised by community watchdog 

The road to a possible conversion was paved by state legislation passed in February. The enabling legislation did not include a provision requiring a public vote but left the decision up to the health system’s board and, ultimately, the Lee County Commission. 

But while the current publicly elected Lee Health board prepares to vote, longtime Lee County educator and self-described community watchdog Steve Maxwell is expressing concern that the public is not being given a chance to weigh in on the future of a public asset that is the largest employer in the county and one of the largest public health care systems in the country. 

Last week, Maxwell sent local media an opinion piece he authored calling the current process a “breach of the public’s trust” and said he is preparing a petition to present to the Lee County Commission asking that a public referendum be scheduled. 

A draft petition shared by Maxwell says in part: “The referendum that we are requesting would authorize holding an election giving the registered voters of Lee County the opportunity to vote to accept or reject the Lee Health Board of Directors’ decision to convert [depending on the outcome of the June 13 vote] from a public nonprofit health system to a private nonprofit health system.” 

Maxwell said his main concern is that “the public has kind of been put as the caboose, if you will, in this whole issue. We’re in the back seat. We’re the last car in the train in the lack of being informed right off the bat of this initiative. And they wrote a bill that precluded the right for the public to be able to vote on the issue: a referendum was not included within the bill.” 

Lee Health held a series of town halls and public hearings in addition to their public board meetings designed to inform the public about the possible change in the system’s business structure. But Maxwell expressed concern in his opinion piece that the forums were scheduled at times when many people would be working. 

“Most of the meetings have been held late afternoon [4:30 p.m.] when most people are getting off work and/or still working,” Maxwell wrote. “As far as public hearings before their Board, their meetings are held at 1 p.m. twice a month on Thursdays. The public has three minutes to speak before the Board they elect.” 

Lee Health responds to public concerns 

Asked about concern over the lack of a public referendum, Lee Health President and CEO Dr. Larry Antonucci said the enabling legislation did not require a public vote because the health care system does not collect a tax. 

“It was very clearly and completely discussed in deliberations regarding this and what the Legislature established was that a referendum was not necessary,” Antonucci said. “One of the things that they had put forth in the general bill that was passed was for a referendum if a special district collects a tax [from citizens]. In other words, if the public supported a special district with a tax, then a referendum would be indicated. But if not, which is our case—we do not have tax authority—then a referendum would not be necessary and the board, acting on behalf of the citizens, could make the decision to convert to a private not-for-profit. That is also consistent with current state law regarding a sale. The board of directors could vote to sell the system without any referendum support. So, it was really related to those two things, where the Legislature felt that a referendum was not indicated because the power is in the hands of the board. And that’s the way it has been since the enabling act was initially written in the 1960s.” 

Lee Health District 1’s Therese Everly and District 3‘s David Klein were the only board members to respond to questions from Gulfshore Business about any concerns they may be hearing from the public regarding the potential conversion or any concerns they may still be addressing for themselves prior to the vote. 

Everly, who has served on the board since 2014 and whose term expires this year, said she has been hearing from the public—and not just in District 1, as members are elected at large. 

Therese Everly

“The feedback that I have been getting is that they’re just now hearing about the conversion,” Everly said. “They were unaware of it. The enabling legislation said we had to have one hearing. The board felt that one public hearing wasn’t enough, so we had town halls on top of that, and then a subsequent public hearing after we received the recommendation [from consulting agency Kaufman Hall]. Unfortunately, they were not very well attended. And when you look at the amount of people in Lee County and the amount of people that showed up—maybe 15 to 30 people at some of these town hall meetings—it’s not a surprise that people are just now hearing about it.” 

Everly said that for some who attended the town halls and public hearings, access to services and the safety net mission were topics that arose. She shares some concern about how the safety net commitment across current service lines would be preserved in any final agreement with Lee County. 

She is concerned whether the draft mission agreement verbiage “is sufficient enough” to cover those safety net services in perpetuity. 

“For example, Lee Health is the largest obstetrics-gynecology provider in the area,” Everly said. “We provide safety net OB-GYN. We know in the state of Florida there are OB-GYN deserts, and nationally, that’s a trend. So, to be able to provide OB-GYN services in perpetuity to the people of Lee County, as it currently is, would be important to me. The current [mission agreement] draft doesn’t spell that out. The current draft states ‘women’s health.’” 

Asked whether all current service lines, including OB-GYN, would be covered in perpetuity under safety net status in the event of a conversion, Antonucci said he does “anticipate that all those services would continue.” As for what “women’s health” encompasses in the draft mission agreement, he said “Women’s health does speak primarily to OB-GYN, but also to women’s cardiac health and other areas of that type of care, so it is a little bit broader than simply OB-GYN.” 

On May 23, in a town hall meeting with the Lee Health medical staff, Antonucci addressed the general safety net issue with the physicians on the call, saying “We would enter into a binding agreement with the county to provide safety net status in perpetuity.” 

Antonucci was asked about accountability under a new board structure under a conversion, the impact and possible repercussions of the removal of sovereign immunity under a new structure and the expected loss of approximately $60 million in supplemental payments in the event of a conversion. 

Regarding a potential new board structure and a switch from public meetings to closed meetings, Antonucci said an appointed oversight committee “would be tasked with evaluating every year whether we as a system have met the obligations set forth in the agreement with the county. And the bylaws would state clearly what our mission and vision would be, and I think, in addition to that, it will be pretty apparent what we’re doing as a system and the investments we’re making. There will be a community needs assessment and a community benefit assessment that will continue to be done every year… So, I think the citizens would be aware of what we’re doing and how we’re doing it through those reports.” 

Antonucci said the system would still be subject to all current review processes and “all the regulatory things that apply to hospitals, such as the other safety nets in Florida, like Tampa General Hospital and Orlando Health, other private safety nets. We would be subject to the same scrutiny and regulatory oversight that they would.” 

David Klein

Klein said accountability will remain a priority.  

“There is still a board [under a conversion],” Klein said. “You [citizens] don’t get to vote for them. But I would ask you, on a down-ballot election, how many people really know those candidates? How many people actually know it’s an elected board?  

“What we’re proposing in this with the county is we would have an oversight monitoring board made up of three professionals… and we would make annual reports to that group. When I looked at the deal, I’m elected to the board with an accountability to make decisions for the community—I take that very, very seriously. I’ve probably been to 40 meetings on this subject.” 

As for the potential $60 million loss of supplemental payments, Antonucci said the range could actually be lower or higher than that, since those payments are “moving targets” to Federally Qualified Health Centers. 

“They’re not something that you could actually count on,” he said, “so any estimation of what we might lose in supplemental payments is just that—it’s an estimate—because those programs change from year to year. And in fact, every year you’re fighting for the supplemental payments; there always seems to be a battle to either eliminate or reduce them. But the bottom line is that whatever supplemental payments we may forego, we feel confident that as we move forward our ability to compete more effectively with regard to being able to operate on a more regional basis, being able to explore other business ventures that now we’re restricted in doing, such as joint ventures with physicians and others, that we will be able to overcome any of these short-term considerations.” 

Klein also said short-term losses will be made up under a new business model.  

“There are all sorts of government monies,” he said. “There are monies that we receive which we no longer would receive. Revenues in the margins of what we would see [under a new structure] would far offset the short-term losses.” 

When it comes to the potential loss of sovereign immunity, Antonucci was asked if the possible financial impact of larger lawsuit amounts could change the system’s commitment to keeping all current medical service lines. 

“We don’t anticipate that,” he said. “We’ve done some work with our insurance carriers to do analysis on what the impact would actually be on the loss of sovereign immunity. Right now, we’re protected by sovereign immunity as a public entity, but we carry insurance over and above our sovereign immunity limits. So, what it would mean is that we would just extend our coverage, the limits that are a little bit lower than what we carry now. The important thing is that our staff, whether it’s nursing staff or clinic staff or medical staff, would always be held harmless and would never suffer any financial consequences of any claim against them or the system as long as they’re employed by us. So, for them, it would be a pretty transparent process. The cost that we anticipate from increasing our insurance coverage would be about $5.4 million. So, again, we feel confident that we could absorb that without any significant impairment of services or change in what we’re doing operationally.” 

The special meeting of the Lee Health board of directors is open to the public and will take place at 1 p.m. June 13 in the Gulf Coast Medical Center Board Room, 13685 Doctor’s Way in south Fort Myers. The public can also access the meeting remotely via teleconference.  

Gulfshore Business Senior Editor David Dorsey contributed to this report.