Adventist Health, CEO Don Jernigan

After Bert Fish Medical Center Disappointment, Florida Hospital Regroups

Talk about a tough first quarter.

On Feb. 22, Health Central chose to merge with Orlando Health instead of the Adventist Health System. At the time, speculation swirled that Adventist Health’s legal woes with Bert Fish Medical Center might have been a sticking point in the decision-making phase.

Two days later, Adventist Health was dealt another blow when Circuit Judge Richard Graham nixed the proposed merger twice-approved by the Southeast Volusia Hospital District board between the public New Smyrna Beach hospital and Adventist Health. Instead of appealing the ruling that board members had violated the Sunshine Law by hosting closed meetings about the 112-bed hospital that resulted in the May 2010 approved union, the nation’s largest not-for-profit Protestant healthcare provider walked away.

“We disagree with the ruling and believe there are compelling grounds to appeal this decision,” said Adventist Health CEO Don Jernigan, whose board attorney Mayanne Downs advised that grounds for appeal were “as strong as I’ve seen in 25 years.” But “we determined the uncertainty and instability that would exist during the appeals process wouldn’t be beneficial to the hospital, our employees or the community. It’s in the best interest of Bert Fish Medical Center that we honor the court’s ruling rather than continue the litigation.”

The Bert Fish Foundation, the philanthropic organization that gifted the hospital to the public in 1966, filed suit against the merger last August on the basis that the deal was made behind closed doors. As a result, the district board reiterated the acquisition search process and on Nov. 9, Adventist Health’s bid was chosen over government-owned Halifax Health in Daytona Beach and for-profit Health Management Associates (HMA) in Naples.

Adventist Health has leased and operated the hospital since July 1, 2010 while the district has maintained ownership of the physical building and equipment. Adventist Health pledged to make an $80 million investment in Bert Fish to boost cash flow and attract more patients with private health insurance. In return, Adventist Health had a lease arrangement with an option to buy the medical center in five years, and had projected a 15 percent tax reduction for residents in the first year.
At the heart of the controversial collaboration are several issues.

First, the Southeast Volusia Hospital District is unique. It’s one of few special tax districts in the state charged with levying the taxes that support the hospital’s indigent care. The board is comprised of seven governor-appointed commissioners. The spate of recent litigation has spurred local healthcare leaders to call for action ranging from a total board purging to new appointments for three board members whose terms have expired.

Second, the board has initiated several property tax hikes for Edgewater, New Smyrna Beach, Oak Hill and a portion of Port Orange to support indigent care. Foundation lawyers said Bert Fish was overcharging taxpayers for indigent care.

Third, there’s a question about the role of former Bert Fish CEO Bob Williams in the closed door process. Graham noted that Williams and the hospital district's lawyer, Jim Heekin, had personal financial reasons to merge with Adventist Health the second time around. (Ed Noseworthy, a nearly three-decade veteran of Adventist Health, replaced Williams as CEO on Jan. 2.)  

Halifax Health and HMA have expressed a desire to discuss a third round of partnership talks for Bert Fish. Adventist Health spokesperson Christine Stewart said the health system would be interested in participating “only if our selection wouldn’t result in another dispute.”

In the departure schedule outlined to Graham in late March, Adventist Health outlined plans to exit the 600-employee medical center by the end of June and return control to the Southeast Volusia Hospital District. Stewart said the transition shouldn’t affect payroll very much. “Bert Fish employees all remained Bert Fish employees during this short duration,” she explained. “A few of the c-suite individuals became AHS employees, but they’ll be put back on the Bert Fish payroll before the departure. Ed Noseworthy will remain there during this time but will no longer be there after the departure. Though we’re disappointed by this outcome, our priorities now are to focus on deploying our exit strategy with each individual work unit in an efficient and timely manner to protect both Adventist Health System assets and seamlessly transition Bert Fish Medical Center operations.”

Daryl Tol, market CEO for the Volusia/Flagler region of Adventist Health, continues to rally the troops. “The team at Bert Fish Medical Center has endured challenging and uncertain times these last few months,” he said. ”We’re unequivocally committed to the citizens of this community.”

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