June 21, 2024
Lee Health weighs recommended conversion

Fort Myers-based Lee Health—one of the largest public hospital systems in the country—continues to weigh the benefits and drawbacks of converting from its current model to a private nonprofit model, based on recommendations from the consultants the system hired in late 2023. As the system’s board of directors prepares to vote this month on potential next steps to recommend to the five-member Lee County Board of County Commissioners, a petition circulated in late April by a local physician asks Lee Health to provide additional financial information before any final decisions are made.

Lee Health’s case for conversion

As reported in Gulfshore Business’ April issue on health care in Southwest Florida, for its first 50 years Lee Health operated as a private nonprofit health system before changing in 1968 to an independent special health care district created by the Florida Legislature and governed by a publicly elected board of directors.

In late 2023, Lee Health retained Chicago-based consulting firm Kaufman Hall to evaluate by February 2024 a possible conversion back to a private nonprofit model. Late that month, Kaufman Hall issued a report recommending that Lee Health “continue with the conversion process,” which started the clock on 120 days (set to end around June 20) for the system’s board of directors to evaluate “the potential benefits of the strategic and operational opportunities” of the conversion. Lee Health also solicited community input through a series of public hearings this winter and spring.

Dr. Larry Antonucci, president and CEO of Lee Health, told Gulfshore Business prior to the Kaufman Hall report that the conversion would make it possible for the system to “compete on an even playing field” in the face of increasing competition overall in the community for health care. Antonucci said at the time that by converting back to a nongovernmental not-for-profit, the system would be more of a regional presence, with the opportunity to work outside Lee County and form joint ventures or partnerships—while retaining its “safety net” status for patients unable to pay. He said if the structure does change, the system would enter into an “enforceable agreement” with Lee County to ensure continued provision of care.

What does Antonucci see as the primary benefit to the community if the recommended conversion goes through? In a late April interview for an update on potential next steps, he said that in addition to maintaining the safety net status, he sees the ability to “maintain local control” as a key benefit, along with the ability to operate outside Lee County—which he called critical in the face of increasing competition.

“We’re not concerned about competition,” he said. “We’re confident that we’ll be the provider of choice, but if we’re going to have competitors from the north, from the south, from other places in the state who can operate on a regional basis, we want to be able to do the same. The issue is continuing to be the safety net provider and doing so with local control, and we don’t ever want to be put in a position where the financial situation forces the board to consider a sale … where the system has to be sold to an out-of-town entity, or especially a for-profit entity that would put profits ahead of patients. More narrow than that would be the ability to provide care in communities that we can’t provide it in now because of our restrictions as a public entity, our Lee County restrictions.”

Antonucci said the Kaufman Hall report indicated that 20% of the system’s patients are currently coming from outside Lee County.

“This (the conversion) would allow us to serve them more closely to their own homes, with less commuting for them, and [we would] also be able to expand our offerings,” he said. “And any time you can do that, and you can increase your volumes, you usually will increase quality when it comes to many surgical and other types of procedures. To me, those would be among the main benefits to the community: The continued viability of the system and the ability to provide care in a broader way.”

Lee Health reported almost $3 billion in operating revenues in fiscal year 2023.

Concerns raised by longtime local physician

With the Lee Health board still considering its next move based on the Kaufman Hall report and its recommendations, one longtime local physician raised concerns this spring about the potential conversion, and asked the system to provide more transparency about the system’s assets.

At one of the town hall meetings in late April, Dr. Raymond Kordonowy, who has practiced internal medicine in Fort Myers since 1993, presented a petition to the system’s board asking for an “asset assessment” prior to any decision being made about the potential conversion.

In an interview with Gulfshore Business in early May, Kordonowy discussed the petition and his concerns about the possible implications for local physicians.

“What I’m asking is that the board be fully informed of its options, and … an actual inventory of our [public] resources and how they might be redeployed,” Kordonowy said. “Maybe the answer is, if you want to stick to the charter, is to stay as a public entity and possibly even sell some of the assets, because it would be better for the community to have competition choice and more affordable care. And the question is: How big of an asset is this? We don’t know, and we’re being asked to just hand this over.”

He said he also is concerned that Lee Health, as the only hospital system in Lee County, has “significantly impacted the physician community” and that the conversion would allow it to “garnish more control over the physicians.”

“I think that’s bad for the community,” Kordonowy said. “And my other big concern is that I don’t believe the public is aware or informed about how significant of an asset they (the public) own at this time. It bothers me immensely that the board has only accepted whatever has been told to them by the administration, and now they’re being asked to take on this responsibility of dissolving this charter. And I don’t see the board trying to take any kind of contrary opinion on some other options.”

Kordonowy’s petition also says “the proposal of changing governance will disband the requirement of charitable care, as well as increase Lee Health’s geographic reach into the health care sector.”

Asked for a response from Lee Health to Kordonowy’s petition, and specifically concerns raised about the “safety net” requirement, a system spokesperson provided answers in a written statement.

“The petition contains serious misinformation and appears to push for the sale of Lee Health to a for-profit company,” the system statement said. “The Lee Health board of directors is not considering a sale of the health system. It is considering a conversion, which will maintain our safety-net mission and a hospital system serving the local community. 

“The petitioner is suggesting that a valuation of Lee Health be completed.  A valuation would only be necessary if the Lee Health board of directors were contemplating a sale of the health system. There is no consideration for a sale of Lee Health, so there is no need for a costly valuation.”

With regard to Lee Health’s responsibility to provide charity care, the system statement said the assertion in the petition is false.

“In addition to our longstanding and unwavering commitment to the mission of charity care, the enforceable commitment between Lee Health and Lee County will ensure that Lee Health’s commitment to providing charity care will exist in perpetuity,” the Lee Health statement said.

“Lee Health will continue to operate under the mission in which it was founded, providing care to members of our community regardless of their ability to pay with local governance and a commitment to excellence.”

Lee Health’s annual financial audit, along with a draft mission agreement for the potential conversion, is available at LeeHealth.org/LookingAhead. Kordonowy’s full petition is available at moveon.org, and his blog—which contains several posts about the potential Lee Health conversion—is available at raymondkordonowy.substack.com.

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