South Lake Hospital sold to Orlando Health — what does the community get in exchange?

12 Dec

The remaining 50 percent of South Lake Hospital that was owned by the community recently was “sold” to Orlando Health, the nonprofit Central Florida hospital conglomerate that has been affiliated with the Clermont hospital for more than 30 years.

Is this good or bad for the community? That depends.

If the sale of the public’s remaining interest in South Lake Hospital, which has 170 beds and more than 1,500 employees, turns out to be a canny exercise in finding another revenue stream for hospital expenses, then the community gets nothing.

However, things could turn out very differently, and South Lake might find itself getting goodies it doesn’t now have, such as a mini-Winnie Palmer Clinic for women and babies.

But first, let’s look at how this confusing “sale” operates.

In 1969, the South Lake Hospital Tax District was created to help provide quality health care, establish an emergency room and provide ambulances services to anyone sick or injured in a community that couldn’t support that level of health care on its own.

Over the last few years, the rate at which the district taxes landowners has fallen, and the amount for the current year is about 64 cents for each $1,000 in taxable property value. That means a family with a home worth $200,000 after exemptions would pay $128 — $10 less than last year — in taxes. All the money collected goes to the hospital.

So, over the years, taxpayers have invested literally hundreds of millions in helping the hospital to grow, and their interest is held by a corporation called the South Lake Memorial Hospital. That’s what it was called before Orlando Health, which operates Orlando Regional Medical Center and several other hospitals, bought half.

Proceeds of the sale in 1995 went into the South Lake Community Trust, which then began taking applications and dispensing grants to worthy nonprofits in the community, most of which have nothing to do with health care.

Last year, the hospital district taxing authority in a small miracle decided to stop collecting millions and simply handing it over to the hospital. That’s about the same time Orlando Health, which runs a $3.4 billion operation with 2,400 employees, started talking about trying to acquire the other 50 percent of the hospital.

Eventually the two came to an agreement for $128 million. Orlando Health takes full control of the board of directors and deposits the money into a new foundation being headed by Kasey Kesselring, who is the headmaster at Montverde Academy by day.

Kesselring said that two other board members from the taxing district are the nucleus of a board of directors for the new Live Well Foundation of South Lake, which will be the recipient of the $128 million. That amount is expected to provide the foundation $5 million to $6 million annually to dispense into the community to nonprofits.

Orlando Health also agreed that the community gets to keep South Lake hospital dollars in south Lake and to make capital improvements costing $99 million to $100 million in the next five to seven years. The hospital must keep current management for three years.

“I see it as a win for the community. People seeing it from the inside, I don’t think they’re going to see much of anything different,” Kesselring said. “And certainly not in a negative way.”

So the big question is whether this new foundation will be simply a lackey for the hospital, handing over millions a year.

“We wanted to have an arm’s-length business in the sense that it’s not controlled by the hospital,” Kesselring said. “The hospital would have to make a grant funding request for whatever project they’d like to do.”

He said he expect “any number” of funding requests that involved health and wellness but are not from the hospital.

“I can’t imagine that our sole existence is to make grants to the hospital,” he said.

Kesselring said he expects that the foundation might fund research and development or do something as simple as paying for the needs of cancer patients.

As time passes, south Lake residents will see how it all plays out.

This article was originally published in the Orlando Sentinel.

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