COULD MASSILLON'S ACQUISITION
OF
AFFINITY MEDICAL CENTER
TURN IN TO A FINANCIAL/POLITICAL DISASTER FOR THE CITY?
(THE QUESTION THAT ONLY THE SCPR ADDRESSES)
Here it is nearly three weeks after a settlement was announced in the lawsuit/counter lawsuit involving the city of Massillon and others as plaintiffs and Affinity Medical Center (AMC, Affinity) and others as defendants and counter complainants and they are still hashing out the details.
Affinity has an interesting history:
One Massillonian in conversation with the SCPR blames part of Affinity's fall into hard financial times:
- on the fact that nurses in 2012 voted to unionize but it was 2014 before a federal judge ordered the Affinity ownership to recognize the union, and
- on it being overstaffed for it being a maximum 156 bed hospital
Hence, the decision to close the facility and the hubbub that developed last month which resulted in litigation which has resulted in a settlement whereby the city of Massillon will become the owner of the facilities/equipment until it can find a buyer.
As The Stark County Political Report sees it, Massillon had/has no alternative but to take whatever deal the Affinity Medical Center owners are willing dish out.
For there was absolutely no way that Massillon et al was going to be able to force AMC to stay open for an additional 120 days let alone time beyond the 120.
In essence, when the nitty-gritty details are ironed out, Massillon will have to take the "whatever" of the settlement and turn it into a positive for Massillon and it citizens.
It occurs to the SCPR that ever since Smith was hired, the fortunes of Massillon have taken a positive direction.
In statements to local media Smith is already signaling that a medical facility in Massillon is not going to be a 156 bed, 800 plus employee operation that AMC was when it shut down on February 11th.
Massillon government is not about to get into the medical provider business. Smith's task is to find somebody, anybody to pay as much of the $25 million valuation as he as a city official can wring out of a would be purchaser."
People can think property is worth $25 million, but the "proof of the pudding" is what what "willing buyer" and a "willing seller" can agree upon.
The SCPR thinks that if Massillon gets 20% or more of the Stark County Auditor's office fair market valuation of the "to be conveyed to Massillon properties;" getting title to the AMC facilities/equipment likely indeed to turn out to be a "stroke of genius."
Persons in a position to know tell the SCPR that there is interest on the part of would be buyers.
Interest is one thing; action in the form of laying cash on the line is quite another.
Notwithstanding one nursing union official's statement that Massillon needs a hospital that puts patient care above profits, you can bet your bottom dollar that no prudent business/business person is going to be willing to sustain losses like Affinity said it did in recent years which promoted the decision to close the facility on short notice (30 days).
What The Report thinks Massillon wants is to get somebody/anybody (medical or not) to buy the facilities for say $2/3/4/5 million or, in a best case scenario, better so that the city can clear away the expenses/debt obligations it begins to incur when the transfer takes place and perhaps add some profit.
Prospective buyers of course know that the city obtained the property free of capital purchase cost in settlement of litigation between Massillon and Affinity.
Moreover, by the time a new medical facility can be recommissioned, even if not opposed by area competing health care facilities (e.g. Aultman/Mercy Medical [who believes that will happen?]) will have to build up a patient base from scratch.
Does any business minded/savvy person really think that once Massillonians who once used Affinity will automatically return on a mere change of ownership factor?
From a political standpoint, Massillon absolutely must not lose money at the end of the day when every financial factor (i.e. selling price minus expenses incurred during closure) is netted out.
The Report is told that the city will have to pay out an approximate $200,000 annually in inherited lease obligation(s) that will only partially offset by lease payments due to Massillon government from tenants of some of the facilities.
Additionally, nobody knows what ongoing utility and maintenance costs will be for "facilities in waiting" for a speculated purchaser.
We do know that Massillon already and will continue during the interregnum to expend more on policing an "empty" facility to ensure that the property is not subject to vandalism.
Also, one must not lose sight of the fact that Massillon is sustaining an annual tax revenue loss (mostly income taxes) to the tune of $600,000.
Perhaps some will not want to factor in the annual $600,000 tax revenue loss in on accounting for the "true" cost of the AMC closure and take over of facilities/equipment by Massillon government, but the SCPR thinks that an "honest" accounting of what Massillon nets out in the end of ridding itself of Affinity needs to factor in lost tax revenue as a consequence of it being closed.
Massillon's tax base will have to increase by a sufficient number of jobs equal to the tax loss or the city will continue to be hurt financially no matter what happens with the hospital complex.
It appears that owning the facilities/equipment/obligation(s), including the tax revenue lost from job loss, could set Massillon back upwards of $1 million in the immediate if not longer term going forward.
The longer the city holds title, the more it seems that it has to get a escalating purchase price, no?
If some enterprise replaces Affinity, then, of course, those tax revenue losses will be lessened going forward. However, it is not likely that Massillon will, anytime soon, be replacing the lost tax revenues. Accordingly, accumulating losses could magnify considerably.
If expenses as mused upon above accumulate while a buyer is sought, then the transaction could indeed turn into the proverbial "white elephant" that likely will have dire political consequences for the mayor (who was "all-in" on the settlement) and council (which voted 9 - 0 for an ordinance approving a settlement).
While city officials are saying there is interest from prospective buyers, that is not good enough.
The longer the space is between city acquisition and eventual sale given away a second time, the more likely it is that what seems to be a "no brainer" (i.e. how could one 'look a gift horse in the mouth') that the acquisition is a certain winner for Massillon finances could in fact turn into "take this off our hands somebody! for we (Massillon government officials) are losing money and we just want to be rid of it."
Just look at the history of Akron's Rubber Bowl which it was just announced will be turn down at city expense of some $400,000 (LINK).
Should the AMC properties to prove to be a "white element" one the most prominent political victims could be Mayor Kathy Catazaro-Perry.
Some Massillonians tell the SCPR that it is hard to believe that the mayor was "surprised" at the closing of AMC in that her doctor husband worked out of Affinity and had to see firsthand and hear rumors that things were not going well at Affinity.
Could be a case of a denial of the the obvious that many human beings are afflicted with?
To the SCPR, it makes no difference whether or not the mayor should have seen the closure of AMC coming because there was nothing she nor her administration could do to turn things around.
But accepting what might turn out to be a "white elephant" is a different matter.
Sometimes it is more prudent to turn down what appears to be a "gift horse."
Time will tell.
And the "telling" could be as soon as next year's election.
Catazaro-Perry is saying she is likely to seek a third term.
He tells the SCPR that he has not made up his mind of whether or not to challenge the mayor in November, 2019.
Reading "between the lines" of The Report's conversation with Lews, it appears likely he will not run because of his current employment picture in which he perceives that giving up that situation will require a sacrifice on his part.
Perhaps a more ominous threat is that Massillon Municipal Court judge Eddie Elum (twice disciplined by the Ohio Supreme Court in recent years for ethics violations) will run against her in the May, 2019 Democratic Party primary.
The SCPR only recently learned that Catazaro-Perry is not nearly so enamored with Elum as she has said in previous years in Q&A sessions in Massillon City Council that she was.
In fact The Report is told that she has distanced herself from the entire Johnnie A. Maier, Jr, R. Shane Jackson and George T. Maier Massillon centered political cabal.
Hmm?
Why?
One theory is that she has grown tired of Elum's constant badgering and threatening council on the extent to which Massillon government finances court operations.
The Report is told that Massillon unfairly finances court operations in view that most of the use of the court's functions come from Jackson, Perry and surrounding township who, it is said, pay nothing towards court operations.
Lewis told the SCPR that there has been a 55% increase in what Massillon council allocates to court operations.
The SCPR thinks that the answer could in part be the foregoing, but maybe more of a factor than anyone realizes, it more largely might be that she realizes that she has gotten some bad advice from what The Report has dubbed as being the Maier Massillon Political Machine (MMPM) and that she in Director Joel Smith is getting good advice and better yet: effective on-the-job action.
To repeat, if Massillon makes the AMC properties into a "genius move," it will be Smith's doing.
Back to whether or not Catazaro-Perry will have a mayoralty opponent next year.
Elum is nearing or possibly might be over age 70 at the time of the primary. The SCPR has a date of birth that might be definitive of he matter but is unable to confirm it.
If he is 70, then it makes a lot of sense he would run for mayor.
But, if not, it does not. At least on the surface of things.
For if he can run for another term as Massillon Municipal Court judge, he is virtually assured to be unchallenged and as judge earns $40,000 plus more than the mayor of Massillon.
That is, unless, as a number of Stark Countians seem to think (but not the SCPR), Elum is Saint Edward (which is what Elum seems to think of himself [LINK] and the money difference makes absolutely no difference to him.
And, for that matter, he likely can retire as a judge and earn a substantial part of his $114,000 (more or less) judge's salary as a pension to be supplemented by the approximate $68,000 (more or less) that the mayor of Massillon is paid.
When Frank Cicchinelli Jr. was pondering whether or not to run in 2011, Elum's name popped up then as a possibility.
Cicchinelli did run but Elum was not the candidate who took him out in the Democratic primary.
Guess who was?
You've got it!
None other than Kathy Catazaro-Perry who, at the time, was the fair hair political maiden of the MMPM.
How times and circumstances and change, no?
A reason that the SCPR thinks that Elum might actually run against Catazaro-Perry is that The Report has learned that Elum is asking around to persons he considers significant politically-attuned, Massillon political figures whether or not he can count on their support should he decide to run.
Not only Democrats, but registered Republicans as well.
You can bet that Elum is watching the AMC thing with keen interest. If he decides to run and if evidence is in that Massillon has a "white elephant" on its hands, one would think it becomes a larger than life issue in the ensuing campaign.
As Massillon government takes ownership of the AMC facilities/equipment what the city can or cannot do with it definitely will become political.
Success will mean a slam-dunk for Catazaro-Perry in getting re-elected to a third term in 2019.
On the other hand, if the acquisition turns into a "white elephant;" not only will Catzaro-Perry be an easy political mark but also will every member of the current council.
The filing deadline will be in early February, 2019 which is nearly a year away..
But by then, we should know whether the AMC thing is a boom or a bust
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