The deal to break up Lakewood’s publicly owned hospital and privatize most of the pieces fails our community, in multiple ways.
But at the most basic level, the deal also fails a test of simple arithmetic: even from a short-term, cold hard cash perspective, Lakewood comes up short by at least $80 million.
The combined fair market value of all our hospital property, rights and associated assets is at least $120 million.
- A study of hospital sales by Subsidium proposed a $70 million value for our hospital, based on averaging recent hospital sales. (It seems reasonable to use this figure, rather than one based on “distressed” hospital sales, given that University Hospitals recently paid $45 million for one-half of St. John’s Hospital, which has 204 bed licenses compared with Lakewood’s 240.)
- Lakewood Hospital Association reported liquid assets of $50 million in its September 2015 financial statement.
Under the terms of the Cleveland Clinic’s lease on Lakewood Hospital, all of this would revert to Lakewood upon termination of the lease. In comparison, a generous assessment of the deal’s compensation to Lakewood adds up to only $40 million.
- Including cash payments and potential income from selling the hospital site, Lakewood receives about $23 million from the deal.
- If money placed in a new health foundation (which will not be owned by the Lakewood public) is included, this adds nearly $17 million to the deal’s financial benefits.
You don’t have to be smarter than a fifth grader to complete the math:
$80 million in public assets transferred into private hands without fair compensation