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Possible Buyer For Troubled JMH Emerges

MIAMI (CBS4) - After a long business trip, John Copeland, the chairman of Jackson Memorial Hospital's governing board, arrived home Tuesday at 2 a.m. to find an unexpected fax waiting for him – an offer from a Massachusetts-based healthcare company to buy the financially troubled hospital.

"I was surprised but thrilled," Copeland told CBS4's Jim DeFede. "This is exactly the type of offer we need."

Click Here to read the letter from Steward Health Care System.

The offer – officially called a "non-binding indication of interest" – from Steward Health Care Systems calls for the company to invest at least $600 million in capital improvements to the hospital. It would also underwrite up to $200 million a year in operating losses and assume $500 million in long term debt that hospital has accrued.

Jackson has been hemorrhaging money for years. Last year the hospital system lost $224 million. This year it is slated to lose between $80 million and $120 million. Even more pressing is the fact that there are at least $1 billion in capital improvement projects the hospital is going to need to take in the next few years. For instance, the hospital's fire sprinkler system needs to be replaced at an estimated cost of $10 million. There is also a severe demand for new equipment. Some of the gear currently being used by doctors is more than 30 years old.

Last week, Jackson officials told county commissioners that they might need to borrow between $30 million and $70 million in the next few months just to be able to make payroll.

"We are in a drastic, drastic situation," Martin Zilber, a member of the Public Health Trust, told commissioners last week. "We can't even continue to do what we are doing at the level we are doing it without significant cash influx."

Another board member Mark Rogers offered an even more dire prognosis.

"I believe Jackson is non viable," he said at the time. "I want to repeat that again. I believe Jackson is non viable. As an economic entity it will not survive and you should be told that directly."

While Jackson has made progress collecting money from patients – a problem that was at the heart of Jackson's financial crisis last year – the latest problems are myriad. The hospital is treating fewer patients than expected which will cost the hospital $76 million in lost revenue. The hospital is also expecting to lose $56 million in state funding.

The most realistic shot for turning the hospital around, commissioners were told, was finding an outside investor. Copeland said he had been looking to see if there was any interest, but last week reported that no private group wanted to take on Jackson's enormous problems.

He said he had spoken to Steward officials weeks ago but they seemed disinterested. Then Tuesday morning he found their fax waiting for him.

The next step will be for Steward – which operates community-based hospitals throughout the Northeast – to fly down to Miami in the next two weeks to make a presentation and begin negotiations, Copeland said.

Many questions remain unanswered, including what assurances the county would be given that Jackson would continue to treat those in need regardless of their ability to pay.

Another major question is the role the Public Health Trust and the county commission will play in a new public/private Jackson especially since the hospital would continue to receive more than $300 million in taxpayer support through the half-penny sales tax dedicated for Jackson.

And what a private partner at Jackson would do to the current partnership the hospital has to both the University of Miami and Florida International University.

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