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The Gainesville Hospital District Board of Directors are now landlords.

Effective Saturday, Dec. 1, North Texas Medical Center is leased to and operated by Gainesville Community Hospital through an agreement between Plano-based Community Hospital Corp. and the Gainesville Hospital District.

NTMC spokeswoman Kristi Rigsby said the hospital is not changing its name as part of the transition and will remain NTMC.

Community Hospital Corp. formed GCH as part of what hospital district officials are calling a “joint venture” to help keep NTMC a viable hospital.

The hospital has been managed by CHC Consulting, the management and consulting arm of CHC, since May.

As part of a recap of the new agreements, Kevin Reed, the hospital district’s attorney, told board members Monday, Nov. 26 that GCH is the entity that will run NTMC on a day-to-day basis.

He said GCH will have a three-member board that will consist of hospital district board president Andy Anderson and two members from CHC.

The joint venture will also appoint a six-member hospital board. Reed said five of the members are supposed to be residents of Cooke County— two of which from the GHD board of directors. The sixth member, a senior staffer with CHC, is exempt from the residency requirement, he said.

The GHD board will also still exist.

“As a district board, you may even decide you don’t want to meet every month,” Reed told board members. “That’s up to you to make that decision as you go forward ... Your agenda is not going to look like anything it has in the past.”

All employees will transfer from the district on Saturday, Dec. 15, Reed said, while adding that GCH will reimburse the district for the two weeks employees remain on their books.

Reed said CHC may call on the district to provide some additional working capital support not to exceed $3 million in the initial 12 months.

There is also a provision in the agreement for an up to $7.5 million payback over four years, Reed said.

“And there’s a provision for this to be extended if the $7.5 million isn’t paid back over the four years,” Reed said.

Mac Stewart, an attorney hired by the board to take on lease discussions with CHC, previously said that after the first $2.5 million is made each year, the revenue will be split 50/50. 

The rent for the equipment and property is $600,000 per year, according to a previous report in the Register. 

Reed said there are some reserve powers in the joint venture that district board members would have to approve including the establishment of or any change in the mission or purpose of GCH.

He said the district will continue to be responsible for its bond debt, and “CHC is taking care of the indigent care responsibility.”

“The providers will also stay with the district for a certain period of time,” Reed said of keeping the hospital’s providers on their existing contracts so there is no gap in the billing process.

He said the process could take as long as six months, but the district will be reimbursed for the costs associated with the hospital’s physicians from the new joint venture entity.

“I think the good thing about this, both on the hospital’s side and on the provider’s side, is we’ve made every effort to make sure there is not a cash flow lag,” Reed said. “I can’t promise you that’s not going to happen, I wish I could, but I think we’ve done everything we can to try to make sure that doesn’t happen and you have consistent cash flow through this whole process.”

On Monday, board members agreed to have Anderson meet with GCH on a regular basis to receive information on issues related to the transfer of hospital operations and assets pursuant to the hospital operations transfer agreement and facility and equipment lease via an 8-1 vote. Ken Arterbury voted against.

The board also approved the administrative services agreement between the district and Gainesville Community Hospital via a 7-2 vote. Jimmy Mosman and Arterbury voted against.

Reed said the administrative services agreement is “pretty comprehensive.”

“It will basically do all of the things that you need to have done to continue to operate as a district,” Reed said.

The hospital district will be charged “the actual cost plus 15 percent” for whoever takes on their administrative duties as part of the agreement.

While there was discussion at Monday’s meeting about the district possibly renting back space for an office, Reed said Friday that the district will not be charged for rent.

Members of the Gainesville Hospital District Board of Directors voted to lease the district’s equipment and facilities in October.

“The truth of the matter is, we want a hospital to remain in this area,” Anderson said Monday.

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