Lakeland City Commission Approves Amendments to Lease and Transfer Agreement
Monday, November 5 2012
The Lakeland City Commission supported Lakeland Regional Health Systems’ next step in joining the USF Health System by voting to approve certain amendments to the Lease and Transfer Agreement between the City of Lakeland and Lakeland Regional Medical Center. The lease was originally entered into in 1986 and governs the relationship between the City of Lakeland as owner of the hospital property, and LRMC as tenant and operator. The approved amendments to the lease do not change the City’s ownership interest in the assets of LRMC, nor do they change LRMC from being controlled by a local board of directors. The amendments are more technical in nature, and relate to extending the term an LRMC Board member can serve, and clarifying LRMC’s ability to financially support strategic initiatives of the USF Health System.
The amendments to the lease extend the terms which current LRMC Board members may serve when those members are also serving on the Board of Directors for USF Health System, Inc. This ensures that at least four current members of the LRMC Board of Directors may simultaneously serve as directors on the proposed eleven-member USF Health System, Inc. Board of Directors.
“The USF Health System, Inc. Board of Directors is a shared governance design in which there are four directors from LRMC and four directors selected by USF Health,” said Elaine Thompson, PhD, FACHE, President and CEO of Lakeland Regional Health Systems, Inc. “In addition, Dr. Klasko, CEO of USF Health and Dean of the USF Health Morsani College of Medicine, will serve as a director, along with two state or nationally recognized healthcare professionals.”
In addition, the amendments to the lease include a provision that allows certain revenues over expenses earned by LRMC to transfer to USF Health System, Inc. in support of system-wide strategies.
“Having the right formula for intellectual and capital formation is important so that we ‘marry’ the strategic interests of LRMC and USF Health,” explained Dr. Thompson. “However, the way we are designing the USF Health System, Inc. governance, before any revenues are transferred from LRMC to USF Health System, Inc. for strategic initiatives, the sum of LRMC’s annual consolidated operating income plus depreciation must exceed 1.5 times annual depreciation and at least one of the four LRMC representatives on the USF Health System, Inc. board of directors must approve the motion.”
“We are very optimistic about our future, and we appreciate our physicians and all of their excellent contributions over the years in delivering high-quality healthcare to our community. Their dedication, along with the dedication and support of the Lakeland community has sustained a long legacy of delivering exceptional healthcare. As a result, we have the distinct opportunity of combining our strong, high-quality healthcare system with the leading edge medical education and research of USF. Quite simply, we are taking our excellent hospital to the next level and making it even better,” concluded Dr. Thompson.