Boone Hospital Center should end lease, renegotiate with BJC

While late in coming, there has been a groundswell of support in the community for terminating the lease between Boone Hospital Center and BJC Health Care, a management firm representing the amalgamation of three well-known St. Louis-area hospitals: Barnes Hospital, Jewish Hospital and Christian Hospital.

Newspaper editorials, several colloquia of community residents and the overall buzz around the region say this is what needs to be done because BJC, which entered the relationship 18 years ago, seems uninterested in negotiating a new lease.

The current lease could run through 2016, and the Boone Hospital Center Board of Trustees’ option to terminate the agreement expires Dec. 31, 2006.
Anyone familiar with commercial leases will tell you there’s a cancellation window after which most contracts automatically renew. More than one party in a lease has found this out the hard way, saddled with obligations they could have avoided if they’d studied the cancellation clause more closely. Seasoned business executives also know that in order to negotiate from a strong position, you must have the ability to end an agreement.

In September, three months before the window closed, two trustees made a motion to end the lease. In early October, the board put out requests for proposals (RFPs) for leasing or managing the hospital and asked for responses by the end of the month—hardly enough time for a thorough proposal.

There is no question that the trustees should vote Nov. 27 to terminate the lease, whereupon BJC would operate the hospital for an additional two years. It’s a no-brainer; the trustees will have 24 months to come to suitable terms with BJC or another lease holder, choose a company to manage rather than lease the hospital, or hire a chief executive to run the hospital and pick his or her own management team.

The trustees should have exercised their option two years ago, giving them the upper hand during the subsequent negotiations over the terms and enough time to seek alternative management.

But there are some caveats worth noting.

Termination of the lease will cast a lengthy spell of uncertainty on the hospital, possibly causing morale problems, departures and questions about capital investment and expenditures.

Termination also opens the door for the currently popular position that, because this is our Boone County Hospital, we should return to the pre-1988 ownership and management condition in which the trustees and a professional administrator ran the institution. This local control, it’s presumed, would keep all the profits here while discarding all the benefits that accrue through its relationship with one of the country’s foremost hospital management firms.

Much has been lost in the fogs of history over nearly two decades, but there is no doubt that the St. Louis-based BJC has made this institution a superior provider of medical services. Melancholy for times past, possessive tendencies in the ironic quest for “home rule” or just the pursuit of greater financial return are all weak arguments for tossing out this top-rated hospital management firm with its big purchasing power.

Let’s get the attention of BJC executives by terminating the lease and then get them bargaining seriously. To make this strategy work, BJC must believe we are willing to end our agreement. But make no mistake; if a fair deal can be made with BJC, it is likely to be the best deal. Then we’ll have an agreement that satisfies our objectives, sends less of the profit out of town and keeps Boone Hospital on the technological cutting edge, staffed with some of the best people in the medical profession who love working there because it’s a great place to be.