For 64 And For Lakewood's Future

Like many of you, I believe in the values of fighting for Lakewood, of fairness in regards to the proper use of taxpayer assets and providing residents with the services necessary for a healthy and active city. This is why I fought to ensure that the Cleveland Clinic provide Lakewood with 21st Century health care in the form of a state of the art Family Health Center and fully accredited 24/7 Emergency Room to serve residents long into the future.

As I see it, my job as a Council Member is not to simply trust what I am being told but, rather, to verify. It was no secret that I did not support the Cleveland Clinic’s original offer in January of 2015. (In fact, I held out my support for a new agreement until the final deal was reached in December of 2015 after all sticking points were negotiated.) I argued for and, with the support of my Council colleagues, secured a major law firm and a leading industry analyst to support Council throughout our fact finding, public hearing and negotiating process. I did not make many friends at the Cleveland Clinic by helping Council take these steps and demanding answers to tough questions during some of the more than 40 public hearings on this matter held throughout 2015. But, you know what, that’s okay. I did my job and Council performed its due diligence.

So, after more than 40 public meetings, about 20 regular Council sessions, a year of consultation with a leading law firm and a nationally recognized health care industry consultant and no identification of another entity to operate Lakewood Hospital in replacement of the Cleveland Clinic, City Council decided unanimously that the time was right to utilize the assets remaining within Lakewood Hospital to pivot away from a service model that was failing in Lakewood and toward 21st Century health care via a Family Health Center and a new fully accredited 24/7 Emergency Room that will serve residents well into the future. In addition, the City of Lakewood will receive $20 million in transition costs and $32.4 million will go toward a Lakewood community health foundation that can focus on specific health needs in our homes and neighborhoods to complement the health care being provided in the Family Health Center. In addition, the Cleveland Clinic is investing $34 million into the Family Health Center and the 24/7 Emergency Room, $8 million toward the new Lakewood health foundation as well as $7 to cover additional transition costs.

Regarding the proper use of Lakewood taxpayer assets, I strongly believe City Council fought for and struck a fair deal. Just prior to the new agreement, the Lakewood Hospital Association’s net assets were valued at $128 million. The negotiated deal accounts for all of the $128 million which does not include the additional $49 million Cleveland Clinic investment described above. Remember, again, that a $90 million investment was needed to make the old Lakewood Hospital facility safe and competitive. City Council’s decision ensures that this facility will not be a financial liability going forward but that the 100-year-old hospital will be replaced with a state of the art Family Health Center and 24/7 Emergency Room, paid for, owned and operated by the Cleveland Clinic. However, again, this deal is about much more than dollars and cents. It is mostly about providing Lakewood residents with access to world class 21st Century health care right here in Lakewood well into the future.

Just this past June, a resident made a comment to Council that she just wanted her municipal hospital back and that Council and the mayor has let her down in this regard. Well, we should remember that Lakewood Hospital ceased to be a municipal hospital in the late 1980’s when a deal was struck for University Hospitals to operate the facility. Then, in the mid 1990’s, the Cleveland Clinic replaced UH and signed a 30-year lease with the Lakewood Hospital Association to conduct hospital operations. A number of important points were apparent by the time the issue of Lakewood Hospital’s future reached Council for consideration in January of 2015: (1) two out of three beds in Lakewood Hospital were empty every night; (2) hospital operations were losing money monthly; (3) the Lakewood Hospital Association was forecasted by Council’s own industry consultant to be bankrupt well before the end of its 30-year lease with the Cleveland Clinic; (4) many revenue generating hospital service lines were transitioned to other Clinic facilities; and (5) the hospital structure and parking garage, again, needed $90 million in capital needs and repairs to make the overall facility safe and competitive.

The challenge was real and City Council made the absolute best decision for Lakewood in allowing for the new deal and ensuring 21st Century health care in Lakewood. But, those who wish to hold onto a failing health care delivery system claim that the Cleveland Clinic can be forced to reopen Lakewood Hospital (I guess to staff empty beds and lose more money), return all service lines and reverse the multiple real estate transactions and other contracts executed since December of 2015 by voting against November’s referendum. Let me be clear, Lakewood Hospital cannot reopen. Lakewood entered into multiple contracts upon which the City of Lakewood has and will continue to perform. Not supporting the referendum will add delay and legal costs to an already executed agreement. What the referendum does offer, though, is an opportunity for Lakewood residents to place an exclamation mark on City Council’s decision to move forward toward 21st Century health care and access to world class health care right here in Lakewood well into the future.

Lakewood is certainly a city with momentum. Our housing stock is improving, growing and appreciating. Our children no longer learn in century old buildings but, rather, new, modern facilities. City Hall is balancing budgets, providing quality services and managing effective safety forces with excellent response times all while not asking for an increase in payroll taxes since 1981. Let’s keep the momentum going by voting for 21st Century health care and state of the art facilities in Lakewood. I urge residents to vote FOR Issue 64 and for Lakewood’s future.

Yours in service,

David W. Anderson

Member of Council, Ward One

David.Anderson@lakewoodoh.net

216-789-6463

Disposition of Lakewood Hospital Association assets

(in millions)            Total Lakewood Hospital Association assets (bricks, mortar, equipment and licenses)

$128.0           Total LHA assets

   20.0            Value of hospital site (land still controlled by the City and will be sold in the future for redevelopment)

   24.2            New Lakewood Foundation

   33.0            Lakewood Hospital Foundation

    8.2             850 Columbia Road facility - appraised for $6.8 million on June 15, 2015 by Charles M. Ritley Associates LLC

    7.0             Demolition/rehab funds to the city

  10.0             Operating losses

    3.0             Demolition costs of office building and parking garage at Detroit and Belle – site of the new Family Health 

                                Center, 24/7 Emergency Room and parking garage.

   2.5              Investment in new parking facility

  20.1             LHA portion of transition costs including insurance, pension obligations, malpractice insurance, tenant relocation and miscellaneous transition costs

(in millions)            Clinic $49 Million Investment

  $34.0           Clinic’s cost of new Family Health Care Center and Emergency Room

     8.0           Clinic’s additional contribution to new Lakewood Foundation in addition to the $24.2 listed above

     7.0           Clinic’s absorption of transition costs not covered by the $20.1 above

(in millions)            Other funds to the City of Lakewood

    $1.5          Approximated value of homes on Belle and St. Charles being sold.  These were owned by the City but managed by the Lakewood Hospital Association and will rightfully return to private ownership.