On Oct. 31, the city of Sturgis completed transactions related to a multi-party letter agreement releasing Sturgis Hospital Inc. from the terms of a sublease tied to hospital improvements from 2004.
Completion of the transaction allowed Sturgis Hospital to finalize the terms of its acquisition by Asker Corporation, including a management agreement and financial support of the hospital, until the acquisition can be approved by Michigan Attorney General.
The agreement calls for payment of $3 million to the city in exchange for release of all obligations of Sturgis Hospital Inc. under a sublease on hospital improvements, including 10 years of remaining bond payments totaling slightly less than $8.5 million.
The agreement also provides for the release of all city liens and security interests in the hospital that were created as part of the sublease.
The city continues to be responsible for remaining payments under the bond issue, and payment from the transaction will be used to offset a portion of that expense.
The agreement is between the city of Sturgis, city of Sturgis building authority and Sturgis Hospital Inc., as well as Asker Corporation and its subsidiary groups SH Holdco LLC and SH Management Group LLC.
In early October, the city commission voted to authorize city manager Andrew Kuk and attorney TJ Reed to authorize a letter of agreement.
Asker is a non-profit health system based in Southfield.
Commissioners had discussed the Asker plan during meetings Sept. 25.
In August, the hospital received designation as a “Rural Emergency Hospital.” Key elements of an REH designation include enhanced emergency medical services, more convenient access to life-saving care, streamlining of patient transfer and potential for increases in federal funding.
With the transaction agreement, there is no guarantee the hospital will restart in-patient service, according to city officials, but the possibility of that occurring has been discussed.