By Dennis Volkert
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, a non-profit health system based in Southfield. It involves a management agreement and financial support of the hospital, until the acquisition can be approved by Michigan Attorney General.
The agreement is among 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.
It involves 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, with payment from the transaction used to offset a portion of that expense.
Jeremy Gump, president of Sturgis Hospital Board and interim CEO, had no additional comment regarding the announcement
In early October, the city commission voted to authorize city manager Andrew Kuk and attorney TJ Reed to authorize a letter of agreement.
City commissioners had discussed Asker’s proposal during meetings Sept. 25.
Within recent months, Asker and Flint-based non-profit Insight have expressed interest in acquisition of the hospital. In early September, Insight signed a letter of intent to acquire Sturgis Hospital at $3.3 million for 11 years. That proposal did not proceed further.
In early August, Sturgis Hospital received designation as a Rural Emergency Hospital. The designation was granted by Michigan Department of Health and Human Services and Centers for Medicare & Medicaid Services.
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 officials, but the possibility has been discussed among commissioners and staff.