Cookeville council approves 50-50 joint venture, authorizes up to $25M in CRMC debt for new inpatient rehab hospital
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Summary
The City of Cookeville approved a 50-50 joint venture between the Cookeville Regional Medical Center Authority and Encompass Health to build a 50-bed inpatient rehabilitation hospital estimated at $60 million; the council authorized CRMC to issue indebtedness not to exceed $25 million for CRMC's share.
The Cookeville City Council on Dec. 18 approved a 50-50 joint venture between the Cookeville Regional Medical Center Authority (CRMC) and Encompass Health Corporation to construct and operate a new 50-bed inpatient rehabilitation hospital. The council also authorized CRMC to issue up to $25,000,000 in indebtedness to finance CRMC's 50% share of the project.
CRMC representatives told the council the current inpatient rehab unit houses 20 beds, was built in the 1970s and that expanding to 50 beds would free acute-care capacity and modernize services. The facility's construction cost was estimated at approximately $60,000,000. The council voted by voice on each of the related agenda items (joint ownership, the 50-50 operating agreement, a ground lease and the debt authorization); each measure passed on a 5-0 voice vote.
A Cookeville resident and health finance professional, Trenton Strode, spoke during the public hearing. He urged the city to ensure "performance metrics, utilization expectation, and the access commitments are not just implied, but they're measurable and reportable as well," and asked specifically how TennCare and underinsured patients would be served. In response, the CRMC representative said the local share moved from a proposed 70/30 split earlier in the year to a 50/50 arrangement to increase local influence and that staff and the city attorney had vetted exit strategies, ownership terms and accountability provisions.
Council members and staff emphasized that the city will retain ownership of the property where the facility will be built and that exit terms and reporting expectations were part of due diligence. Vice Mayor Eldridge and other council members said minor lease and insurance details would be finalized between attorneys before execution.
The council's approvals included: (1) authorization for the CRMC authority to enter a joint venture with Encompass Health; (2) approval of a 50-50 ownership agreement; (3) authorization for the city manager to enter a ground lease with the new entity (subject to final attorney review); and (4) authorization for CRMC to issue indebtedness not to exceed $25,000,000 for the CRMC share of construction costs. Each action was moved, seconded and approved by a 5-0 voice vote.
Next steps: staff and the CRMC will finalize lease and insurance language with the parties' attorneys and proceed with the financing and ground-lease execution required to begin design and construction.
