Lexington Medical Center proposes major change

Plan would meet competition, other challenges

Posted 8/13/20

Lexington Medical Center is pursuing a new strategy to meet growing competition and other challenges.

"The hospital wants to change its structure to allow it to continue providing the best …

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Lexington Medical Center proposes major change

Plan would meet competition, other challenges

Posted

Lexington Medical Center is pursuing a new strategy to meet growing competition and other challenges.

"The hospital wants to change its structure to allow it to continue providing the best health care services to the people of the Midlands," said hosptal spokesperson Jennifer Wilson.

LMC President and CEO Tod Augsburger outlined the plan to County Council Tuesday. 

Under the plan, Lexington Medical Center would become a non-governmental, not-for-profit organization.

"The change will provide enhanced flexibility that will keep Lexington Medical Center local, independent and strong." she said.

Health care organizations across the country are facing many challenges including declining reimbursements, expensive medications and technology, and for-profit competitors.

In response, hospitals are merging and consolidating, creating large national and regional conglomerates.

Under its current structure, Lexington Medical Center will struggle to compete financially with other hospital systems.

As a governmental entity, Lexington Medical Center spends more than $106 million annually in pension expense as part of the SC Retirement System.

Most hospitals pay just 1% to 3% in pension expense.

Lexington Medical Center’s pension expense is 21.3% of its payroll.

Enrolling new employees in an alternate retirement plan will reduce the annual expense and liability while also allowing Lexington Medical Center flexibility when recruiting new employees..

As a governmental entity, Lexington Medical Center is restricted in its ability to earn a return on its reserve.

Lexington Medical Center earns, on average, less than a 2% return.

Other hospitals earn higher returns and can use those funds to provide patient care.

“With this new structure, we will be able to offer more flexible retirement benefit options to new employees, improve our investment options and collaborate with organizations that provide services not offered by our hospital, such as hospice care, durable medical equipment providers and pharmacies,” said G. Tripp Jones, MD, retired oncologist and chair of the Lexington County Health Services District board of directors.

With this change in structure, Lexington Medical Center would have a 21-member board that would oversee the hospital’s operations.

The current 20 board members of the Lexington County Health Services District, who were appointed by Lexington County Council, would transition to become the new Lexington Medical Center board.

Lexington County Council would then appoint a new n9-member board of directors – 1 member from each council district – to oversee the district.

This would ensure LMC upholds all its assurances to the county and continues to meet the needs of the community.

LMC would also pay a $1.2 million fair-market-value annual land lease to Lexington County for the 18 acres of the hospital’s main campus.

Because this transition is structural only, nothing would change for Lexington Medical Center patients, physicians or current employees.

The 20-member Lexington Medical Center board is unanimously requesting that Lexington County Council change the structure.

“It’s imperative that we partner with our community to take the necessary steps to ensure our hospital remains independent and focused on taking care of our families, friends and neighbors,” Dr. Jones added.

“Lexington Medical Center has successfully done that for nearly 50 years as the only locally owned, locally governed independent hospital in the Midlands. And we want to stay that way – accountable to the people we serve. It’s the right time and the best decision to make today to take care of our community tomorrow.”

lexington medical center, Tod Augsburger, Tripp Jones

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