CEDARTOWN — The Cedartown-Polk County Hospital Authority has entered into a memorandum of understanding with the Hospital Authority of Floyd County and Floyd Healthcare Management to operate Polk Medical Center. Floyd has also agreed to seek a certificate of need from the state to build a new 25-bed hospital for citizens in Polk County.

Polk Medical Center has been managed by Redmond Regional Medical Center in Rome for the past 15 years. Redmond’s contract with the Cedartown-Polk County Hospital Authority expires Dec. 31.

Floyd and Redmond submitted the only two serious proposals to Stroudwater and Associates, the consultants who brokered the deal on behalf of the Cedartown-Polk Authority.

“The proposals were graded on a criteria scale, the response to each one of the criteria that we established,” said Harold Wyatt, chairman of the Cedartown-Polk Hospital Authority. “(Floyd) just scored higher on the overall scales than Redmond did.”

Wyatt made it clear to a large audience at Cedartown City Hall on Tuesday that the MOU is a non-binding document to provide the basis upon which both parties would negotiate a definitive legally binding contract.

“It’ll begin with a five-year lease of the existing facility as it is and during that time frame we will file a certificate of need to build a replacement hospital on a new site or on the existing site, yet to be determined,” said Floyd Medical Center CEO and President Kurt Stuenkel. “They do have some land right outside of the bypass on (U.S.) 278. On completion of construction, then we’ll enter into a 35-year lease for the completed facility.”

Click here to see the approximate location of the property.

Stuenkel referred to an 18-acre tract at U.S. 278 and Kelly Road east of Cedartown. The Cedartown Land Company, owned by the Cedartown-Polk County Hospital Authority, acquired 18 acres at the intersection in January 2011 and has an option on another 56 acres next to the 18-acre tract. The option contract is good through the end of this year.

“The Cedartown Hospital Authority formed the Cedartown Land Company LLC as a limited liability corporation for the sole purpose of purchasing land,” Wyatt said. “We did that so the hospital’s name wouldn’t be out there trying to acquire land. We felt like the price would go up if they found out (it was for the hospital).”

Part of the Floyd proposal includes the addition of a two-unit surgical suite to the new hospital, which is something that would also have to go through the certificate of need process. Currently, Polk Medical Center does not provide surgical procedures.

Wyatt said the addition of the two-room surgical suite was a major consideration. “It provides that much more service, surgeons, anesthesiologists in the hospital. It will have a major impact on the performance of the hospital,” Wyatt said.

While the new hospital would be built by Floyd, it would be owned by the Cedartown-Polk County Hospital Authority.

“We’re going to go out and get financing and we are going to guarantee that debt through Floyd Healthcare Management and the Hospital Authority of Floyd County,” Stuenkel said. “At the end of the lease it reverts back to Cedartown-Polk (Hospital Authority).”

The Cedartown-Polk Hospital Authority issued a request for proposals to other medical care providers in early 2011, through Stroudwater and Associates, a nationally recognized consultant in the health care industry.

Stuenkel said that when the RFPs came across his desk, he realized the scene was changing. “They’re going to have a new relationship with somebody. It was really a moment of clarity for me — who’s that new person going to be?”

Stuenkel said that if someone, for example, either Tanner in Carrollton or Wellstar in Marietta were to get a foothold in Polk County, it could have a devastating effect on Rome’s medical community. “There could be a giant sucking sound as referrals start going to some of those other sponsoring facilities,” Stuenkel said. “It was quite alarming to me. I thought this is something that we cannot afford to not respond to; we’ve got be involved. So we did. We jumped on it with both feet and we put together a very aggressive proposal.”

The proposal includes a stipulation that Floyd will offer all current Polk Medical Center employees the opportunity to stay on board.

Floyd has also agreed to enter into a payment-in-lieu-of-taxes program to address concerns of some in Polk County that the community might lose some tax revenues by entering into a relationship with the nonprofit Floyd. “We knew that would be an issue so we decided to take it off the table,” Stuenkel said.

Floyd has also agreed to pay as much as $20,000 a month for the lease on the existing hospital and spend as much as $2 million during the period of time it continues to operate in the existing facility to upgrade equipment or make needed renovations to the facility.

The Redmond HCA lease agreement called for Redmond to pay $50,000 per year fixed rent for the hospital premises. That deal also required Redmond HCA to make $2.4 million in capital improvements to the hospital during the last 13 years of the lease agreement.

“We’re very disappointed in the outcome and in the process,” said John Quinlivan, CEO of Redmond. “Based on what I heard, I still think our proposal was better. I hope the community gets to see them side by side.”

He said Redmond has enjoyed its relationship with the Cedartown-Polk Hospital Authority and citizens of Polk County and expects to be able to continue to serve the community in the future.

In addition to a new modern 25-bed hospital, Floyd is also committing to the development of a new medical office building and is planning a medical mall nearby. “Some of which we might own, some of which we might encourage folks to co-locate on the land. All of that is yet to be determined. It’s a real Chamber of Commerce type of project,” Stuenkel said.

The new venture calls for the creation of a nine-member Polk Medical Center Inc. governing board. Six will hail from Polk County, all initially members of the authority.

Two members will be from Floyd Healthcare Management, and Stuenkel will be the ninth board member.

Additionally, two members of the Polk Authority will sit on the Floyd Health­care Management Board to make sure the two agencies are able to communicate effectively.

A full public hearing to address the health care partnership has been scheduled for Oct. 31 at 1 p.m. at the City Hall in Cedartown.

Editor's note: This story has been updated to add a memorandum of understanding released by Polk Medical Center