Following weeks of financial struggles, Sturgis Hospital Interim CEO Jeremy Gump spoke to the Sturgis City Commission Wednesday to provide an update on hospital operations, as well as the process of finding an organization to acquire the hospital. Though the hospital continues to function tenuously day-to-day, Gump indicated time is running out for the facility.

“I understand there are discussions going on between the city, city personnel, and a potential acquirer, and that’s a vital item that needs to be completed prior to any transaction taking place,” Gump said. “But I wanted to make sure everybody was aware of another step in the process and have some clarity around how this works.” 

Gump said he had seen commentary, received many inquiries, and even posed the question in a message to all Sturgis Hospital employees that afternoon: “Who actually owns Sturgis Hospital?” He said at one point the city owned the hospital, but then it “spun off” into its own private, non-profit organization. “I want to be clear that ‘nonprofit’ is a bit of a misnomer. If the hospital goes forever and never makes a profit it closes. That’s why we’re here,” Gump said. 

Sturgis Hospital is a tax-exempt entity and, therefore, no one owns the hospital. “The profits of the hospital are not allowed legally to inure to the benefits of a private individual,” Gump said. There are no shareholders, and there are no dividends being paid to shareholders.

“One could say no one owns Sturgis Hospital, Inc,” Gump said. “However, as a non-profit or tax-exempt property it is actually owned by everyone. It provides a service that is for the public good, and because of that the sale of the assets of a non-profit or tax-exempt entity are regulated by the state’s attorney general.”

Gump said prior to being able to sell Sturgis Hospital to a for-profit entity, the board has to consider the amount of money being paid. “We can look at the income stream generated by the hospital and see it’s negative year after year after year. Why would anybody pay for that? That’s a fair point,” he said.

According to Gump, there are assets of the hospital that have liens placed on them either in the form of financing or city bonds. “So, one could look at those and say they don’t really have any equity value either. But there are other assets, tangible assets, ones that you can pick up and feel or move that have equity value that would have to be paid for,” he said. 

However, there are also crucial intangible assets that would have to be paid for: the certificate of need. A certificate of need is a legal document required in many states (including Michigan) and some federal jurisdictions before proposed acquisitions or expansions of healthcare facilities are allowed.

“If the hospital were to close, our certificate of need would go away,” Gump said. “I can guarantee that anybody who would want to apply for a future certificate of need would get opposition from other area hospitals who would see that as an opportunity to gain market share.”

Gump said in moving forward with this process it’s essential to ensure, as the primary step of any organization whether for-profit or non-profit interested in acquiring Sturgis Hospital, would do so at a fair market value after careful consideration. 

“We are continuing to operate, we’re doing everything we can because of the value of the certificate of need, and the time and dedication our employees have put into the hospital,” Gump said. “We continue to operate and push forward the best we can. I will reiterate time is absolutely running out. That has been made clear to the now two parties that are interested — the third has declined to submit an offer.”

Gump closed his presentation to the commission by saying the hospital board will now be meeting every Thursday going forward, and if an offer is received the board will convene as soon as possible. 

Beca Welty is a staff writer and columnist for Watershed Voice.