The Three Rivers Health Authority Board has given permission to execute an “operating lease” with McKesson, the company with whom the hospital is working to implement its new electronic medical record.

The action came Thursday morning (May 28th) during the board’s May meeting.

The move is a change from the “capital lease” authorized earlier in conjunction with the new information system and reflects the hospital’s difficult financial situation.

During a post-meeting interview, Matt Chambers, president and CEO of Three Rivers Health, noted that the federal government is “moving everybody toward that electronic medical record” and the hospital is “in the middle of implementing that.”  He said, “We go live with it in September and so we’re in the final testing stages now, making sure the system is operable and interoperable.”

Chambers explained that, originally, the hospital financed the project with bonds through Chase.  Because of the hospital’s financial situation, Chase decided to “back away from that and did not fully fund the project so we have sought other funding that would take Chase out of the picture.”

Chambers said, “Originally, the board had given permission to execute a capital lease for the information system.  However, again because of the financial situation we’re in, the lenders that we’re talking to right now are only willing to do what is called an operating lease.”  He explained that, “Technically, it’s the same amount of money, but it’s like when you lease a car, you can purchase it at the end for the market value.”

Chambers said the operating lease will be for a three-year period, instead of a five-year capital lease, “so it does have some cash implications.  It will make things a little tighter around here, but it would allow us to move forward and take Chase out of the picture for that particular bond note.”

Chambers said, “It’s been a fairly long, drawn-out process” reflecting the current economic crisis.  Regarding the status of the process, he said, “We know it’s sitting on the president’s desk of this financing group in San Francisco so we are hoping for an answer in the next seven to ten working days.”

Permission for management to execute the operating lease came on a 7 to 2 vote.  Andy Goldberger and Ray Bendure voted “no” after expressing a desire for board action following receipt of the final terms.

To hear comments from Matt Chambers regarding the “operating lease,” click here for an excerpt from his conversation with by Bruce Snook of the River Country Journal.