The 30-year lease purchase agreement between Desert Healthcare District and Dallas-based Tenet Healthcare for Palm Springs, Calif.-based Desert Regional Medical Center was approved by voters Nov. 5.
Here are six things to know:
1. The district's board voted to move forward with Tenet's 30-year lease proposal for the hospital in late May. The lease agreement was then stalled in late June while the district's board worked to "clarify and refine some language" around a noncompete clause in the agreement.
2. Following the approval, Desert Healthcare and Tenet plan to close and enter into the purchase agreement sometime in December, according to next steps shared by Desert Healthcare.
3. The 30-year agreement will begin May 31, 2027, with an initial payment of $100 million from Tenet to the district, in addition to around $65 million in existing reserve funds. Annual payments from Tenet to the district will begin in May of 2028 of around $20 million, increasing incrementally to around $28 million by 2046. The district is expected to receive an additional $550 million over the lease term.
4. Beginning Jan. 1, 2030, seismic retrofitting must be completed at the hospital, in accordance with California law. The lease agreement will end May 30, 2057. Tenet will make a final $100 million purchase payment and ownership of the hospital will be transferred to Tenet.
5. Tenet has operated and managed Desert Regional since 1997, when it signed the first 30-year lease agreement with the District.
6. The district board and employees plan to engage with financial advisors to create a plan that supports funding community health needs and goals identified by the district, and to grow its financial resources for future investments.