Hospital project ongoing; team signs NDA with potential provider

More than a year ago, a single company responded to Valencia County’s latest efforts to build a hospital. 

Since August 2022, a four-person team has been negotiating with a Texas-based company on a contract to develop an acute care hospital in the county. 

To date, negotiations are ongoing with no executed contract as of yet between Valencia County and Community Hospital Corporation, a Plano, Texas-based, not-for-profit company founded in 1996.  

In addition to the contract negotiations with CHC to operate and maintain an acute care hospital in the county, a request for proposal for the Phase I design-build of a hospital was released by the county in February. 

The scope of the procurement outlined in the most recent RFP calls for a 15-bed, 35,100 square foot facility to be sited on property within Valencia County, which is anticipated to be at least 10 acres. The procurement document caps the maximum allowable construction cost for the project at $40 million. 

A total of five companies responded and have been narrowed down to a short list of three.  

The News-Bulletin has requested the names of all five respondents as well as those on the short list from the county’s purchasing department but they haven’t been provided as of this writing. 

Long awaited update 

At the Wednesday, Sept. 6, Valencia County Commission meeting, Commissioner Joseph Bizzell asked county attorney Dave Pato to provide an update on the project.  

Bizzell and Pato, along with Commission Chairman Gerard Saiz and County Manager Danny Montette are the negotiation team that has been trying to finalize a contract with CHC since last year. 

“I know we’d like to be more transparent, but there were NDAs (non disclosure agreements) we had to sign,” Bizzell said.  

During the third special legislative session of 2021, the New Mexico Legislature — with the approval of Gov. Michelle Lujan Grisham — appropriated $50 million to the New Mexico Department of Finance and Administration for an acute care hospital in a county with a population of less than 100,000, Pato said.  

On March 4, 2022, the county and DFA signed an agreement for the $50 million to plan, design, construct, equip and furnish an acute care hospital in Valencia County. Funding for the project is through the Coronavirus Local Fiscal Recovery Fund, and is part of the more than $1.7 billion awarded to the state in June 2021. 

Shortly after the agreement was signed, the county issued an RFP for an acute hospital and CHC submitted its proposal to the county in August 2022. Negotiations have been ongoing since then. 

The contents of CHC’s proposal aren’t subject to disclosure during contraction negotiations, the attorney said, but work on the project has continued.  

One challenge identified in the last year was the requirement the funding be spent by the end of 2025. During this year’s legislative session, the county was able to convince the Legislature to extend the deadline to 2026, as well as allow for 5 percent of the $50 million to be used for pre-opening expenses. 

“We are working through other obstacles as it relates to design and construction,” Pato said. “We didn’t want to wait to hammer out details of the (CHC) contract, so we issued the Phase I (RFP) for design-build, and cooperated and coordinated to help incorporate (CHC’s) needs.” 

During a phone interview Monday, Sept. 11, Bizzell said the process has been “very frustrating. It seems like it’s moving at a snails pace then takes six jumps forward. There are some things CHC is clarifying with the state. I can’t say what because it’s part of the negotiations.” 

The commissioner said it’s the hope to have a final contract with CHC and a contract with one of the three final design-bulid teams by December. 

“We’re hoping to have everything done and be able to disclose everything then,” he said. 

One aspect of the project many are wanting to know is the location of the hospital. Bizzell said CHC will be purchasing property, then donating it to the county so the facility can be built using the $50 million. 

“It’s going to be donated back to the county and leased by them,” he said. “We can’t give taxpayer money to a private entity. The property has to be owned by a government entity to be improved.” 

He noted the location of the facility — even if he knew it — is an example of information he and other members of the negotiating team aren’t allowed to disclose under the terms of the NDA. 

Phase I design-build 

The February RFP is using what’s called a best value selection to find a team to handle the design and construction for the hospital project. It’s a two-step procurement approach that generates a short list of offerors from the Phase I RFP. According to Bizzell, five teams responded and those have been narrowed down to three. 

In Phase II, technical performance criteria and other project requirements will be given to the short-listed teams with the end result being the selection of the team that provides the “best value,” a combination of qualitative factors and price. 

While the initial RFP in 2022, which drew CHC as the only respondent, went before the commission, the second procurement in February did not.  

Bizzell was sure the procurement came through the commission, saying “we always have to direct staff,” but Pato said that’s not required and the RFP was handled by county administration.  

In an email exchange to clarify the process, the attorney wrote that commissioners did not direct staff to draft and release the solicitation but rather it went through the county’s central purchasing office and was handled by county purchasing agent Rustin Porter, as per county procurement code and purchasing regulations. 

Pato wrote that while Porter engaged the commission in the development of the 2022 RFP for a provider — in this case CHC, which is still in contract negotiations — “as he anticipated the board would want to be intimately involved with the development of the minimum qualifications” for the provider, he did not do so for the Phase I design-build procurement. 

“… given that the board is not defining the specifications for the construction or establishing the minimum qualifications for the contractors,” Pato explained in an email. “While we continue to negotiate the healthcare facilities contract with (CHC), we were nonetheless faced with a deadline for encumbering and expending the hospital appropriation.    

“Rustin accordingly worked with the county’s on-call architect, Molzen-Corbin, and (CHC) to incorporate the physical plant needs identified by (CHC) into Phase I of the hospital design-build solicitation, and issued the Phase I design-build documents. We are presently working on finalizing the Phase II documents, and hope to have that published shortly, with an eye towards a December award. The design-build contract will be awarded by the board of county commissioners.” 

Commissioner Bizzell said he is “very confident” a successful contract will be negotiated with CHC. 

“They have been a great partner so far. They must think this is a good idea or they wouldn’t be trying to do it,” he said. “Looking at it from a business person’s perspective, we are going to give them $26 million and change to run it and money to construct. Any business would love to be in that position. 

“This commission has been very dedicated to getting this hospital built. By December, we’re hoping to have a selection from the short list and a contract with CHC, but I really can’t say more. I don’t want to jeopardize the negotiations.” 

Funds for the operation and maintenance of a hospital facility were collected from county taxpayers in the form of a property tax from 2007 to 2014. So far, it has amassed about $27 million and is being kept in an interest-bearing account at Bank of the West.