The Smithville Hospital Authority Board of Directors has signed a letter of intent with the Seton Family of Hospitals as a first step toward the acquisition of Smithville Regional Hospital.

The action, which took place at the board’s regular meeting on Monday, was unanimously approved.

Under the proposed agreement, Seton would lease and operate Smithville Regional Hospital for 30 years, with an optional 20-year extension. In addition, Seton has agreed to build a new medical professional office building adjacent to the hospital.

“This begins a process of due diligence that would transfer operation of the hospital to the Seton family. It’s a very intensive process, and only the first step,” said Dr. Earl Walborg, president of the hospital board.

The hospital board is made of seven members, three of whom are appointed by the city, with the remaining four members self-appointed. Answering to the board and overseeing the day-to-day operations of the hospital and its approximately 400 employees is CEO Grady Hooper.

“I think this is a very positive development for the authority, the city of Smithville and Bastrop County,” said Hooper.

It’s still too early to tell how that acquisition would look, but Hooper said that the hospital authority – and the board – would remain intact under the lease agreement.

There are different possible scenarios for the agreement, including Seton operating SRH and all its affiliates, including Towers Nursing Home and the Riverbend Medical Group, or the possibility that Towers and/or other affiliates may be separated and not be among the facilities operated by Seton.

“The residents of Bastrop County require complex health care services,” said Charles Barnett, CEO of Seton. “As we’ve demonstrated in Luling and the Highland Lakes, Seton can bring entirely new levels of healthcare to a region.”

Though nothing is set in stone, the acquisition is expected to be complete by the end of the year.

“Obviously, they (Seton) are sufficiently interested enough in us (SRH) to have tendered this initial offer,” said Walborg. “The board felt this was an opportunity we could not pass up without exploring seriously.”

Smithville Regional Hospital has served Smithville and the surrounding area for 52 years, initially as a private hospital and then under the hospital authority. The hospital was begun in 1958 by Dr. James Winston Thomas, and moved to its current facilities in 1995.

As many rural hospitals across the state and country have struggled and many have closed their doors, SRH has been able to remain relatively financially stable and has twice looked at possible expansion with a new hospital in Bastrop, including going so far as to draw up architectural plans.

However, those plans for expansion have been idle for a couple of years now, and an increase of Medicaid, charity and self-care patients has taken its toll.

The Seton Family of Hospitals has 24 clinical locations throughout Central Texas and is a member of Ascension Health, the largest not-for-profit health network in the nation.

“Stand-alone hospitals face a unique and nearly insurmountable challenge,” said Barnett. “By partnering with the Seton Family of Hospitals, Smithville and Bastrop County will be able to meet those challenges.”

SRH has enjoyed stability under the leadership of Hooper, who has been with the hospital since 2003. During his tenure, the 36-bed hospital has upgraded the care it provides trauma patients to Level IV, was selected by the Smithville chamber as the 2008 Business of the Year, and was a recipient of the 2009 Texas Health Care Quality Improvement Achievement Award.

Though the Smithville City Council appoints three board members, the hospital authority board, and not the city council, has the final say on what will become of the acquisition proposal.

“The hospital has been a big part of our community for a long time, but I do know it’s difficult for small rural hospitals,” said Mayor Mark Bunte. “I’m sure the board will work to protect the jobs of our fellow citizens and do what is in the best interest of our community.”

The official press release from the Seton Family of Hospitals can be found here.