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The Medical University of South Carolina is building the MUSC Shawn Jenkins Children's Hospital in downtown Charleston while pursuing a deal to buy four existing hospitals in rural areas of the state. The purchase would take those hospitals off the tax rolls. File/Wade Spees/Staff

The mayor of Mullins recalled a sense of "jubilation" after learning the Medical University of South Carolina was buying the small Pee Dee city’s only hospital.

The company that owns Carolinas Hospital System-Marion has been selling off medical centers it views as financial underperformers, a larger national trend that tends to diminish and, in some cases, eliminates care options for residents of rural areas.

It found a taker earlier this year for four of them. MUSC leaders think the hospitals it's negotiating to buy and operate in Marion, Chester, Florence and Lancaster counties are performing just fine. And local officials welcome the move, citing the prospective buyer's ties to state government and its well-known brand name.

"This news could possibly be the best news that we have received in this county in 50-plus years," said William “Bo” McMillan, a retired businessman who’s been mayor of Mullins since 2012. "It's a premier label. With it comes an almost instantaneous belief that the level of care will be better."

McMillan and leaders in the three other small communities where MUSC is looking to expand gushed about the potential benefits: the hope for new jobs, access to more medical specialists, local ownership.

There is at least one downside, and it hits square in the pocketbook. The municipalities and counties where the hospitals are located will lose tax revenue after the sale is finalized, to the tune of a combined $5.2 million, according to the State Treasurer's office.

The seller, Community Health Systems, is a for-profit business, so it pays taxes on its real estate and the expensive medical equipment it uses. MUSC, on the other hand, is a state-run nonprofit and isn’t subject to those same taxes.

'Not complementary'

MUSC was approved to spend up to $137 million to acquire the four community hospitals in late January, the first time in its history it has extended its physical reach outside of the Charleston area. The purchases come as hospitals across the country — and even in South Carolina's Upstate — are merging to strengthen their purchasing power and trim redundancies.

MUSC is buying these hospitals as Community Health Systems is looking to exit the state. The Franklin, Tenn.-based company struck a deal last year to offload the two Mary Black Health System hospitals in Spartanburg and Gaffney to an Upstate buyer, saying they're not "complementary to our business strategy."

By comparison, MUSC is expanding and adding rooms. In downtown Charleston, for instance, it’s spending about $388.7 million on its new children's hospital and it recently was approved for a $325 million medical center in lower Berkeley County.

The cities, school districts and counties operate on budgets of a smaller scale, and the lost tax dollars can be significant in some cases.

In Mullins, it works out to $28,527, a relative drop in a $4.4 million general fund, while Marion County will lose about $162,000, and the school district will be short about $215,000. 

In Florence County, the city and county governments expect to lose at least $1.8 million in income from Community Health Systems, which owns property valued at about $100.4 million, according to property records.

Lancaster County along the North Carolina border, where MUSC is looking to acquire Springs Memorial Hospital, will lose about $2.1 million in tax proceeds, about 2 percent of the annual budget.

"Any loss of revenue is concerning, but you have to balance that with the medical benefit to the residents from having a top-notch operation like MUSC running our hospital," said Steve Willis, county administrator.

Singing praises 

The county won’t be taking as much of a hit as another government body within its borders. The City of Lancaster is poised to see $734,000, or 8 percent of its annual budget, go away.

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Lancaster Mayor Alston DeVenny said he thought of the young people who would be able to work for an established employer like MUSC after learning of the Springs Memorial sale. He hopes MUSC's presence will attract more doctors and other medical professionals to the area.

Concerns have been brewing for years that Springs Memorial could be swallowed up by one of the big health care systems just across the state line in Charlotte, he said. Keeping the ownership in South Carolina, and under a public owner that wouldn't have as much interest in squeezing patients for revenue and profits, is a positive in his view.

"We think some of that pressure may be relieved with MUSC," he said.

But an 8 percent budget cut will create a financial crunch, he said. The city is the county's center of government offices and religious institutions, neither of which pay property taxes, DeVenny said.

Dr. Pat Cawley, CEO of MUSC Health, said he has been meeting with leaders and legislators across these four regions to assure them of the system’s commitment to their communities.

“We’ve got a proven track record of being community partners,” he said. “We’ve done this in the past and we’ll do it in those communities as well.”

Their presence will help recruit doctors to these towns, where today they might be lacking, Cawley said. He also pointed to the billions in economic benefit MUSC has brought to the Charleston area.

In Chester County, the total lost will be at least $326,000, according to county auditor Donnie Wade. Even so, county supervisor Shane Stuart said having MUSC run the hospital will be overwhelmingly beneficial, and he "can't sing their praises enough."

"Our residents deserve some better health care quality," he said.

Stuart doesn't like the idea of losing any tax revenue, noting every dollar counts in a small rural county. But when Stuart read the news that MUSC would be buying the local hospital, he said he was smiling.

Reach Mary Katherine Wildeman at 843-937-5594. Follow her on Twitter @mkwildeman.