NATCHEZ — Nearly a year after starting the sale process for the county-owned hospital, the Adams County Board of Supervisors adopted Thursday a resolution approving a purchase agreement for Natchez Regional Medical Center.

Pending the signature of the buyers and approval of the federal bankruptcy court, the agreement will officially make Community Health Systems the bidding stalking horse and probable buyer of the hospital.

CHS is the parent company of Natchez Community Hospital, meaning the health care system in Natchez will be largely consolidated when the sale is closed.

Healthcare Management Partners Chief Executive Officer Scott Phillips  said the date is not finalized, but the parties involved are considering Sept. 11 for the auction, which would allow the sale to close at the end of September or October. Phillips led the negotiations for the sale on the county’s behalf at the recommendation of NRMC’s board of trustees.

The vote to approve the agreement, taken in executive session, was unanimous, board attorney Scott Slover said.

The details of the agreement affirmed what has been unofficial public knowledge for several months, that CHS will pay a total of $18 million in the sale, $10 million of which will be in upfront cash and $8 million of which will be pre-paid Natchez city and Adams County ad valorem taxes.

An economic development arrangement ratified by the Mississippi Development Authority would have allowed more than $11 million in pre-paid taxes, but the asset purchase agreement requires only $8 million.

Phillips said the agreement — which he characterized as being “a foot thick” — was a good one for the county.

“You have, for the first time, a large, well-capitalized, well-run, multi-hospital system that will run both hospitals and has the capability to invest in new infrastructure,” he said “This will create a stable hospital structure where you have both the structure of capital and management to improve.

“Since we started this, virtually every potential buyer who came in, at the end of the day said, ‘The best buyer is CHS.’”

While some discussions of the sale last year included assertions from hospital representatives that any purchase agreement would include a requirement to invest in a new medical facility and recruit new physicians, Phillips said the agreement the supervisors ratified did not.

“CHS has said they will act in their interest, and their interest is to recruit doctors and upgrade the hospital,” Phillips said. “They will be combining the operations of two hospitals, and they need time to do that before they can commit to other things.”

CHS has had 20 to 30 people in Natchez working to plan for the future, Phillips said.

The potential buyer still has to execute the agreement, which will be filed with the court and await the approval of federal bankruptcy Judge Neil Olack.

The judge will take up the matter July 16, and Phillips said he could not envision the judge issuing a unilateral “no” to the agreement and bidding process.

“If he sees something he doesn’t like, he will likely say ‘I want this done,’ and reasonable people take reasonable suggestions,” Phillips said.

Slover said the specific details of the agreement were discussed in executive session to protect the county’s legal strategy in the ongoing bankruptcy case.

The agreement will become public record, however, once it is filed with the court July 16.

In the bidding process the county supervisors approved in June, a qualified bidder would have to outbid CHS by at least $1 million, and every subsequent bid would have to outbid the previous bid by $100,000.

The $1 million initial overbid requirement is to cover the cost of the stalking horse. In stalking horse agreements, the stalking horse bidder has a built-in financial incentive in case they are outbid because of the presumed risk they are taking on by being the stalking horse.

Any entity that wants to bid on the hospital will have to put down a $500,000 refundable deposit, Phillips said.

Under the adopted rules, qualified bidders will have to be able to demonstrate they can take on the business of operating a hospital and have the capital to bring the NRMC facility up to standard and potentially replace it in the long run.

Once the bidding process and purchase agreement are approved by the court, the board can adopt the finalized sale resolution and the sale process can begin with an advertisement for bids in local and national publications.

When the notice advertising the sale is published, county residents have the option of filing a petition asking to take the sale to a voter referendum for approval. The petition would require 1,500 signatures to take the matter to a vote.

If a successful petition is not filed, the hospital can go to sale without further objection.

NRMC opened in 1960 as Jefferson Davis Memorial Hospital. Its $2.4 million construction was underwritten by an $800,000 local contribution and state and federal funds.

It has been financially independent since 1974 and does not receive tax support, but is backed by a 5-mill standby tax that the Mississippi Development Bank required the hospital to get in 2006 when it asked for the MDB to reissue its revenue bond.

The hospital board of trustees announced in February its intention to declare bankruptcy, citing at the time a $3 million deficit between financial assets and liabilities.