Who is responsible for the operation of Lakewood Hospital and maintaining its assets, including capital expenditures?
Under the 1996 lease, LHA (not the city and not the Cleveland Clinic) is required to maintain the hospital in “good repair and operating condition” and to “replace equipment and other personal property necessary to [hospital activities].” As confirmed by the city’s outside legal counsel, Thompson Hine LLP, this requirement likely would not be interpreted by a court as requiring LHA to make material capital investments in the hospital necessary to maximize hospital revenues or to operate the hospital as a state-of-the-art facility.
As noted above, the 1996 definitive agreement does not include a commitment by the Cleveland Clinic to operate a hospital, nor does it place any responsibility on the Cleveland Clinic to maintain the hospital or to make capital repairs or improvements beyond investments during the first five years of the definitive agreement. The definitive agreement does include some commitments by LHA to make capital investments in the hospital; however, these commitments could only be enforced by the Cleveland Clinic, not the city (as noted above, the city is not a party to the definitive agreement). Additionally, LHA reports that it has met the capital investment obligations contained in the definitive agreement.