After three years of ruminating on how to lift Indian River Medical Center out of financial decline, the boards of Vero’s publicly-owned hospital have picked a path from small-town to world-class.

Tuesday afternoon, following a morning of presentations, Indian River Medical Center officials selected Cleveland Clinic as their partner of choice, the IRMC board of directors voting unanimously and the Hospital District trustees splitting four to three. They now move into the negotiation phase of a deal for Cleveland to take over the hospital.

If all goes well, by the end of the year, Vero Beach will join Abu Dhabi and London’s Belgravia neighborhood – with views of Buckingham Palace – as the latest entry on the Cleveland Clinic’s map. The system, with eight regional hospitals in northeast Ohio, also has facilities in Las Vegas and Toronto.

Its only Florida hospital – until now – is in Broward County.

If plans presented to Vero officials in Cleveland last month work out, Cleveland Clinic Weston will soon be joined by not only Vero but as many as five other hospitals in the state, all in a three-year time frame.

The vote to go with “The Clinic,” as it is known in its host cities as well as to the international clients it draws, came after investment bankers from Chicago-based Juniper Advisory elicited more specifics from Cleveland’s preliminary proposal, which was so vague that one trustee, Tracey Zudans, found it off-putting.

While the other potential partners gave a dollar amount for proposed capital improvements, the Clinic committed to whatever it took to bring the place up to “Cleveland Clinic standards.” That evolved into a firmer offer this time for capital improvements totaling up to $250 million over the next 10 years, with an assumption of $102 million in liabilities.

That sum, coming from the famed clinic, was somewhat less than jaw-dropping. Zudans wasn’t the only one cocking an eyebrow.

District trustees Allen Jones and Marybeth Cunningham, the board’s finance chairman and chairman respectively, voted for Cleveland Clinic – but noted that the group’s four-three vote might send a signal as the two sides head into negotiations that a larger financial commitment was desired.

Just one switched vote when the definitive agreement comes back to the Hospital District trustees a few months from now, and the deal falls through.

The IRMC board of directors on the other hand seemed almost reverent. Seated at a conference room table, with Dr. Wayne Hockmeyer, the board’s chairman, leading the proceedings, they all but joined hands for the blessing delivered unto them – if all goes well with negotiations – sometime before the end of the year.

The final proposals, made available to the boards over the weekend, evolved over the course of the 10-week courtship, but also extended the time span for the outlay.  Adventist Health System – the second choice of six of the District trustees, as well as the first choice of one – increased its commitment for capital expenditures to $300 to $325 million over 10 years (the original proposal was over five years).

Cleveland, whose preliminary proposal, as summarized by IRMC’s advisers, read only “TBD: Cleveland Clinic Standard,” this time spelled out a $200- to $250-million commitment to capital improvements. Orlando Health, offered $200 million over seven years, or an amount projected to be approximately  $285 million over 10 years.

Those were the three nonprofit partners; they all proposed a transaction known as member substitution in the nonprofit world, and they all offered to lease the hospital’s physical plant.

All three of the nonprofits offered to keep current IRMC employees, although Adventist limited the offer to all “frontline” employees – primarily nurses and physicians.

Adventist was the only system that would have insisted on a new union contract; that, some trustees feared, could have thrown a wrench into the works at the last minute if a contract could not be negotiated.

HCA, the only for-profit, proposed a long-term lease, pre-paid in the amount of $150 million, along with $265 million in capital expenditures over 10 years.

For-profit HCA would have been the only hospital to contribute directly to the county – through the property taxes it would pay on the IRMC campus – a sum of about $2.5 million annually, according to estimates tossed about on Monday.

But all four would offer tax relief by picking up the tab for indigent patients, substantially reducing the need for tax money currently collected by the Hospital District, a taxing authority.

The decision reached Monday required two separate boards to agree on a single suitor, one of four that have been closely examined since November.

After listening to three hours of analysis led by Juniper, the hospital transaction experts, before approximately 100 onlookers at the county’s InterGenerational Center, the 16-member Indian River Medical Center board of directors drove across town to a hospital conference room to deliberate.  The seven trustees of the Indian River County Hospital District returned to their offices  for separate but parallel discussions (for details, see the two other stories on Page 1).

Within 10 minutes of the Hospital Board of Directors convening, and within two hours of the District Board beginning deliberations, accord was reached, their matching selection having “bubbled to the surface,” as the District’s consulting attorney Bill Boyles had predicted it would at their last meeting.

Now Boyles will huddle with a half-dozen other attorneys and advisers to write a letter of intent, a non-binding agreement that gives Cleveland Clinic exclusivity to negotiate with Indian River.

Signed by the chairman of the Hospital Board, Wayne Hockmeyer, and the chairman of the District trustees, Marybeth Cunningham, the letter initiates yet another phase in the carefully choreographed process.

It will likely include issues like the structure of the acquisition; the assets and the liabilities involved; the terms of payment; and issues of confidentiality.

Those are of particular concern since the hospital’s public ownership – represented by the Hospital District – can involve Government in the Sunshine laws. Cleveland, like all of the other partner candidates, wants out from under those laws.

At any point during the timeframe for negotiations – spelled out in the forthcoming letter of intent – either party can withdraw from the process.

That is not likely to happen on the  partner’s end, Juniper Advisory’s Jamie Burgdorfer told IRMC officials last week.

All of the four suitors are trying to expand their footprint in Florida, and backing out of a deal might discourage future partnerships.

Indian River stands to lose just as much if it chose to pull out, since any future partner – presumably drawn from one of the initial four – might view Vero as a less than reliable dealmaker.

While those negotiations take place, a valuation firm hired by the Hospital District will be looking over the terms to “make sure it’s a good deal,” as Cunningham told the trustees. The valuation expert adds another layer of reassurance to taxpayers that a process that has already included strenuous vetting by the two boards will have the official OK of another set of professionals.

In three to four months, the Clinic should have completed due diligence and have a full accounting of hospital’s existing circumstances as well a solid sense of its potential.

At that point, if terms are agreeable to Indian River trustees and IRMC board members, a binding definitive agreement will be drawn up and once again it will be submitted to both boards for approval.

That done, only the imprimatur of federal and state agencies – the Federal Trade Commission and the Florida Attorney General – will be needed to finalize the deal. If all goes well – and Juniper’s advisors say they see no snags on that front – the deal should close within five months.

So far, Juniper Advisory’s timeline is exactly on schedule.