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Brady Hospital

Rumors have floated around Brady for months that the McCulloch County Hospital District had leased a nursing home in Crane, Texas. During the same time period, the Hospital District sold property to a developer to build a nursing home or assisted living facility in Brady. Many people thought these two separate issues were related, but apparently they are not. They are two separate projects.

Adding grist to the rumor mill is the fact that the Precinct 1 (Melvin area) Hospital District seat currently held by Clay Jones is up for election this year. Gary Sutton is running against Mr. Jones in the first contested election for a McCulloch Conty Hospital District Board seat in recent memory. Many citizens discounted the idea that the McCulloch County Hospital District had leased a Nursing Home in distant Crane as small town political disinformation and too far-fetched to be credible.

On Monday, September 29, Gary Sutton ran a political ad on KNEL Radio that put the Crane Nursing home lease forefront as a political issue. Here is a transcript of Mr. Sutton's ad:

Greetings McCulloch County

In past weeks I have been coming to you describing differences between my opponent, Mr. Clay Jones and myself. Today I come with a whole different issue.
In researching various issues concerning the hospital I began to look at the Crane Nursing Home deal executed 6/1/14.

Early on I felt the district may have broken the law by entering into the deal. I have legal opinion that states that indeed the district has BROKEN THE LAW. Per local law 1059.004 and Attorney General opinion JM 257 the District cannot operate outside the boundaries of McCulloch County.

The Hospital Board BROKE THE LAW by entering into a $40,000 per month lease and assuming all of the liabilities for the Crane Nursing Home, over 200 miles from McCulloch County.
I believe other illegal acts may also have occurred and am turning my findings over to the District Attorney, as well as pursuing civil actions of my own.

These findings make the Tim Jones’ newspaper statement of 8/13 (only cost $725) and Clay Jones’ statements at their last board meeting blatantly false and totally misleading. I call on the Board of Directors to immediately do the right thing and:
1. Terminate the three illegal contracts associated with the Crane facility.
2. Terminate the employment of Mr. Tim Jones who executed these illegal contracts.
3. And I call for the resignation of Board President Clay Jones.


I am Gary Sutton and I am running for a seat on the Hospital Board of Directors.

 Hospital officials confirm that McCulloch County Hospital District has indeed leased the Crane Nursing Home and Rehabilitation center from Four Cooks Realty LLC for $40,000 per month. MCHD entered into a management Agreement with Healthcare Support Management LLC to operate it. Both agreements were signed by Tim Jones, an employee of private tax-exempt HOT Healthcare Systems. A Hospital board member confirmed that Mr. Tim Jones has authority to sign agreements on behalf of the McCulloch County Hospital District.


Mr. Sutton cites section 1059.004 of the Texas Special District Local Laws Code and an Attorney General's opinion (JM-257) in another case indicating that a district cannot own property outside the district boundaries. Hospital officials contend that the lease agreement is beneficial to McCulloch County Hospital District because it is profitable and allowed under section 1059.107.



In 2011 McCulloch County Hospital District leased their property at 2008 Nine Road to Heart of Texas Healthcare System, a tax-exempt private corporation for $150,000 per month (later raised to $250,000 per month). Healthcare System assumed all responsibility for operation, including staffing, payroll, accounting, debt collection, insurance, utilities, maintenance, regulatory compliance, supplies, and all other things required to operate a healthcare facility.

This agreement obligates Healthcare Systems to provide care for indigents but requires the Hospital District to pay for it. The details are in the Indigent Care Agreement (Exhibit A, which starts on page 49 of the attached reference document).

Part 4.a of the Indigent Care Agreement (ICA) states that the District will pay the Provider "those payments listed in Exhibit B". However, Exhibit B does not list any payments. It is blank.

On November 24, 2013, the Indigent Care Agreement was retroactively suspended effective April 1, 2012. The suspension is indefinite with no reinstatement date. It is interesting to note that the ICA was suspended indefinitely rather than terminated. Termination would have invalidated the entire lease agreement under Part 30.2.

During the suspension, neither the Hospital District nor Healthcare System have any rights or obligations under the ICA. It is unclear who is responsible for providing and paying for indigent care while the ICA is suspended.


The McCulloch County Hospital District, a Special Purpose Taxing Authority, was formed in 1969. Somewhere along the line between then and now, they took an assumed name and began doing business as (dba) "Heart of Texas Memorial Hospital". MCHD operation is governed by Section 9, Article IX of the Texas Constitution and Texas Special District Local Laws Code Chapter 1059.

In November of 2010, Heart of Texas Healthcare System was formed. It is a tax-exempt corporation set up to "... perform the functions of, or to carry out the purposes of Heart of Texas Memorial Hospital". The 83rd Texas Legislature passed special legislation (HB 1920) that allows the McCulloch County Hospital District to lease the Brady hospital facilities to any person.

In April of 2011, the Hospital District leased the hospital to Healthcare System. Since then, the business structure of Brady Hospital has become incredibly complex with multiple tax-exempt corporations involved.

By delegating their functions to the tax-exempt Heart of Texas Healthcare System, the MCHD Board of Directors effectively removed daily hospital operation from compliance with the state laws mentioned above, including Texas Open Meetings and Open Records requirements. Other than the annual IRS Form 990, Healthcare System is not required to reveal anything about daily operation or financing to the public. It is a private corporation.


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