Tavares, FL - Oct. 1, 2009 - Yesterday was the annual Legislator's Delegation meeting of the Florida State Legislators from Lake County. Held at Lake Sumter Community College, the purpose is to hear from various constituent groups requesting various actions. For "local" issues, the delegation can initiate "local laws" that could be successful.
The big, first subject I am writing about here ( I will add a separate posting on the other subjects later) was the proposal from Marilyn Bainter, an elected Board member of the North Lake County Hospital (Tax) District, who requested the Delegation initiate a local law to eliminate the current law establishing the Hospital District and 1 Mill tax. That law gives about $12-million in property taxes to two local hospitals, and she wants to replace it with a referendum to let voters decide if the tax should be continued. Marilyn Bainter spoke for 15 minutes and 6 other tax opponents (including me) spoke for 3 minutes each. The Hospital representatives also received 15 minutes, and then there were about 15 more of them each speaking for 3 minutes.
Senator Paula Dockery did not show up. Also out sick was Rep. Stephen Precourt. Thus, attending the meeting were Florida State Senator Carey Baker, Rep. Marlene O'Toole (who chaired the meeting), Rep. Charles Van Zant and Rep. Alan Hayes.
The Decision: Only Rep. Charles Van Zant backed Marilyn and said there should be a referendum. Carey Baker deferred any position by saying the Constitutionality of the law should be reviewed (although he knew about this issue for a year), Alan Hayes said due to the economy it was not a good time for change, and Marlene O'Toole said that the issue is a local issue and opponents should run candidates for the Hospital Board to get "change". Thus, except for Rep. Van Zant, the delegation avoided any action to improve the oversight of the tax funds and prevented voter input by denying 3 to 1 to have a referendum as requested by Bainter.
My primary conclusion is that at this time, the existing Hospital Tax District law is REALLY badly worded and needs significant revisions, if not elimination. The problem is the law only says that the tax funds of about $12-million are split between the two hospitals for "continued hospital services" WITHOUT ANY oversight requirement, NO conditions on how the funds are to be spent, NO status reports (except standard audited financials), and NO requirement for an audit trail to ensure funds are only spent to benefit Lake County residents (some Leesburg Regional Medical Center funds may subsidize the Villages Hospital and residents of Sumter and Marion counties who do NOT have such a tax). Basically, the Hospitals can spend the money on any usage (including marketing services, high salaries, pensions, etc. ) and are not questioned by the Board. Thus Marilyn has raised many issues, and the Hospitals have scrambled into defensive mode to come up with different reasons to justify the tax. But, because neither the law or the Board have provided any specific guidelines on how to spend the funds, status reporting, oversight methods, etc., some taxpayers question justifications for the tax. This problem of defining justified spending and reporting is compounded by the Board, who don't ask questions or explain the justification for their votes, thus any observer is left with the belief they either are not open minded, don't care about oversight (by "trusting" the Hospital staff to spend appropriately), or don't think they have a need to justify their decisions to the public.
At the bottom of this posting is a good overview of the meeting by David Donald of the Daily Commercial, except they take "loss" numbers from the Hospitals to "justify" the continuation of the 1 mill tax without also disclosing the net profits reported on the Hospital financials, even AFTER absorbing the "losses" , but the numbers do not agree with values stated by Marilyn Bainter. Thus the Hospitals justify the taxed by showing all sorts of loss figures on different categories of client. In contrast, Marilyn and supporters justify elimination of the need for the tax by focusing on high net profits of the hospitals even AFTER they absorbed the losses they talk about.
Following the Daily Commercial article, I have attached a comment from LRMC's attorney, Phil Braun, who supports continuation of the existing tax law without any referendum or revisions for oversight. Braun talks about losses from bad debt and Medicaid, which are considered by the Federal government to be costs they SHOULD absorb in order to be a non-profit hospital, thus I don't consider them a valid reason to justify a tax only used in 10 of 67 Florida counties.
My opinion: A referendum vote is needed where the hospitals can make their pitch and the law can be revamped to provide needed structure, conditions, status reporting, sunset (termination) provisions and oversight systems if passed.
vj
Delegates to challenge taxing districts constitutionality
DAVID DONALD
Staff Writer
LEESBURG -- Is the North Lake Hospital District a constitutional taxing authority?
That's the question Lake County's representatives in the state legislature want answered.
Opponents of the hospital district, however, wanted legislators to go one step further.
Hospital district board member Marilyn Bainter asked legislators Wednesday at the Lake County Delegation Meeting at Lake-Sumter Community College to dismantle the taxing district and then let voters decide in 2010 if they want to continue supporting the hospitals.
"We need to be able to vote," she said.
Bainter said when the Northwest Hospital District and Northeast Hospital District merged into the North Lake Hospital District in the early 1990s, it wasn't approved by voters.
"No one got to vote on it," she said. "It just happened."
Hospital officials say the consolidated hospital district didn't require voter approval because voters had previously approved the separate taxing districts.
However, state Reps. Marlene O'Toole, Charles Van Zant, Alan Hays and Sen. Carey Baker want to delve deeper into the state's constitution to see if the creation of the North Lake Hospital District required voter approval. State Rep. Stephen Precourt and Sen. Paula Dockery did not attend the meeting.
Because voters never had a chance to vote on creating a merged hospital district, Van Zant said a referendum was necessary.
"We should let the people decide," he said.
The hospital district board should also have the option of approving a property tax rate up to $1 for every $1,000 in taxable value, Van Zant added. Board members can only levy $1 or nothing at all.
Hays and O'Toole disagreed with Van Zant, saying they weren't in favor of dismantling the taxing district or holding a referendum with so much uncertainty in Washington, D.C., on the national health care debate.
"It's unwise at this time to put a referendum in front of the people," Hays said. "It's premature to tinker with the system too much until we find out what happens in Washington."
O'Toole praised Bainter and other opponents for shedding light on hospital district issue. She said there will be several seats open on the hospital district in the 2010 election and urged opponents of the tax to find residents who better represent their views to run for those seats.
"Government is better when it is handled locally," she said. "Tinkering is not the answer."
Bainter shone a spotlight on the hospital district when she ran for a seat last year. More than 40,000 residents voted for her in the 2008 election.
Bainter said the hospitals make enough in profits and receive enough tax breaks every year that they can do without taxpayer support.
Leesburg Regional Medical Center and Florida Hospital Waterman received about $12 million from taxpayers in North Lake last year to help pay health care costs for the uninsured patients.
Bainter compared the hospital tax to triple taxation. She said residents are already paying to keep the nonprofit hospitals running with federal, state and local tax breaks nonprofit hospitals receive every year.
With high unemployment and the worst economy since the Great Depression, Bainter said North Lake residents can't afford to subsidize the hospitals.
"I think more and more people are going to wake up," said Bainter. "We're already giving (the hospitals) tax breaks."
However, proponents of the tax say without the money the hospitals receive, they couldn't provide services that end up saving them money.
"There would be a huge gap in service and the community if this money goes away," said Art Ayris, executive pastor of Leesburg First Baptist.
The church operates the Community Medical Care Center, which receives about $450,000 a year from LRMC. The contribution of the hospital to help the clinic gives more than 5,000 uninsured patients an alternative to more expensive emergency room care, Ayris said. A recent study, conservatively, estimated the hospital saves more than $1.5 million a year by helping the clinic, Ayris said.
Philip Braun, legal counsel for LRMC, said the hospitals need the tax to continue offering services to residents so they don't have to travel out of the county for care.
"I think they (the delegation) were asking the right questions," said Philip Braun, legal counsel for LRMC. "I think they will find it is constitutional."
Uncompensated health care costs in 2008
Waterman - $20.7 million
LRMC - $33 million
Taxes received from hospital district in 2008
Waterman - $6.6 million
LRMC - $5.3 million
- end of article -
(Ed note: The above numbers were part of the hospital financial statements, and STILL they reported significant net profits totaling $28-million, according to Marilyn Bainter, thus they don't need the taxes. The Daily Commercial article failed to disclose the resulting profits, only the normal "uncompensated health care costs" expected of a non-profit hospital. These are the types of issues disclosed by Bainter indicating a need for the voters to vote again on the merits of the Hospital District and the taxes - vj)
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Email memo from Leesburg Regional Medical Center's Attorney, Phil Braun - who supports continuation of the existing Hospital District tax without revisions to the law.
From: Phil Braun
[mailto:[email protected]]
Sent: Wednesday, September 30, 2009 10:37 AM
To: John Brandeburg
Subject: Hospital district funding
I am writing as someone who works in and mostly understands the complicated world of healthcare, but I am also writing this as a concerned Lake County resident who was born and raised in this community and whose family owns a business in this community. It is my hope to reach out to you and other like minded conservatives who understand the economic benefits of having the hospitals in this community and why they should not be criticized for making a profit or giving back to the community. There seems to be a group of people who claim to have a great understand of a system they have never worked in nor truly want to understand, they simply want to throw out large numbers and information with no real understanding of the issue.
Thank goodness prior local delegations understood the importance and the need to help provide funds to not-for-profit community hospitals such as Leesburg Regional Medical Center and Florida Hospital Waterman. It was with great foresight that these districts were enacted. The district funds have allowed the healthcare system and services to grow and provide care to everyone in the community. It has provided opportunities not only to care for the needs of the community, but has created jobs, attracted businesses and provided economic stability in a community where there is little commercial industry. Furthermore, it has allowed residents like me and my family, as well as many of other families, to obtain the best possible care without having to leave our community. It is unfortunate that a very small group of people on a crusade has brought so much negative attention to a great partnership that should be seen as a very positive benefit to our community. To me this is a very anti-growth position to attack the Hospital and their funding.
Should we settle for smaller hospitals with less innovative treatments and less services? Our community deserves and has better. The hospitals have been great partners in the pursuit to provide the very best and safest healthcare to this community. You only have to look down the road to Volusia County where they have three separate hospital taxing districts: Halifax Hospital with a 2.6 proposed rate and collection of approx $41 million, West Volusia Hospital district with a 1.78 proposed rate and collection of approximately $16.6 million and Southeast Volusia County Hospital at a 3.5 proposed rate and collection of approximately $21.5 million and compare that to Lake County’s proposed 1 mill rate and collection of approximately $10.2 million, which is actually a reduction in collections from 2008. I believe this is quite a bargain for the healthcare that is provided to our residents, especially those who can’t afford to pay the full cost of their needed healthcare.
No matter how the numbers are presented or whether a hospital has a large or small profit, there are documented shortfalls and uncompensated costs absorbed by Leesburg Regional and Waterman. For Leesburg Regional the actual cost to provide Charity Care, Bad debt (working poor or those who pay pennies on the dollar or not at all) and Medicaid (the very poor) is well over 10 million dollars. Unfortunately we also live in an area with very little commercial industry to help offset these short falls and because Medicare also does not cover all the cost to provide all the care needed we have an even larger shortfall to make up.
It is important to understand that no matter what is presented, the hospitals use their profits to help pay for uncompensated care. In addition, we use our remaining profits to reinvest into the community and the longevity of the business. As you are aware, in a not-for-profit hospital, there are no shareholders – our board members are volunteers and accept no pay for being board members. We are a heavily regulated industry and there is no room to be fraudulent or to play games. What we provide and what we put in the public record is the truth and is what we believe is necessary for us to operate. We do not wish to be perceived as making idle threats. The truth is, this funding helps us with our mission, and without it, our mission to provide for the healthcare needs of the communities that we serve will be threatened. Services will be at risk not only for those who cannot afford it, but for everyone. Jobs will be at risk, not to mention the impact to the local economy. This is not something the hospitals take lightly and we consider this a very serious issue.
It is an issue too crucial to be determined or controlled by a small minority. It is simple to consider their proposal of simply changing the language to “up to 1 mill” as sensible. I would argue and tell you that it is not that simple. This group has gone on the record as saying they wish to eliminate the hospital district. This group has gone on the record and has said that they did not care how much profit the hospitals made or did not make, they would still advocate for elimination of this important funding. To let those with such agendas sway you into thinking they just want flexibility to eliminate the district funding is not representing the well-being of the citizens of this community. While there is a small but vocal few who wish to do away with this funding, there are far more people whose lives will be impacted if this funding is taken away or given flexibility without clear criteria of when to use that flexibility. If changes to the legislation must be made, it is imperative that those changes include some type of criteria that assures if the hospitals have a documented need they will get the funding they deserve. If the day comes (and we all hope it will come) that the hospitals do not have a need or that there are no uncompensated costs to take care of, then certainly the hospitals and the volunteer board members of those hospitals as good trustees in the community, would certainly be willing to return that money to the district.
It has been said that we made huge profits in the previous years and should have returned that money. I would argue that this is a good thing and that you have to save for a rainy day because the cost of healthcare is extremely expensive, and although the numbers sound tremendous when compared to a household budget, we are not running a household. This is a very expensive business and we want to provide the best care, the safest care and the most efficient care possible and to do that takes a lot of money and it takes the help of the community.
Furthermore, there have been accusations of a lack of transparency by the hospitals. It should be noted that we have met with every single board member of the district and that each of them has had more than one opportunity to sit down and understand the numbers. Unfortunately, healthcare finance and tax exempt regulations are not easy to understand. Some district members have been open and have had the ability to understand while others have chosen to ignore the facts because they are blinded by their one true desire to take away the funding. It should also be noted that the board members of the hospital district voted 5 to 1 to keep the district in place. They also voted 5 to 1 to levy the 1 mill as well as voted 5 to 1 on their budget again all of them meet with the hospitals and looked at their numbers. The claim that they rubber stamped the funding this year is just another tactic by those who want to do away with such funding.
There have been accusations of conflicts of interest and we want to be clear that no one on that board is currently a member of the hospitals’ operating boards. There is one member on that board who also volunteers to be on the Foundation Board of Leesburg Regional Medical Center. This man has shown nothing but integrity in this community and certainly has no financial or other gain by being on either board other than to see that the best healthcare possible is provided in his hometown. If that is a conflict of interest, then we all should be ashamed for not having such conflicts in our lives. I see that conflict of interest as no different than someone who sits on a board of trustees whose duty is to determine if the hospital has a need for such funding and looks away when presented with facts and figures showing that need. To me, that is much more of a conflict and much more of a detriment to our community.
So I would argue that we should not change the system until a better system has been proposed or developed. If there are going to be changes then it should be a comprehensive review of the legislation for all special districts and not simply adding some small language that will have unintended and unanticipated consequences.
I hope that these thoughts and information has given you something to think about and will help as we move down the path of reviewing and trying to understand how the hospital district funds are used and what they mean to the hospitals and the community.
Thank you for your time and consideration.
Sincerely,
Phil Braun
Thanks
Phil
Phil Braun JD, CHC
VP/General Council
Central Florida Health Alliance
Compliance and Legal Department
352-323-5924