North Lake Hospital District
September 17, 2009
Page 1
MINUTES OF MEETING OF NORTH LAKE COUNTY
HOSPITAL DISTRICT OF SEPTEMBER 17, 2009
The meeting of the North Lake County Hospital District (the “District”) was held on September 17, 2009 at 5:15 p.m. in County Commission Chambers, Administration Building, 315 W. Main Street, Tavares, Florida.
Attorney M. Meredith Kirste called the roll to ascertain the trustees present for the meeting. The following members were in attendance: Frank Gaylord, Chairman; William Bowersox; William Talley, Jr.; Roger Beyers; Ken Carpenter; and Marilyn Bainter. Also in attendance were Patricia A. Sykes-Amos, accountant, and M. Meredith Kirste, attorney for North Lake County Hospital District. After having a quorum of Trustees present in accordance with Florida Law, the meeting was called to order.
WORKSHOP
Mr. Lee Huntley, President/CEO Central Florida Health Alliance, mentioned that their CFO, Dale Hocking, met with Ms. Bainter and a small group as requested and that the CFO’s from both groups have prepared a summary of the operating profit analysis and provided that to the Board.
Mr. Ken Mattison, CEO of Florida Hospital Waterman, stated that he appreciated the opportunity to bring forth information that the Board requested, and they wanted to be transparent. He mentioned that they were trying to consolidate those reports to report that information in similar fashion to Leesburg Regional Medical Center (LRMC) in the future.
Mr. Dale Hocking, CFO of Central Florida Health Alliance and Leesburg Regional Medical Center, explained that the first column in the Operating Profit Analysis for the Hospital Tax District chart shows the operating income or loss and what their profit or loss would be without the tax and the matching funds from the State for 2002 forward. He pointed out that it took a turn in 2007 when they had a loss of $147,000, in 2008 with a loss of $3.7 million, and in 2009 with a loss of $6.4 million, without including any investment income, tax, or State support. He noted that all hospitals in the State of Florida pay a tax into a public medical assistance trust fund, which was 1.5 percent of their net patient service revenues for in-patient and 1 percent for out-patient revenues. He illustrated that from 2002 to 2007, they paid over $2 million a year into that fund and over $3 million in 2008. He related that the last column illustrated capital that they have invested in LRMC, which ranged from $12 million to $41 million in the prior years until this year, when they had to reduce that to only $6.3 million. He commented that the tax support was critical for them, and they would be in a severe loss without it, which could result in an inability to update their technology and improve their facilities or equipment. He also mentioned that he spoke with Ms. Bainter and two other people regarding issues such as structure, finance, income statement vs. balance sheets, health care finance, and accounting in general and reconciled the 990’s.
Ms. Frances Crunk, CFO of Florida Hospital Waterman, thanked the Board for the opportunity to share with them the importance of having a healthy operating margin to sustain the organization for the future. She referred to the second page of the attachment referenced by Mr. Hocking showing the operating income in the first column which excluded their investment income and the tax. She noted that they have shown a profit. She related that having a positive operating margin was critical for a hospital, and a hospital would continue to spiral downward without it, resulting in an inability to meet their debt obligations, purchase new technology, update or replace equipment or buildings, meet the community’s growth demands, or bring new services to the community. She also pointed out that access to financing would be difficult at best without a healthy margin or adequate cash reserves, and it would be at a higher interest rate as a result. She reported that their operating margin for the last seven years shown in the chart, including the tax dollars, averages 5.5 percent, and was 2.9 percent without the tax dollars. She referenced data showing that on average in the southern United States, the operating margin for the top performing hospitals was 11.19 percent. She opined that if tax dollars were not available, Florida Hospital Waterman would be committed to maintaining a reasonable operating margin, but with a reduction of capital spending, services, and workforce and an eventual increase in rates. She stated that this could result in the long run in physicians admitting patients to other facilities, patients leaving the community to seek services elsewhere, inadequate workforce, an overcrowded emergency room, and the decline of a community hospital. She commented that they had been able to use the funds from the tax to offset a portion of the cost associated with the uninsured, to expand their services, and to provide equipment that was important to their patients. She pointed out that the hospital has spent approximately $151 million in capital improvements in the last seven years. She predicted that in 2010 they were likely to see a 4 percent reduction in their Medicaid payments and the potential elimination of one of the Medicaid programs, and commented that with the increasing uninsured and unemployment rates, the need for their support was greater than ever. She noted that there was an error in Column 11 for 2004 and that it should be $1,078,161.
Ms. Bainter stated that when she went through the financial statements, she saw that in 2007, LRMC had 57 percent and Waterman had 49 percent Medicare patients. The chart she handed out from AHCA (Agency for Health Care Administration) showed that Waterman was at 3.09 percent of their gross revenues for Medicaid and Leesburg was at 2.44 percent. She opined that the cost to the property owners of about $150 for a total of $11.2 million could be left in the economy in Lake County. She pointed out that the hospitals were not paying any federal, sales, state, corporate, or ad valorem taxes. She also stated that the County was paying for the health insurance of its employees, who were part of the insured population that were making up for those that were not insured and the indigent. She commented that if the tax proceeds were used for charity care, then they had to make a change in the law to reflect that it would be used for that rather than continued hospital services. She opined that she has had to make an effort to ask for any information or data regarding indigent care. She stated that she went back through the minutes of previous years’ meetings and did not see that this Board discussed much during their tax hearing times about whether they should go through with the tax, discontinue it, or ask the legislature if they could change the wording to vary the tax rate. She opined that the hospitals had high paid directors and employees and special interest groups that were sharing in some of the profit margins, and she asked for differentiations between Leesburg Regional Medical Center, Inc., LRMC, the Skilled Nursing Center, and the Villages Tri-County Medical Center.
Mr. Hocking stated that Leesburg Regional Medical Center is a hospital, and the Skilled Nursing Center was a department of the hospital when it existed and was included in LRMC’s financial statements, but it had been sold. He also clarified that LRMC, Inc. is the corporate structure that included the hospital and that The Villages Tri-County Medical Center, Inc. had nothing to do with this tax district. He also explained that there are structures in place because of bond issues and the Medicare regulations.
Phil Braun further explained that Leesburg Regional Medical Center, Inc. is a Florida not-for-profit corporation which holds the license for the hospital. He emphasized that the point Ms. Bainter was trying to make about the separate corporations had nothing to do with this tax district. He commented that hospital care and skilled nursing care were related entities, and the information that they were provided was all related to the operation of that hospital.
Ms. Bainter pointed out the net asset transfer of $11,705,000 to the affiliate hospital, Villages Tri-County Medical Center, and she stated that according to VHA (Voluntary Hospitals America) and the Catholic Health Care Associated United States of 2005, charity care does not include bad debt.
NEW BUSINESS
a. Recitation for the record of the name of the taxing authority, the roll back rate, the percentage of decrease over the rolled back rate, and the millage rate to be levied.
Ms. M. Meredith Kirste, attorney for the North Lake County Hospital District, announced that the rollback rate was 1.092 mills, the decrease of percentage over the roll back rate was 8.43 percent, and the millage rate to be levied was 1.0 mills.
On a motion by Ms. Bainter, seconded by Mr. Tally, and carried unanimously by a vote of 6-0, the Board moved to waive the formal reading of Resolution No. One-A in its entirety, and Ms. Kirste read the resolution by title only.
Ms. Bainter moved to make an amendment to the resolution changing the first paragraph to “Whereas, the North Lake County Hospital District may levy a millage to raise operating revenue” and under “Now Therefore, Be It Resolved As Follows,” she wanted to change to “1. The North Lake County Hospital Board of Trustees hereby approves a levy of 0.0 mills; and 2. The levy of 0.0 mills represents a decrease in the property tax levy of 0.00 percent under the rolled-back rate of 1.092 mills.”
Mr. Gaylord, Chairman, stated that at this point, for the purpose of clarification and since they had public hearings to be made, the amendment should be made at the time of the formal motion for the adoption.
Public Hearing on Resolution No. One-A setting millage
The Chairman opened the public hearing on the resolution and asked those that were proponents of the resolution to speak at this time.
Mr. Art Ayris, a resident of Fruitland Park as well as the executive pastor at First Baptist Leesburg and Executive Director of the Community Medical Care Center, stated that the value of the millage rate was far greater than the actual dollars. He related that the hospital has probably put over $3 million into the Community Medical Care Center in Leesburg, which were highly leveraged dollars, and there were 50 volunteer doctors that work with them and thousands of hours donated by volunteer nurses, other practitioners, and dentists, as well as over $1 million of donations given by pharmaceutical companies. He noted that they also partnered with the Sexual Assault Nurse Examination Program so that the victims did not have to go to an emergency room. He opined that if the millage went away, the hospital would have some hard choices, and it would leave a huge gap in services in Leesburg.
Dr. Celia Nelson, a general surgeon in Lake County since 1992 who was on the medical staff at LRMC, stated that it would be tragic and unnecessary for the tax dollars to go away. She related that there were patients showing up at their hospital who could not pay for the services that they have to provide there for them, but they get the same treatment and excellent care as those that were insured. She noted that they had to keep paying the bills in order to keep providing the supplies and services, and the hospital was not going to or wanted to turn the uninsured away. She commented that the hospitals had to be functioning, viable entities to be able to provide medical services for the community, and those tax dollars were well spent and well invested in a healthier community.
Ms. Patricia Stover-Jones, a resident of Fruitland Park, stated that when she first came to this area 36 years ago, LRMC was considered a small rural hospital that was adequate for bumps, bruises, and limited medical services. She described the negative effect on the community when LRMC closed its obstetrics department until they finally returned this service to their community by acquiring a for-profit hospital. She mentioned the heart problems that her father had suffered and that they had to travel to a hospital in Orlando for heart surgery and treatment at a time when those services were not provided locally. She also related that her mother’s onset of cancer three years later necessitated them driving to Orlando for a 17-month course of chemotherapy, which caused great hardship to her family. She related that later LRMC had both a cancer and a heart treatment center that made it easier for her parents to get the medical care they needed right there in Lake County. She commented that this illustrated that the progress of LRMC has been able to bring substantial increases in safety and state-of-the-art health care to the citizens of Lake County, and without the tax district funds, there would not have been much needed funds to reinvest in facilities, equipment, and services. She pointed out that the profits were invested in this community’s future health and not given to shareholders. She opined that having to travel out of the area for health treatments would add more of a burden on their citizens than the average cost of $100 a year for the tax. She stated that she understood that health care finance was complex and why the questions have been asked regarding the issues being discussed for the last few months. She also admired the efforts Ms. Bainter had made to understand those complex issues and ask many mind-provoking questions. She stated that LRMC holds in the highest regard the value of stewardship, integrity, and quality. She asked the Board to please not take those resources away.
Ms. Rosie Short, who worked at Florida Hospital Waterman, related that she has recently taken in her unemployed 24-year old niece who had symptoms and was exposed to someone with meningitis. She stated that the hospital treated her niece, even though she had no insurance or money, without harassing her or asking her for money. She opined that it would be appalling to take away this money, which was only a small part of what the hospitals contribute to the community.
Mr. Marc Westerman, Vice President of Support Services at LRMC, commented that in all of his years of experience he had never worked with a team that took the fiduciary responsibility and stewardship of the dollars the way that the team at LRMC does. He reassured the Board that they focus and have pride in ensuring that they properly spend every dollar as economically as possible with the balance of quality of the service and products.
Ms. Kathy Lieffort, a resident of Howey-in-the-Hills and an employee of LRMC, stated that she would not have moved to this area if the hospitals and health care system was not here. She was given support from the administration to start a program called Compassionate Companions using volunteers so that patients would not have to die alone. She commented that she was very proud to be working for that organization and knew that the tax dollars were important for their hospitals. She also stated that she was proud to pay those taxes for those fantastic hospitals.
Ms. Linda Ball, a nurse at LRMC, commented that their emergency room sees a phenomenal number of patients, and they provide that care without asking about their ability to pay. She stated that the employees at the hospital were part of the community and received the benefits of the care that was provided there. She opined that there was an attitude and an environment at Leesburg Regional that she had not seen in any other hospital in which she had worked, and it fostered a genuine desire to care for those that were entrusted to them. She has seen the hospital grow and include new services such as the heart institute and open heart surgery and advancements in the technology that was available. She opined that they could not do that without the support of the tax money. She expressed pride that she spent almost 25 of her 38 years as a nurse working for LRMC and had no intention of going to work anyplace else, because it is a special place providing special care.
Dr. Charles Mojock, President of Lake-Sumter Community College and a LifeStream board member, recapped that he spoke in favor of the one mill for the hospital district last week and commented that he believed the hospitals have delivered on their promise of transparency. He believed it was clear that the hospitals needed the one mill to support them and the work that they were doing, and he encouraged the Board to adopt the one mill rate.