Las Vegas Sun

March 28, 2024

Money-losing UMC could be privatized

If University Medical Center continues to lose millions of dollars, Clark County might consider transferring ownership of the hospital to a private, nonprofit corporation, officials said.

UMC has lost nearly $6 million this fiscal year because of an increase in uninsured patients seeking treatment at the public hospital.

The medical center suffered similar losses in the early 1990s, forcing administrators to turn to Clark County for $17 million in subsidies. County officials fear more subsidies could burden their general fund, which is already tight.

"I think it should certainly be an option," Commissioner Yvonne Atkinson Gates, vice chairwoman of UMC's board of trustees, said of transferring the hospital. "I think we need to look at all the options that are out there in terms of looking to see if we can provide better quality of care."

Transferring public hospitals to private, nonprofit companies has been a trend across the country. Washoe County transferred its hospital in 1985, and Carson-Tahoe Hospital made the transition in March.

Washoe County's facility struggled financially before it was incorporated into a tax-exempt nonprofit hospital called Washoe Medical Center.

Washoe administrators noted that the dynamics in health care have changed drastically in the nearly two decades since the transfer, but said the private, nonprofit status has been beneficial.

"One of the reasons we transferred Washoe Medical Center from county-owned to private, nonprofit is the private facility could operate more efficiently and more effectively," said Chris Bosse, Washoe Medical Center vice president of finance.

Bosse said the Washoe Medical Center board of trustees focuses solely on the hospital; hospitals operated by counties are often competing with other needs.

Like UMC, Washoe Medical Center has treated a larger number of uninsured patients since the Sept. 11 terrorist attacks, when tourist industry workers lost their jobs. Washoe, however, is still profitable.

Clark County Finance Director George Stevens said the success of a UMC sale can't be based on other Nevada hospitals' experience. UMC treats far more indigent patients -- low-income residents with no health insurance.

"The biggest concern is that even if the county were told to do away with the county hospital, we are still responsible for indigent care," Stevens said. "Would you be spending more money on indigent care than you would be giving the hospital to operate?"

Carson-Tahoe Hospital was a county-owned facility for 52 years. In March, it converted to a private nonprofit. Spokesman Richard Linkul said the hospital was financially healthy when it made the transition.

Linkul said the nonprofit paid off its $26 million debt to Carson City and is eligible to pursue bond money based on its own bond rating. Also, taxpayers are not responsible for the hospital's financial success.

"This puts us in a stronger position; it allows us to borrow more money and borrow it at a better rate," Linkul said. "Every dollar we are able to generate is always put right back into the further success of our organization."

Carson-Tahoe is required to provide indigent care for 25 years.

Clark County Manager Thom Reilly -- along with UMC spokesman Rick Plummer -- said the decision is up to the hospital's Board of Trustees, which is the County Commission.

"When the county was losing money I believe there was some discussion about it, but it hasn't been approached in the past few years," Reilly said. "It's up to the board of trustees to see if that's something they want to look at."

Commissioner Erin Kenny, chairwoman of the hospital trustees, was out of town and not immediately available for comment.

Commissioner Myrna Williams said the county would "have to see all the research and how it works out."

"Is it a better answer fiscally?" Williams said. "It's certainly something that I'd imagine would be in the hopper with all other options."

Commissioner Bruce Woodbury said he sees no need to make any immediate changes and blames the hospital's current financial problems on the aftermath of Sept. 11. He said the county would have to conduct extensive analyses before making a move that would affect so many county employees.

"You always want to explore different options but I think it's worked pretty well for UMC to be a public hospital," he said. "The bottom line needs to be what's best for citizens in terms of medical care and fulfilling our obligation to provide medical care to those who otherwise can't afford it."

Atkinson Gates noted agreed indigent care would be the greatest stumbling block. She said making the hospital private would, however, end the community's private hospitals' long-standing complaint that the government should not be in a business competing with them.

Whether a transfer would be successful considering UMC's financial status could be a concern. Linkul said Carson-Tahoe opted to sell while the hospital was operating successfully.

"We've seen too many companies, health-care or otherwise, where they should have sold, then it unravels and becomes unsellable," Linkul said. "They have to agree to terms and conditions that are less than favorable."

UMC administrators are scheduled to give Clark County commissioners a presentation on their finances during the board's Aug. 20 meeting.

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