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September 30, 2014

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ANSWERS: CLARK COUNTY:

UMC might benefit from a hospital taxing district

Boulder City Hospital tried last fall to persuade voters to create a hospital district.

The proposal: Collect 15 cents per $100 assessed value from property owners and use the money to improve the hospital.

Boulder City voters shot it down. But with University Medical Center enduring budget cuts so severe that they even led to the shuttering of UMC’s outpatient cancer clinic, some Clark County officials are wondering whether a hospital district is a feasible funding option for the county hospital.

UMC is a nonprofit, like Boulder City’s, but UMC is run by the county and the Boulder City Hospital is run by a private entity. Advocates for the hospital say that difference could result in a different outcome at the polls.

Are hospital districts a new concept?

They have existed in Texas since the 1960s. Washington state has 56 public hospital districts, said Beionka Moore, executive coordinator of the Association of Washington Public Hospital Districts. In Nevada, eight formerly private hospitals, mostly in rural northern parts of the state, benefit from hospital tax districts.

Does the county have the power to create a hospital tax district? Doesn’t the state Legislature have to approve it?

State law says a hospital district can be created by a county commission. We might all start hearing the details in the coming months.

Are UMC’s money problems the result of bad management?

Problems with the prior management led to a police investigation. But the hospital has always lost money because it is the only public hospital in the largest metropolitan area in Nevada and it does not turn away people who cannot pay for medical services. At the same time, the state cut funding to its Indigent Accident Fund, translating to a loss of at least $13.5 million to UMC next year, money that would have helped cover the cost of medical care for the poor. That’s on top of an $8 million hit UMC will take because state Medicaid funding was cut.

Does UMC get truckloads of money from the county?

It gets millions, but county officials say the amount needs to be put into context. In 2007, the county commissioned a comparison of UMC with 11 other publicly financed hospitals. Summarizing 2004 figures, the report said county contributions to UMC amounted to 4.7 percent, or $20 million, of its budget.

That 4.7 percent was lower than the percentage of public money in the budgets of nine other hospitals. (Two hospitals didn’t provide information.) The public contribution to those nine hospitals’ budgets averaged 21.7 percent. The high was 36.2 percent, at San Francisco General, and the low was 5 percent, at Hennepin County/Minneapolis. Peter Tibone, UMC’s director of reimbursement, added that Clark County is required to pay millions to the state ($62.1 million in fiscal 2009) to support the Medicaid Disproportionate Share Hospital fund, and $18 million to Nevada’s Medicaid Upper Payment Limit program. This money helps fund the state’s share of federally matched Medicaid programs, of which UMC is the largest beneficiary.

UMC’s state and local funding in fiscal 2008 grew to $44.8 million, about 9 percent of the hospital’s budget. That is likely to keep increasing, Tibone said, because economic downturns result in more patients who can’t pay. Even with bolstering from the county in 2008, the hospital lost $12 million, he added.

There has been no more recent study of how that stacks up against other hospitals.

How much does UMC lose when patients can’t pay their bills?

Tibone said that in fiscal year 2008, the county hospital wrote off $382 million in bad debts because of nonpayment. It posted another $1.1 billion in contractual adjustments — the difference between what the hospital billed and what it collected from insurance companies.

All told, UMC’s revenue from patient care was $502 million. Tibone said UMC creates budgets anticipating these losses, so the hit to the bottom line isn’t as severe as the numbers tell.

Then how much money would a hospital district raise if, say, a tax rate of 15 cents per $100 of assessed value, as Boulder City Hospital wanted, became law?

We can only approximate, because the boundary lines of a hospital district haven’t been drawn. But with help from the Clark County Assessor’s Office, we can guess by using the county’s 2009-10 secured tax rolls. As of Dec. 6, 2008, the total assessed value of all property in Clark County was $90.8 billion. Divide that by $100, and you get $908 million. Now multiply that by 0.15 (15 cents) and you get $136 million as the amount that might be raised from a hospital district. On a home assessed at $250,000, 15 cents per $100 would amount to $375.

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