Rural Hospital District May Fail To Survive
Across America the health care system is facing budgetary shortfalls. Rural Hospitals are struggling to remain solvent and local hospital districts are hard pressed to provide service to the taxpayers. In Townsend Montana, the local district has been under extreme pressure to fulfill their fiduciary duty with an extreme amount of debt.
The hospital was forced to close a few years back due to non-compliance. This closure caused a further burden on the hospital district responsible for maintenance of the building. Under Montana law 7-34-2122MCA ~“a hospital district has all powers necessary and convenient to the acquisition, betterment, operation, maintenance and administration of hospital faciliities that its board of trustees considers necessary and expedient.” Under subsection 11 of the law; The district may; “sell or lease any of its facilities or equipment as may be considered expedient.”
For years the hospital district provided the statutory funding that came with the creation of the hospital district in Broadwater County. The contract with BHC required the district to provide funding for maintenance of the building. Because BHC has been operating in the red, the maintenance program continued to impact the maintenance program, a majority of all funding went into operations costs. This diversion of funding left the building in need of extensive repairs.
It is estimated that the district and BHC need approximately $1.800,000.00 to become solvent. Certain deficiencies fail to provide satisfactory conditions mandated by Montana code adding potentially additional financial obligations. An assessment made to remediate the known costs is listed $2,893,000.00.
Over the past several months, the district has been nervously standing by awaiting a decision pending between BHC and other major medical facilities. A takeover of BHC has been on the table due to financial shortcomings. St. Peters Hospital in Helena Montana made local headlines stating that a “Letter of Intent” was signed with BHC. In their review of BHC, they sent a team to Townsend to examine the facility. In that process they estimate that it will take around $2,000,000.00 to repair the building.
Broadwater County officials have listed the taxable value of the land and buildings owned by the Hospital District at $5,037,084.00. Chairman of the District board Hugh van Swearingen stated there is no way there is that value.
Today at the district meeting it was said that St. Peters Hospital has yet to come forward with an offer. The chairman of the district board stated that another major medical provider called Sanford Health based in South Dakota has also shown interest. In addition a health care facility in Billings Montana has also looked at BHC.
One of the buildings owned by the hospital district is currently being used as a storage building for the ambulances. It is known that the historic use of the building has resulted in a petroleum leak in severe need of cleanup. The building also has confirmed black mold and is now listed as a Brownsfield site in need of remediation.
A short time ago, BHC and the district used the ambulance building as collateral for a $1,000,000.00 loan from the taxpayers. The loan was given to the district using the ambulance building as collateral. It is now determined that there is zero market value or loan value in the building or the property.
The district was told by Broadwater County Attorney Cory Swanson that the board should hire a commercial appraiser to get a value on the building and property prior to any sale of the facility. Because the debt against the building and property is still pending, Mr. Swanson said that, on behalf of the taxpayers, this action is required prior to closing. He also stated that the board members need to be sworn in prior to making financial decisions. Up until very recently only one of the 5 board members had recorded their oath as required by Montana Law.
Board Member Vic Sample moved that the board approve getting an appraisal but the motion failed to get a second. With taxable value at near five million and a debt around two million, the district is in trouble.
The board was notified today that they need to file their preliminary budget to the commission on or before Friday, June 14, 2019. The board was not aware of their statutory budget requirements. With only $104,000.00 total cash assets controlled by the district, there is deep concern on how the hospital can survive.
The taxing authority of the Broadwater County Hospital District is now in need of resolution of debt. With near zero revenue, economic conditions of the district will likely worsen in the coming days. The district will meet again next week to approve a preliminary budget.
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