County Commissioners Vote to Turn Hosiptal Into a Non-Profit
Teton County Commissioners took the first step on Tuesday to convert the county-owned medical facility, Teton Valley Health Care, to a private nonprofit that would continue to work within county jurisdiction.
Commissioners signed a Conversion Agreement at the end of the public meeting that will allow county and hospital officials to begin more formal and detailed negotiations with Bingham Memorial Hospital, the nonprofit medical facility based in Bingham County that has been working as consulting agents to Teton Valley Health Care for the last two years.
“I think the long term here with the hospital; it’s the way to go to start investing back into our hospital where we maintain ownership and we still maintain local control with a board of trustees here,” said Teton County Commissioner and hospital board vice-chairman Bob Benedict before the vote. “I think the liability reduction to the county is significant and I think we should go ahead.”
Tuesday’s unanimous vote by commissioners will allow for the incorporation of a new nonprofit entity called TVH or Teton Valley Hospital. The county will now seek 501-(C)3 status to establish TVH, an IRS status that could take several months to obtain. Officials will also seek, among other components, a five-year renewable hospital management agreement with Bingham officials.
Bingham Memorial Hospital went through a similar conversion in 2004, changing from a government-run medical facility to a private nonprofit. Bingham officials entered into a letter of intent with TVHC in August, working toward the Conversion Agreement signed this week.
“I would conclude this presentation by saying that the plan we put forth and the Conversion Agreement is designed to produce a self-sustaining, perpetual hospital operation,” said hospital board chairman Steven Dietrich to commissioners on Tuesday. “A key component to producing the cash flows necessary for these future capital improvements is leveraging the expertise, purchasing power and systems developed by the Bingham executives and their staff, that we increase our efficiencies and revenues at this hospital. I can’t guarantee and there are no guarantees, that this will succeed and certainly other options were explored over the prior 18 months. The interest expressed in TVHC and us by Bingham is significant and should not be underestimated given the general lack of other restructuring opportunities we see available for this hospital.”
In a public meeting that lasted almost two hours, Dietrich detailed the hospital board’s journey toward the ultimate decision to convert the hospital using Bingham Memorial Hospital has lead management.
“A basic fork in the road became quite evident soon after the second taxpayer levy barely passed in May ’10,” Dietrich said in an interview. “Aaron Hansen (now the TVHC Treasurer) and I held our nose of sorts when we made a final recommendation to the BOT in January ’10 to seek yet a second capital levy. We put significant constraints on the request (for capital only) and even suggested the monies could be paid back to the county if our fears were unfounded about capital needs and the money was not necessary. Unfortunately, our fears were right and the money was critical to the capital needs of the hospital in 2011. Nevertheless, the trustees concluded that levy No. 2 was probably the last one the voters would approve – with good reason.”
This laid a solid foundation for the hospital board to pursue not a new taxing district that would have to be voter approved, but a partnership, and more specifically, a nonprofit status for the hospital.
“The lease agreement will be 99 years long but the management agreement will be a five-year renewable deal with events of default and termination,’ said Dietrich. “Although it will be a private entity, TVH will be governed by a local citizens’ board. Just like now, it will be incumbent upon this board to react should the operating results not develop as desired. The options range from finding a new management partner, self-management, giving up on the lease or even selling the assets. The bottom line is there are always options but it is our starting premise to plan for success not failure. We want and need a viable hospital in this valley and that is what we shall have.”
Several members of the public expressed concern that the hospital was being “given” to Bingham Memorial Hospital while others questioned the county’s liability upon entering into such a partnership.
“We are not giving the hospital to BMH,” said Benedict. “The hospital is owned by Teton County and continues to be owned by Teton County. It is a county-owned hospital. If the nonprofit does go into default it reverts back to Teton County.”
“You have to remember this is a conversion agreement, which is just the beginning of the process of laying out the big issues,” continued Benedict. “The thing that the (hospital) board looked at is to make sure, whatever the organization is, the nonprofit keeps investing into our hospital, our community hospital. Whatever the new management is has to reinvest into the new hospital at the deprecation rate that includes money that is going into it from the present tax levies and also anything in the future that is donated to the hospital. From my perspective and the board’s perspective, for many years there were not investments made into the hospital. What this does is require the investments to be made into the hospital and that is part of the contract that needs to be developed.”
Both the county and hospital board made concerted efforts during the meeting and in the form of public documentation to show that the process by which they arrived at Tuesday’s decision was done in the pubic arena. After the meeting, the Valley Citizen was given an unsolicited, 22-page packet that included public discussion dating back to 2009 where initial inquiries to change management models were first discussed.
“Public disclosure of aspects of this process in the form of presentations like this and others was intended by the (Board of Trustees) from the start,” Dietrich said at the beginning of the county meeting. “However, the public must realize that these beginning negotiations included certain employment and contract issues that would not be appropriate to address in public. All BOT decisions pertaining to the execution of the Conversion Agreement were made in open session. It is both the intention and responsibility of the BOT to disclose in a timely manner the pertinent facts related to this process,” he said.



























