Tax District?
A hospital taxing district is neither an option nor under consideration to save St Mark’s Medical Center. HCOE has been continually asked, "Would a hospital district solve the problem?" It is common for people to presume that this is the only way. Let us be clear: a hospital taxing district will not solve the issue at hand, and we at HCOE do not believe that it is needed. Sam Wilson wrote an article for The Fayette County Record explaining in detail how a hospital district and hospital authority work. First, if a hospital district were to be passed, it would take a year of tax collection before the money would be available. Second, passing this kind of a taxing district requires a year of intense community engagement. It also requires objective third-party consultants to prepare the tax district proposal and then a series of community meetings and forums to explain that proposal. Taxpayers have to be able to be a part of the process and provide input. There has to be full transparency, and the taxpayers must understand how their money will be spent and who is accountable. Third, given the history of SMMC in this community and the devisive contentiousness surrounding the previous attempt in 2018, HCOE believes it would take at least two years of the hospital operating smoothly and transparently before any endeavor of this magnitude could even be considered. Even if we wanted to pass a hospital district, we would need four years before funding was available from this strategy. SMMC simply does not have four years, and four years down the road, SMMC won’t need it. A hospital district is not an option and never has been under consideration as a solution by HCOE.
As to the "inevitable" need for a hospital district, HCOE does not believe it will ever be required. We have a large, well built, and well designed hospital. This is a facility that has the ability to support itself. Almost all of the 85 hospital districts in Texas support truly rural hospitals that are small and have sparse populations.
There are only five approved Rural Emergency Hospitals (REH'S) today in Texas, and they too are in extremely small and rural areas. The other four rural emergency hospitals (REH's) located in Crosbeton (outside Lubbock), Marlin (outside Waco), San Augustine (East Texas), and a hospital outside Abilene are actually rural areas with very limited access to emergency care. Here in Fayette County, we don't have the same problems. We are a vibrant county with a high net worth demographic. We are the seventh ranked county in Texas based on net worth. In addition, our hospital facility is valued at $24 million dollars based on a net income valuation model.
The HCOE asset management plan calls for bringing providers into the facility and treating the entirety of the hospital as an asset that we can lease and generate leasehold revenue in addition to generating revenue from hospital operations SMMC manages. When we do this, we generate net income from leasing operations of just over $2 million dollars and that is enough to cover the debt on the hospital. Unfortunately, the hospital administration has never viewed the hospital in this way, and as the healthcare delivery model has shifted to an outpatient model, requiring fewer hospital inpatient beds, those beds have been decommissioned and the space has become increasingly vacant. Today, hospital operations account for about 15% of the space of the hospital and the rest is vacant, considered an underperforming asset. HCOE has a plan to reverse this situation and use this space to bring specialty care back into the hospital, use the space, and support the hospital’s bottom line.
We don’t believe the hospital needs a hospital district today or in the future. Even if we did, we don’t have four years to wait for the proper formation of a hospital district. It is simply not a possibility.