MRMC As We Know It at Stake in Bond Issue

October 30, 2012 in Ocala News

Munroe Regional Medical Center for SaleOCALA, Fla. — Voters this election season are voting on a bond issue that could have a far-reaching impact on the state of healthcare in Marion County for decades to come. The bond issue appears at the end of this year’s general election ballot following a series of unrelated constitutional amendment questions also at stake. A “Yes” vote on the issue will provide Munroe Regional Medical Center with financing it needs to continue as a not-for-profit hospital under local control. A “No” vote will allow outside for-profit parties to take over the hospital.

MRMC is by most measures the first hospital of choice for residents in the greater Ocala area in Marion County. This will not be the first time for MRMC to seek and possibly secure such financing. During the 1960s, the Marion County Commission and the general electorate approved a bond issue to support expansion of the hospital, which later reached completion during the 1970s. This year, the financing proposed requires voter approval of a $65 million bond issue tied to an ad valorem tax designated exclusively for MRMC.

While many public finance experts might regard sales tax support as the preferred avenue, the ad valorem choice results from the fact that sales tax funds are not permitted to be used for this purpose. Local debate reveals that – despite skepticism by some about ad valorem taxes generally – many consider the importance of keeping MRMC operating as a not-for-profit to be in the greater interest of the community.

If the bond issue does not pass, trustees will move forward and choose one of several non-local for-profit companies to grant a 40-year lease – which amounts in effect to a sale of the hospital. In that case, half of the money received from the winning bidder will stay with the hospital district trustees to fund indigent care.  Half will go to the county commission to decide how it is spent for health care.

According to Mike Sizemore, a former county commission candidate, comparable sale leases typically would result in funding sufficient to offset local indigent care for about 10 years, leaving the next 30 years without funding. At this time, the highest dollar amount offered by prospective for-profit entities would cover just about one year’s annual net revenues, but would give the lessee – virtual buyer – control over the hospital for 40 years.

For-profit companies which are poised for a takeover of MRMC are Community Health Systems, Duke LifePoint Healthcare, and Health Management Associates. Some think such a takeover would be a great deal because of the huge dollar amounts offered up front by these national, for-profit healthcare providers. However, an important fact is the annual net revenues of the hospital are between $340 million and $370 million. So the top offer is just about equal to the annual net revenues. They will have this hospital for 40 years and pay a price equal to one year’s net revenues.

Even with net revenue now ranging between $340 million and $370 million, MRMC presently operates at a loss. A for-profit company – to make their new acquisition profitable – would have to eliminate unprofitable services like obstetrics, and maximize corporate staff to reduce local support jobs.

Limiting access for individuals lacking insurance also is standard for such for-profit firms as might bid for MRMC. It also is notable that limiting access for individuals who don’t have insurance is a standard with all for-profit hospitals. In proposals received to date, for-profit companies are planning to allow a fraction of amounts estimated needed for maintenance at MRMC’s aging buildings.

MRMC currently is rated in the top 1 percent for quality care when compared to 5,000 hospitals nationwide. That places Ocala’s not-for-profit hospital among the top 50 in the nation. It serves an area with population segments that are older and poorer than many areas in the nation. MRMC is the largest employer in Marion County, with 2,479 employees, according to the University of Florida. MRMC’s total local employment impact stands at 5,007 jobs, including full-time and part-time positions when factoring in local small businesses that depend on the hospital for revenues and profits. Therefore much is at stake when considering the importance of guaranteeing continued quality health care in the area.

Editor’s note: Recently the Marion County League of Women Voters issued a notice of clarification for voters. While LWV has published its opposition to various constitutional amendments on this year’s ballots, those positions are not applicable or relevant to the bond issue which happens to follow such amendments on the general election ballot.  Marion County League of Women Voters has not taken a formal position for or against the Munroe Regional Medical Center bond issue.

UPDATE: Voters rejected the MRMC bond issue and tax referendum in the general election on Tuesday, Nov 6.