The Crested Butte News Serving the Gunnison Valley since 1999
Exploring ideas like selling the hospital to outside interests
Gunnison Valley Hospital won’t be looking for financial support from county taxpayers this November. The hospital’s administration decided it would have been too much to ask of voters who might already be under hard times in the current recession.
As a result, the hospital is exploring different options to close its operating deficits, including the option of selling the hospital to a private health care group.
GVH chief executive officer Randy Phelps says, “We didn’t think the timing was right for the community, where we have small businesses under financial stress because of the economy. We didn’t want to increase their tax burden and diminish their ability to compete, and we didn’t want to see any negative impact on homeowners.”
Phelps, with the backing of the GVH board of trustees, approached the Board of County Commissioners in March about the possibility of asking voters to approve a one mil tax increase to help cover the hospital’s operational expenses.
“The bottom line is if we’re going to accomplish our mission, as defined by the board, we’re going to need some funding through new relationships with healthcare entities or tax support,” Phelps told the commissioners at the time.
Part of the hospital’s trouble in generating revenue has been treating patients who aren’t able, or are unwilling, to pay for services. Last year, treating those patients led to a $700,000 increase in the amount of unpaid accounts, bringing the total amount owed the hospital up to $4.4 million.
The resulting imbalance between the cost of services being provided and the amount the hospital is earning means GVH is losing money just keeping its doors open and providing the services it is required to offer by the county’s mandate. The hospital’s operating losses for 2008 alone totaled $160,000.
The operating losses should be less for 2009 because of budget trimming. Phelps says every cost-cutting measure has been taken. He says department managers remain open to cut costs further any way they can, but he says those steps might not be enough.
But the additional funding to cover the shortfall won’t come from taxpayers after this election, even after the results of an April survey showed broad support in the community for raising taxes to help the hospital.
With a margin of error of five points, the survey, conducted for the hospital by Utah-based Dan Jones and Associates, showed 42 percent of respondents “definitely” in support of the ballot initiative, 32 percent “probably” in support, and only 13 percent “definitely opposed.”
“We had the numbers, but we thought that we ought to wait and see how things are going for the rest of this year,” said Phelps.
One thing the hospital’s administration has to discuss is the other option Phelps mentioned to the commissioners in March: new relationships with other healthcare entities.
Although GVH is an enterprise fund associated with the county government, it is financially independent. One possibility that was considered to pump some fresh capital into the operation is selling a managing interest in the hospital to a healthcare conglomerate.
The new relationships could also mean entering into a management agreement with an equity share for a company or some other form of private investment.
Phelps also said, “If we’re thinking about this holistically, then selling the hospital to a for-profit entity is a possibility.”
The result would be some loss of local control over the hospital’s operations. The GVH board of trustees has said it wants to look for a solution to the financial troubles locally, before taking such a drastic step.
“Although the hospital’s finances have improved, that option is still out there,” Phelps said. “We haven’t really explored all the other options that are out there as to affiliation agreements with other investors or management relationships with external firms. That will be important for us to get done before we set about making final plans.”
Until those plans are made, Phelps said, the possibility of seeing a ballot initiative in November 2010 is “absolutely still on the table.”
