NEWS ANALYSIS

THOMAS HARDY

Introduction

Indian River Medical Center seems to be in the news often regarding its Heart, Wellness and Cancer Centers, increase in staff doctors, emergency room wait times, patient satisfaction ratings, budget and financial deficits, staff cuts and funding for our indigent citizens. The issues are too numerous to cover in one article. This will be first in a series of reports to examine some of these problems.

The most pressing concern for Indian River County relating to the Medical Center is how its operations will affect homeowner’s finances. There is a “need to know” that the County’s property taxes may be increased.

Increased taxes would be due to the burden of funding increased costs of indigentmedical care.   But the fact is, as the cost of providing indigent care at the Medical Center increases, that cost is passed on to the taxpayers.

Background

In 1959 the Florida Legislature established the “Indian River County Hospital District.” It was created and incorporated by Chapter 59-1385 of the Laws of Florida Acts.  A year later the District took control of hospital management.

By creating the District, the Legislature authorized and empowered its governing body, consisting of seven trustees, to assess and levy special ad valorem property taxes on its residents.  (According to the Florida Hospital Association, there are 303 Florida hospitals today, of which only 16 are given the authority to impose ad valorem taxes.)

The most significant requirement of Chapter 59-1385 is for District trustees to “provide for the payment of hospital…expenses for patients…provided that said patients shall be first certified to be medically indigent by the Indian River Hospital District, based on the definition and standards used by the State of Florida Department of Health.”  They must also be a County resident for at least six months and their income less than 150% of the Federal Poverty Guidelines.

The requirement of Chapter 59-1385 means that the District has the authority to impose special property taxes on County residents to raise the revenue needed to reimburse the Medical Center for providing indigent medical care.

In 1984 the District trustees voted to turn over operational control of the Hospital and established Indian River Memorial Hospital, Inc. as a community not-for-profit corporation.  In 2006 the Hospital changed its name to the Indian River Medical Center.

Today the District has two main legal agreements with the Medical Center: 1) the District leases it to Indian River Medical Center and 2) it reimburses the Medical Center for costs to treat indigent patients.

The District’s obligation to reimburse the Medical Center for indigent medical care is governed by an “Indigent Care Agreement,” based on a methodology for determining inpatient, outpatient and emergency costs.   The methodology today is referred to as the “Bolwell Method.”  Harry J. Bolwell, was a former Board member of the District and according to Dr. Hugh McCrystal, a 25-year member of the hospital District Board, Bolwell was “one of a kind, a very special person — especially when it came to fighting for mental health and indigent care funding.”

The Indigent Care Agreement between the District and the Medical Center, which defines the reimbursement methodology for indigent medical care, is up for negotiation every three years.  This is a third year.  Although negotiations were extended until the end of May and were supposed to be voted on by the District trustees in June, both parties say they are working to avoid a stalemate that would lead to expensive arbitration.

How much is the Medical Center asking to be reimbursed for indigent medical care?

Ann Marie Suriano, Executive Director of the Indian River County Hospital District, indicates that ad valorem tax revenue for the fiscal year 2013/2014 was budgeted at

$ 12,526,531, of which $ 11,824,974 was earmarked for indigent medical care.

Of the $ 11,824,974 earmarked for indigent medical care, the Medical Center share was roughly $ 8,100,000.  For the 2014/2015 fiscal year, the Medical Center is requesting reimbursement of roughly $ 9,700,000, an increase of $ 1,600,000 (16.5%).  Were that increase authorized, under the Indigent Care Agreement, it would be assessed to Indian River County residents in the form of increased property taxes.

The Hospital Board countered, proposing to reimburse the Medical Center $7,047 for the 2015 fiscal year.  In a June 10 letter to Trevor Smith, Hospital District Treasures, Jack Weisbaum, Treasurer of the Medical Center proposed to accept the District’s offer, with a few provisions yet to be negotiated.  “In response to your latest proposal, IRMC does not want to go to arbitration as it is a lengthy and expensive process, benefiting primarily the attorneys and experts while costing the Medical Center’s bottom line, the county taxpayers and ultimately the very patients we are trying to help,” Weisbaum wrote.

The way in which property taxes are assessed is through use of a mill rate set by the taxing authority (District).  According to Chapter 59-1385 of the Laws of Florida Acts, the District is “empowered to annually assess and levy against the taxable property within the district a special tax not to exceed 5 mills on the dollar.”  The current millage rate is .00096980 per $ 1,000 of taxable value.

To a property owner with a house valued at $ 250,000, with a $ 50,000 Homestead Exemption, a rough estimate of the additional $ 1,600,000 requested by the Medical Center for indigent care would have resulted in an additional property tax of roughly $21.44 per year. This represents an increase of 11-13% in property taxes attributable to the Medical Center request for additional reimbursement.

What can the Hospital District do to defray costs for indigent patients?

Not much.  As mentioned above, the District’s negotiation of a new Indigent Care Agreement with the Medical Center is in a stalemate. In an effort to reduce the burden of indigent care at the Medical Center, the District has established relationships and provides indigent care funding to the following providers:

Visiting Nurses Association

Indian River County Health Department

The Mental Health Association in Indian River County

The University of Florida Center for Psychiatry and Addition Medicine

New Horizons in Vero Beach

Treasure Coast Community Health

By helping support these providers, the District is trying to route indigent patients to preventative care and treatment at facilities less costly than the Medical Center emergency room.  This will decrease the burden on the Medical Center.  For now though, as the Medical Center seeks more indigent care funding, the District may be forced to decrease funding to these other providers.

The societal impact of uninsured patients

According to the Medical Center’s Community Health Needs Assessment of 2013, almost 20% of Indian River County residents are not covered by health insurance. Indigent patients, by not having health insurance, do not schedule regular preventative health primary care visits, and when they get sick, they get sicker.  In the end it costs more for their care in an emergency room.

The lack of health care obviously has an effect on their quality of life, resulting in emotional and psychological costs.  They live in fear and anxiety of a potential health problem with no means to afford it.  These fears may restrict parents from allowing their children to participate in sports or school activities and further develop their children.  All these factors have an immense cost financially and the spirit of hope within a community.

Summary 

According to Ann Marie Suriano, “the philosophical thought for the District Trustees, is the conflict between doing their duty to provide medical care for indigent patients, while taxing property owners for those costs they cannot control.”

In our next report, we will look into the Medical Center’s costs of providing for indigent care.  We should also know more about negotiations between the Hospital District and the Medical Center on the Indigent Care Agreement.

Editor’s Note: Thomas Hardy can be reached by email at hardythomast@gmail.com or by phone at 781-635-2251