LOWVILLE — After months of fits and starts, the Lewis County Board of Legislators has reached an agreement with the Lewis County General Hospital board of managers that will, over four years, pay off a $5 million debt the hospital owes the county.
County Manager Elizabeth Swearingin said there is a memorandum of understanding between the legislature and the hospital that will have the hospital reimburse the county $200,000 a month in January, February and March of next year, then reduce the monthly repayment to $100,000 for 44 months until the debt is paid.
Ms. Swearingin said Friday morning that the deal is based on the hospital retiring its current debt this year with grant and intergovernmental transfer funding. However, the county in December will pay the hospital’s $4.8 million state retirement system obligation; the payback schedule will reimburse the county for that payment. Board of managers President Michael F. Young said the actual numbers will depend on the exact cost of the retirement obligation, which will be down from original estimates.
Intergovernmental transfer funds come to the hospital from the state, to pay for losses incurred by providing indigent care and to reimburse for services provided at below-cost rates. The hospital’s next payment will be $4.2 million, and that will go to the county to retire existing debt.
However, Lewis County will have to pay half of that, or $2.1 million, to the state as its share of the fund. The effect will be that the county will, in a roundabout way, pay itself $2.1 million after the funds channel through the state, back to the hospital and on to the county.
The other component of the memorandum of understanding, Ms. Swearingin said, is that the hospital will develop a plan that will end its reliance on the county for funds when it runs short.
“This plan assumes no more borrowing by the hospital,” Ms. Swearingin said. “The board of managers and the Board of Legislators are focusing on getting a financially stable hospital that operates in the black.”
She said the hospital is supposed to operate on a zero-based budget, as is the county: cash in equals cash out, without operating losses.
It has been some time, however, since that has occurred. For the last few years, the hospital has had to come to the county for additional funds, first for pension payments, then for pension and health care payments and finally for pension, health care and operating costs. Ms. Swearingin said the legislature wants that to end.
“No one wants to continue in this vein,” she said.
Mr. Young said his board is working hard to accomplish that goal.
“The message we got was threefold,” Mr. Young said. “The county wants us to be independent, to operate in the black and to stop borrowing to meet our obligations. We think we can do that.”
Mr. Young said several things have happened that have made the board more optimistic about the future. The designation as a Critical Access Hospital, which has raised federal reimbursement rates, has finally begun to result in higher payments.
And he said the hospital’s decision to hire new doctors under a limited liability company, which keeps them out of the state’s retirement system, will provide growing benefits as time goes by.
“We eliminated five providers from the (retirement) system this year,” Mr. Young said, which has contributed to the drop in the hospital’s pension fund obligations.
He also said the reimbursement agreement with the county will provide greater cash-flow stability because the hospital will be able to accurately predict its payments to the county.
“I think we came to a solution,” Mr. Young said. “I think everyone’s happy.”