The debate over changing a community hospital's not-for-profit status is usually heated, but one pending conversion recently led to an en masse resignation of a hospital district board in Tooele, Utah.
The resignations of six of the 13 trustees of the Tooele County Hospital Special Services District board on June 2 were in protest of the Tooele County board of commissioners' vote to sell 122-bed Tooele Valley Regional Medical Center to Brentwood, Tenn.-based Community Health Systems for $3.7 million. A letter of intent for the transaction, which would convert Tooele Valley into a for-profit facility, was signed last month.
According to hospital district board Vice Chair Kathleen Griffith, the main issue prompting the resignations was simple: The resigning trustees did not want a for-profit firm running the hospital, located in a fast-growing community 25 miles southwest of Salt Lake City.
"A not-for-profit hospital is beneficial for the community. Profits are put back into the community, while a for-profit hospital has to meet the appetite of the shareholders," said Griffith, who was among those who resigned.
Griffith said the hospital district board preferred to sell the facility to Nephi, Utah-based Rural Health Management Corp. Rural Health has been managing the facility for the past two years and operates four other small hospitals in the state.
Although Rural Health underbid Community by $1.4 million, Griffith said the board had been pleased with Rural Health's management of the hospital and its recruitment of new doctors.
Rural Health President Mark Stoddard said he is "disappointed we couldn't work further with the county," but the company has no plans to challenge the decision.
Under the county's governance structure, the 13-member district hospital board actually had little say in the matter.
The county board of commissioners appoints nine of the hospital district trustees. (Two of those seats are vacant.) Four other seats are appointed by surrounding towns served by the hospital. Six of the seven sitting county-appointed members resigned.
Aside from approving the sale, the county commission also had sidestepped the hospital district board by passing a resolution late last year to curb its ability to make large purchases or enter new contracts.
County Commissioner Lois McArthur said selling the hospital is crucial to its maintenance.
The facility has had mostly minor improvements since it was built in the 1950s, and growing demand is placing too much stress on the facility.
"We don't have the money to do it ourselves, and (CHS') financial stability is far greater than Rural Health's," she said.
While both Rural Health and CHS promised to build a replacement facility, McArthur said CHS' proposal called for a larger, state-of-the-art hospital.
James Rice, president of the Governance Institute in La Jolla, Calif., said that with the proliferation of appointed hospital boards and buyout offers by large chains, a repeat of the scenario in Tooele is likely.
"We're starting to see more tension when we're dealing with the large amounts of money proprietary chains offer for controlling interests," he said.
Meanwhile, McArthur said her county board would quickly appoint replacements for the departed hospital district trustees and finalize negotiations with CHS. "For a long time, no one wanted our hospital. Now it's a commodity," she said.