The city of Burlington, Vt., will streamline the permit process for Fletcher Allen Health Care's new $111 million outpatient center in exchange for the system's paying the city nearly $10 million over the next 30 years.
Burlington, with a population of about 40,000, will use the money to help support a variety of city services, such as a free city shuttle, emergency medical services, and parks and recreation programs.
The money is on top of $3 million Fletcher Allen had to pay in September to settle charges that it falsely billed Medicare for the work of medical residents (See story this page).
Fletcher Allen Chief Executive Officer William Boettcher said the payment-for-permit deal is not a case of quid pro quo.
"I don't think so at all," Boettcher said. "They're simply trying to be helpful in fulfilling something they worked hard to get."
Boettcher said the city lobbied Fletcher Allen to build its new outpatient center in Burlington.
Under the 30-year agreement, not-for-profit Fletcher Allen will make an initial annual contribution to the city coffers of $325,000; that annual contribution will increase by 2% each year. The payment also may increase proportionately for any improvements to Fletcher Allen facilities that increase the total existing square footage by more than 25%.
The payments to the city will come from Fletcher Allen's operating budget.
"We definitely aren't raising rates," Boettcher said.
The annual contribution agreement resulted from talks between Burlington Mayor Peter Clavelle and Boettcher.
Boettcher, who came to Fletcher Allen last year, said building relationships with the city is a priority for him, and the move toward an annual contribution was something both he and Clavelle wanted to make happen.
"Fletcher Allen has a corporate citizenship responsibility, and we need to put some resources toward meeting that responsibility whether they be monetary or in kind," Boettcher said.
The Burlington City Council unanimously approved the agreement on Nov. 1.
Clavelle said the agreement "doesn't mean (Fletcher Allen) will get any particular regulatory relief, but we support the (outpatient center) project and I will do what I can to make certain that the permitting process is smooth."
Boettcher said the process involves building and environmental permits.
Fletcher Allen got certificate-of-need approval in April to build its 258,800-square-foot outpatient center. The project also includes an 80,000-square-foot education center.
Groundbreaking for the new outpatient center could happen as soon as the end of 2000, and the facility could open by 2003.
Fletcher Allen is the largest employer in Burlington, employing about 4,000 people. Fletcher Allen Health Care, with 481 beds, includes the main Medical Center Campus in Burlington, the Fanny Allen Campus in Colchester, Vt., and a 250-physician group practice.
Fletcher Allen's contribution is just more than 1% of the city's $28 million general fund budget, most of which is collected from property taxes.
If Fletcher Allen were to pay an annual property tax bill, Clavelle estimated it could top $3 million.
But Clavelle said he considers the proposed $325,000 annual contribution a "substantial" one.