Transfer of Hospital Assets Slated for May
Voters Must First Approve Measure
By Ryan Schlehuber

Mackinac Straits Hospital Authority has agreed to transfer all of its assets, including buildings, leases, obligations, and county agreements, to a new private, notfor profit corporation which will build and operate a new hospital in St. Ignace. The transfer will require approval from residents of the Authority's four controlling units, the City St. Ignace, St. Ignace Township, Moran Township, and Brevort Township. That approval will be sought in an election scheduled for May 6.

The Hospital Authority agreed to the transfer at its meeting Monday, February 4.

The new entity will be Mackinac Straits Health Systems, and transfer is expected to be completed by early June, if voters approve it.

The new corporation will be eligible to receive more federal and state funding than the rural health clinic controlled by Mackinac Straits Hospital Authority. The new rural, critical access hospital it will build in St. Ignace, which will be called Straits Area Healthcare Village, is expected to be opened in fall 2009 at a cost of $26 million.

"We've got to get out and have an education campaign for the May 6 ballot issue to approve the transfer," said Hospital Authority trustee Walter North. "It is going to be imperative on us to explain to the public that this is a win-win situation."

The biggest benefit the new organization provides for taxpayers is they will not have to contribute to the new facility's debts, which is the underlying statement CEO Rod Nelson and the Authority are emphasizing with the transfer.

The downside will be that the public will no longer be able to attend hospital board meetings, because as a private corporation, Mackinac Straits Health Systems is not regulated by the Michigan Open Meetings Act.

The transfer from the old Mackinac Straits Hospital Authority to the new Mackinac Straits Health Systems would include all assets, debts, operations, and liabilities under the ownership of the Hospital Authority, including long term care, the Moses Dialysis unit, and a satellite clinic on Mackinac Island. The building housing the Naubinway satellite clinic is leased and a transfer is being negotiated.

Roselyn Parmenter, legal counsel for Mackinac Straits Health Systems, joined the board at its meeting, via conference call. She reported that the preliminary determination from the Municipal Employees Retirement System (MERS) will allow current employees to continue their MERS pension plans or cash them out after the transfer. Details for inclusion of newly hired employees with MERS, after the transfer of authority, still need to be worked out, said Mrs. Parmenter.

The transfer will mean that the Mackinac Straits Hospital Authority will become inactive and will no longer own any assets, said Mrs. Parmenter.

"It was thought initially that the hospital authority would still exist to keep employees' pension plans intact and lease the employees to the new organization," said Mrs. Parmenter, "however, the Authority cannot do that under Michigan Act 47."

The hospital authority will be inactive but not disbanded, as it would need to approve any transfer or sale of the new hospital by Mackinac Straits Health Systems in the future.

"If the hospital is ever sold in the future, all of the assets would go back to the Hospital Authority," said Mr. Nelson. "It still has a long-term role in ensuring health care is provided for this community."

The current hospital campus and its buildings are owned by Mackinac County under a deed transfer from the Authority in 1991. The county also holds a $1.2 million bond obligation used to expand the hospital's long term care facility, and the Authority has an agreement to make the payments on that. While that obligation will also be assumed by the new Mackinac Straits Health Systems, a committee consisting of Authority members Richard Smith, Jim Farero, and Ron Mitchell will discuss with Mackinac County the possibility of selling or leasing the current hospital buildings to cover that debt, once the hospital's operations are transferred over to the new facility.

Mackinac Straits Hospital Authority's agreement with the county to collect a county-wide millage is also transferable to the new Health Systems, so the hospital will continue to collect 1.2 mills annually, which generates $900,000 for the hospital to subsidize the Long Term Care Facility, said Mr. Nelson. The millage will be up for reelection in 2009.

"As long as we have Long Term Care, we will ask for the millage to be renewed," he said.

Serving on the board of the new private corporation are Hospital Authority Chairman Ron Mitchell and board members Margaret Doud of Mackinac Island, Fred Paquin representing the Sault Ste. Marie Tribe of Chippewa Indians, Richard Smith of Epoufette, and former Senator Walter North of St. Ignace. Others on the new board include Steve Autore of Cedarville and Patrick Shannon of Sault Ste. Marie, who owns a home on Mackinac Island.

Other Hospital Authority members will not serve on the new board, but, Mr. Nelson said, they may be tapped for committee assignments. They include Kathy Lawnichak, Pat Serwach, Al Feliksa, Donald McArthur, Jim Farero, and George Ford.

The Sault Ste. Marie Tribe of Chippewa Indians will lease space in the new facility for its new tribal health center and shares some resources, such as the dialysis unit. It has also donated 16.5 acres of land worth $1.2 million on which the new hospital will be built.

That transfer must be approved by the U.S. Congress under an 1834 stipulation requiring federal oversight of tribal land transfers or sales, the hospital has learned.

The land once housed a motel that the tribe operated in conjunction with its casino, but because the tribe used its own money to purchase the property and never put it in the federal trust, Mr. Paquin told the Authority February 4, he is confident that the issue can be resolved with little or no trouble.

The act was created to prevent trusted land given to tribes by the U.S. Congress to be sold to any other entity, foreign or domestic, without congressional approval.

"The problem is the tribe went to the bank and borrowed the money to buy the motel," he said. "That's not federal dollars, it's tribal dollars. It was never taken into trust. So basically, it's some wording in the bill that just says 'tribal land.' It is tribal land, but it wasn't federal dollars that funded it."

Mr. Nelson said the construction plans for the new facility are 80% finished and should be presented to the board by April.

Pending Mackinac Island Suit

In response to a question from Reinette Murray, a nurse at Mackinac Straits Hospital, Mr. Nelson said the hospital assets transfer and new facility funding will not be affected by a lawsuit pending against Mackinac Straits Hospital and its Authority, Mackinac Island Medical Center, Mackinac Island physician Donald Weersing, and Mr. Nelson.

In the suit, filed in 11th Circuit Court in October, Brian Schoenborn, a radiology technician at Mackinac Island Medical Center, charges he was ostracized and subsequently wrongfully discharged after filing complaints with Mr. Nelson and the Michigan Department of Community Health alleging inappropriate professional behavior at the medical center.

He filed the suit under the Whistleblower Protection Act.

Mr. Schoenborn, an employee at Mackinac Island Medical Center since 2003, was notified October 17 that he would be laid off November 3. Mr. Nelson said he is still considered an employee of Mackinac Straits Hospital.

Karen Cheeseman, the hospital's human resources director and head of qualities and risk management, said the allegations and complaints have been investigated by the risk management committee and the medical staff's committee, headed by Dr. John Stephenson, the hospital chief of staff.

A preliminary hearing in Mackinac County 11th Circuit Court has yet to be scheduled.

ER Staffing Questioned

Trustee Kathy Lawnichak asked if there is a protocol for the emergency room when the waiting room of patients is backed up, a situation she witnessed recently when she visited the emergency room to be treated for an illness.

She asked whether another doctor can be on call in case the one doctor on staff gets overwhelmed.

"I just wondered if there is a protocol for that, so people aren't waiting around for three hours to be treated," she said.

Dr. Stephenson said other than a mass casualty situation, it is rare that the waiting room is backed up where patients are waiting for three hours, so keeping a doctor on call is unneeded.

Tamie Hartwig, director of nursing for acute care at the hospital, assured Mrs. Lawnichak that she will look into exploring solutions to avoid such a situation again, regardless how rare it may be.

Finance Update

The hospital lost $80,173 in November 2007, reported Jason Anderson, chief financial officer, adding that November and December are the hospital's slowest months financially each year. In gross revenue, Mackinac Straits Hospital is up almost $1.6 million from last year, he said, owing to an increase in acute care, emergency room service, use of hospital beds, and outpatient services.

The February 25 meeting of the Mackinac Straits Hospital Authority has been rescheduled to March 24. Meetings are usually held at 4 p.m. at the Mackinac County Airport.