County Seeks Legal Advice on Hospital Debt, Millage
By Karen Gould

An agreement must be reached between Mackinac County and the Mackinac Straits Hospital Authority over what to do with a county millage levied for the hospital, continued payment of the $1.3 million debt on the hospital mortgage, and the future of the hospital buildings and property. To avoid a future dispute, the county's attorneys advise, an agreement should be reached before the May 6 election, when the hospital is seeking approval from voters in the City of St. Ignace, and St. Ignace, Moran, and Brevort townships to transfer all assets and liabilities owned by the hospital from the Mackinac Straits Hospital Authority to a new private corporation, Mackinac Straits Health Systems.

The proposal to build a new hospital complex in St. Ignace has county commissioners questioning the potential financial impact to the county and their responsibility in the matter, although all attending the Thursday, March 13, county commission meeting agreed the new hospital would ensure continued medical care here, boost county employment, and serve as a catalyst for ancillary businesses.

County commissioners are concerned about a lack of communication from hospital planners, and also learned Thursday that a committee was formed six weeks ago by the hospital board to discuss the future of the county-owned Burdette Street building and property, a process in which the county was not invited to participate.

Hospital documents that had been promised to commissioners by the hospital prior to Thursday's meeting were instead made available at the meeting, giving no time for review of the Asset Transfer Agreement by county attorneys.

During Thursday's meeting, commissioners agreed they need further legal advice and will meet with their attorneys in St. Ignace Monday, March 24, at 9:30 a.m.

If the transfer request fails on the May ballot, the new hospital probably will not be built, said Ron Mitchell, hospital board chair.

The county holds the mortgage debt and owns the existing hospital buildings and property. The county, said its attorneys, could ultimately become responsible for the $1.3 million in bonds, a county debt that now is paid by the hospital. The county also needs to decide if it wants to sell the debt, buildings, and property to the hospital, or take over the debt payment.

The hospital will continue to make debt payments, said Mr. Mitchell, but not indefinitely. In two years, hospital operations will be moved to the North State Street site, where a new hospital complex is planned.

"We feel obligated to make those payments now, but then again," he said, "not forever."

The county commission called for Thursday's meeting with county attorneys and hospital planners.

Attending the meeting with commissioners via conference call were their attorneys, Bonnie Toskey and Richard McNulty of the law firm Cohl, Stoker, Toskey, and McGlinchey of Lansing. Mr. Mitchell and board member Richard Smith attended from the hospital. Representatives attending from the Authority's four controlling units were Mayor Paul Grondin and City Manager Eric Dodson from the City of St. Ignace, and township supervisors Ed Serwach of Brevort and Jim Durm of Moran. St. Ignace Township Supervisor Dale Nelson was absent, attending his township meeting scheduled at the same time. Hospital CEO Rod Nelson did not attend.

Until the hospital vacates the Burdette Street site, it will continue to pay on the $1.3 million debt the county owes on the mortgage, said Mr. Mitchell.

The hospital board also plans to continue to use the 1.2 mill hospital levy when the new hospital is open by transferring the funds to the new corporation. The millage, which expires in 2009, generates about $900,000 for the hospital to subsidize the Long Term Care Facility. The new hospital, said Mr. Mitchell, would offer 66 long term care beds.

Language on the ballot for the current hospital millage stipulated the hospital can transfer the millage to the new corporation, said Mr. Mitchell. The ballot reads the millage is for Mackinac Straits Hospital "or its successors or assigns."

According to the county's attorneys, the millage is not automatically transferred to any successor, rather the decision is up to the county board.

"The ability to assign that millage to that new corporation," said Mr. McNulty, "is totally subject to an agreement between you [county commission] and the Authority, or you and the new hospital. It's not automatic."

The millage, said Mr. Mitchell, supports long term care operations.

"Long term care is a losing proposition," he said, "but we still need to provide that. I think the county wants to provide that."

Later he added, "If we want to continue to have long term care and care for our indigent population, we're going to have to have some support."

The hospital authority, comprised of the three townships and the city, was formed in 1954 to get grants to build the hospital, said Mr. Mitchell. To get financing for the new hospital, a private corporation has now been formed, he said, since the U.S. Department of Agriculture (USDA) will not make financing available to the authority.

The move will absolve taxpayers of responsibility for the new hospital debt, he pointed out, should the new hospital ever fail.

If the current hospital were to fail now, the $1.3 million owed would fall to the taxpayers, he said, while under a private corporation, if the new hospital failed, the estimated $35 million debt would not be the responsibility of taxpayers.

"This is a win-win, I think, for the residents of the county," he said. "By going this route, by going with the USDA and then a private lender, this gets us completely off the back of the taxpayers."

Hospital board meetings, now required to be open to the public, would be closed in the future, he said, even though the board would have the option include the public.

As a private corporation, hospital meetings no longer are subject to the Michigan Open Meetings Act. The new corporation probably could hold open meetings, said Mr. Mitchell, although they likely would not. Other privately owned hospitals, like Northern Michigan Regional Hospital, are not willing to hold cooperative venture discussions, such as those about providing radiation oncology and other services, he pointed out, in an open meeting.

"Northern Michigan Hospital isn't too anxious to come to a board meeting" that is public, said Mr. Mitchell. "They are a private corporation and anything they say can be in the paper, so they avoid coming to meetings."

Mr. Mitchell said county interests will be represented by board members. The new board will have 11 members once the new hospital is open, although there are only seven members on it now. They include Mr. Mitchell and Richard Smith of Epoufette, former Senator Walter North of St. Ignace, Mayor Margaret Doud of Mackinac Island, Fred Paquin representing the Sault Ste. Marie Tribe of Chippewa Indians, who also serve on the Authority board, and Steve Autore of Cedarville and Patrick Shannon of Sault Ste. Marie.

County commissioners were surprised to learn a committee had been formed about six weeks ago by the hospital board to discuss the future of the Burdette Street hospital building and property. County commissioners had not been invited to participate in the process.

Following the March 24 meeting between commissioners and their attorneys, the group will communicate with the hospital board and present a proposal for handling the debt, millage, and hospital property. If an agreement is reached, county commissioners could take action on the proposal at their April 10 meeting.