Carson-Tahoe considering private non-profit corporation

In its search for alternatives to meet the challenges of the current health-care market, Carson-Tahoe Hospital is considering the formation of a private, non-profit corporation.

As such, the hospital would be privately owned as well as maintain its tax-exempt status, and control would remain in local hands.

Originally a county hospital, Washoe Health Systems of Reno, converted to a private, non-profit in 1985, and the system has fared well.

Yearly, Washoe Health System nets about $4 million to $5 million systemwide, according to president and chief executive officer Jim Miller.

And since 1985, the organization has added many services, including home care, long-term care centers, imaging centers, pharmacies, a resource center, a diabetes center and an obstetrical clinic.

This type of non-profit company is owned by the community. Managed through a board composed of residents that often contribute some sort of expertise, the board sets direction and strategy, approves the budget and finds funding sources. Members must represent the public.

A second governing board, appointed by the membership of the corporation, oversees all aspects of the health care business.

The proposition is a double-edged sword, Miller said. It takes the hospital out of county hands but could increase the flexibility of its decision-making process.

"As a governmental entity, (the hospital) is restricted to doing only what the law allows. There must be enabling legislation allowing you to do certain things," Miller said.

For example, the price tag for Carson-Tahoe's recommended improvements is about $90 million, but the hospital's ability to get its hands on that kind of money is limited by the city's ability to assume the debt.

"Carson-Tahoe's debt structure is a problem because any bond issues floated to supply the money for capital improvements impact the city/county borrowing limits," Miller said.

But a community non-profit corporation, also known as a 501(c)(3) corporation, gives the hospital the ability to assume debt without tax support. Once on its own, the hospital would have its own debt limits.

If such a corporation is established, under Nevada law the money for the hospital could come from tax-exempt bonds, grants, commercial money or any combination of the three.

Private non-profit institutions are typically insured, and under those circumstances board members would not be liable should the hospital go into default.

In the case of Washoe Health System, the new organization assumed all contracts and debt, which was restructured.

As a county hospital, Washoe's staff was covered by the Public Employment Retirement System, a benefit that Carson-Tahoe employees currently enjoy and don't want to lose.

To address this problem, Washoe officials developed two new programs.

One offers benefits equal to PERS. The other is a 401(k) program, a pension investment option often used by private companies.

In the first, an actuary put together a private contract in which the benefits are equal to PERS. Those benefits would accrue in addition to the PERS retirement employees have already vested in that system.

According to Miller, most chose the 401(k) program because it is more flexible. Participants often have several options for the amount of salary they wish to place in their pension fund, and how that money is invested.