Carson residents on financial hook for hospital until transition complete

District Attorney Noel Waters expects Carson-Tahoe Hospital's transition to a private corporation to be successful, but underscored the fact that Carson City taxpayers are liable until it's completed.

Hospital officials last week approved a $10 million purchase of 55 acres in northeast Carson City and, if approved by Carson City supervisors today, escrow on the property will open before the hospital's transition to a private nonprofit corporation is completed.

"There seems to be a lot going on at once, and part of that is motivated by perception that it is necessary to move quickly in this (business) environment," Waters said Wednesday. "Unless and until the hospital is officially transferred, the taxpayers are ultimately the pocketbook for the hospital's operations. That is how it's been ever since Carson-Tahoe became a hospital, and that is a concern."

Carson-Tahoe Chief Executive Officer Ed Epperson said the hospital has funds available for the purchase. Even if the transition were not completed, he added, hospital officials would want title to the land for a regional medical center.

"We'd have the cash in the bank to buy the land, and we'd need new bonds to build the new regional medical center and repay ourselves for the cash purchase of land," he said. "But then we'd run into the kind of problems we've always had -- city indebtedness."

Epperson was referring to Carson City's inability to assume the kind of bonded debt needed to build a new regional medical center.

"In the worst case, we would own the land and not know how to finance the new regional medical center," he said. "That's the reason we decided to become a private nonprofit."

The proposed regional medical center that is being designed to serve Carson City and its surrounding counties underscores the main reasons for the conversion to a private corporation, according to Waters.

"The hospital's service area is now broader than Carson City, but it is our local taxpayers who are at risk," he said. "Carson-Tahoe can widen its pool of health-care customers as a private, nonprofit or remain a county hospital, ultimately serving the indigent population."

According to hospital officials, the application for private, nonprofit status is being reviewed by the Internal Revenue Service. They expect a ruling within the next two weeks. In addition to approval by the IRS, hospital officials must also acquire the necessary bonds to repay $26 million in debt being held by the city.

The nonprofit corporation would be managed by a board of residents to set direction and strategy, approve a budget and find 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 initial board must be composed of the incumbent members of the current Board of Trustees.