Frequently Asked Questions
At several public forums held throughout the district, we heard a number of questions asked more than once. In the interest of providing information to those who were unable to attend, many of those questions are answered here. If you still have questions, please reach out and let us know by clicking here.
Is it true that HAD #4 has no value?
No. That’s not true and we have never said that. But it’s also not that simple.
Hospital Administrative District (HAD) #4 is a quasi-municipal organization with an elected board consisting of members from the 13 communities that make up the district. That means that the financial information for the hospital is public, although sometimes difficult to understand for people who do not work in health care.
As of March 31, 2019, the balances are as follows:
- Cash on hand for operations: $1.2 million
- Cash in funds designated by the board for replacement of equipment and plant upgrades: $13.8 million
- Cash and assets in donor-restricted funds: $1.1 million
That gives us a total of $1.2 million in unrestricted cash, and $14.9 million in restricted cash.
The long term debt including what is known as “current portion” of debt due in the next 12 months = $8.75 million
The total short term financing (operating line of credit) is $2.7 million
This gives us a total debt of $11.45 million
The current assets of the hospital are a combination of cash ($1.2 million, see above), Net Patient Accounts Receivable ($8.7 million) and other assets ($2.7 million) for a total of $12.6 million.
The current liabilities are a combination of Accounts Payable ($4 million), Short Term Financing ($2.7 million), Accrued payroll ($2.7 million) and other ($.6 million) for a total of $10 million in liabilities.
So while there is value to HAD #4 and there are assets, the fact remains that there have been significant operating losses every year since 2012. This is not necessarily a problem unique to Mayo Regional Hospital, but rather a trend being seen nationally with small, rural hospitals. Those hospitals that join a larger system are able to continue providing quality care, close to home in a sustainable fashion, which is our goal.
There is a section of the contract that requires the board of HAD #4 and employees of Mayo Regional Hospital to speak positively about the agreement. Why?
This is typical language for a merger. There are a few board members and employees who have concerns about this merger and they have spoken about those concerns publicly. They are not being silenced and they are still board members and employees. We’re all in this together. Every opinion is important and we continue to listen to all sides.
HAD #4 will no longer exist if this merger occurs? Does that mean that we lose all local control?
HAD #4 will no longer exist, but a local advisory board will be created. Other hospitals that are part of Northern Light Health have a similar structure. Those hospitals are doing well and continue to provide local, quality care, close to home. That’s our goal as well.
What if guarantees are not met?
Northern Light Health has hospitals throughout the state and a reputation to uphold. They have worked hard to ensure promises made are promises kept.
That being said, if for some reason guarantees are not met, the local board can withdraw from the agreement, returning to being an independent 501(c)(3).
I’ve heard that our taxes will go up if the hospital doesn’t merge. Why?
Because this is a Hospital Administrative District, the quasi-municipal organization has taxing authority. It’s never been used. However, towns have asked the HAD #4 Board to give notice if taxes might be imposed so they can structure it into their budget. The board issued that notice earlier this year for the first time. It does not mean that taxes will absolutely go up, but there is a chance it will happen in order for the hospital to pay off the debt necessary to pay in the short term.
Those taxes can only be used to pay debts, and not for operational costs. So while the tax increase would allow for immediate payments to be made, there will still be challenges faced from an operational standpoint in the years ahead.
Why can’t we just wait a year to vote on it?
This process has been underway for years. The Board of Directors and Executive Committee for HAD #4 has done due diligence with forward thinking and advance planning as the trend for small, rural hospitals facing challenges became evident. The board is confident that this is the best path forward, as is the local legislative delegation. The reason for the vote now is so the legislature can do the work they need to do to pass the change to the HAD #4 charter this session, which would allow for the merger to take place.
There are still additional steps that would need to be taken after the town votes and the legislative votes. This allows for additional time for input and/or questions when the question of the merger goes back before the Legislature, after the town votes are taken.
Can’t we lease the hospital out to a health care system and retain control?
No. That idea was presented and was not an option with any organization we have talked with over the years.
I have other ideas that will help that don’t involve a merger. Can you accept them?
Of course. We want to continue to hear from everyone. However, just in the past six months we have heard from a number of people with a similar question and additional ideas. None of the ideas presented are ideas that we have not already considered as a board or Executive Committee. Some of the ideas require another party to be willing to accept the idea (like a lease), and other ideas require changes that are simply out of our control (like larger reimbursement rates).
We’re always open to hearing what people have to say. But please understand that a good number of people have done a great deal of due diligence on this matter and feel that the merger is the best path forward.