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Broward Health’s assets at “distressed” levels, “below book value” without tax levy, study says

By Karla Bowsher, BrowardBulldog.org 

Broward General Medical Center

A new state-ordered study compares the value of Broward Health’s operating assets to those of a “distressed hospital” worth “significantly below book value.”

The study by the audit firm Deloitte determined Broward Health’s fair market value to be $271-$320 million, without counting the tens of millions of dollars in annual property tax revenues it receives. If those taxes are included, Broward Health’s value rises to $503-$532 million – or “slightly above book value,” Deloitte’s 69-page report says.

The firm will present its findings to Broward Health’s governing board at a public hearing at 5 p.m. today at the Westin Cypress Creek in Fort Lauderdale.

The hearing is a requirement of Florida’s “Sale or Lease” law, passed last March at the urging of Gov. Rick Scott, that required all public hospitals to determine how much they are worth and evaluate the possible benefits of selling or leasing their facilities to a private corporation.

Before the law was enacted, Broward Health’s board spent many months looking at whether to privatize. That effort, however, stalled for reasons that remain unclear.

‘NO CONCLUSION’

The North Broward Hospital District, whose business name is Broward Health, operates four hospitals and 22 other medical facilities. Its flagship is Broward General Medical Center in Fort Lauderdale.

As a special taxing district, it receives property tax dollars from Fort Lauderdale to Parkland to help care for indigent patients. Last year, the district took in $154 million in tax revenues, according to an annual report.

Broward Health’s board of seven governor-appointed commissioners voted on July 25 to hire Deloitte for $275,000 to put a price on the district.

Deloitte’s final report, submitted to Broward Health last week, analyzed the district’s fair market value in two scenarios: with and without tax revenue.

“Deloitte made no conclusion or recommendation in the report,” Broward Health CEO and President Frank Nask said in an emailed statement. “The next step is for the board to review Deloitte’s report and vote on accepting it as a matter of public record.”

Frank Nask, president and CEO of Broward Health

Commissioners Debbie Kohl and David Di Pietro, board members appointed by Gov. Rick Scott, did not return phone messages seeking comment.

A PUBLIC PROCESS?

The board began to discuss the idea of leasing its facilities to a community nonprofit corporation prior to the passage of the federal Patient Protection and Affordable Care Act of 2010. Also known as “Obamacare,” the legislation requires uninsured individuals to obtain private health insurance or pay a penalty starting in 2014.

Nask broached the subject at a board meeting on July 22, 2009.

“If everyone gets insured, then we would not receive tax dollars,” he said, according to the meeting minutes.

At a special meeting on Sept. 10, 2010, the board passed a resolution authorizing Nask “to initiate and facilitate” the lease process.

Commissioner Clarence McKee, an appointee of former Gov. Charlie Crist, was the lone vote against the resolution. He said it seemed rushed and that he needed more information and time to make an informed decision.

“This looks like a done deal,” he said, according to the minutes.

The board acted without seeking public comment, fueling a backlash.

At a public tax hearing a few days after the meeting, critics berated board members for not allowing them to voice their opinions before the vote.

Four town-hall style meetings were later held about the matter. The resolution was ultimately repealed and replaced with a slightly different version.

The new resolution authorized Nask “to explore and to evaluate all potential options for the district to respond to the impacts of federal healthcare legislation … including, but not limited to, the potential lease of the district’s facilities.”

But according to Nask, the possibility of transitioning the public hospital system into a community-based nonprofit that could lease or sell its assets is now moot.

“As far as a transition process from 2010, the board simply made a motion to study a possible transition,” Nask said. “There’s nothing to proceed with because the law changed.”

 

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