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Sale of MGH gives rise to series of tough questions

Guest op-eds

August 12, 2012
Robert Kulisheck , The Mining Journal

It appears that financial and programmatic challenges confronting Marquette General Hospital require that it be sold to a for-profit organization that will have the ability to continue to provide quality services to our community.

It also appears that Duke LifePoint has the financial resources, medical expertise, practical experience and a management philosophy that would enable it to successfully operate a regional medical facility in Marquette. While I am very much in support of this sale, I have requested that the Attorney General's Office address the questions noted below in its final report.

First, it has been reported that Duke LifePoint's $500 million offer includes $15 million to fund a new MGH Foundation. This new MGH Foundation is of significant local interest because for most of the past century MGH and its predecessors were granted tax exempt status by the City of Marquette, Marquette County and the local school districts.

Now that this tax exempt nonprofit hospital is being sold, Michigan law requires that a new independent foundation be created to serve as the repository for the "profits" from the sale. The board of this new foundation will then, on an annual basis, distribute dollars back to the community for "health related purposes."

How was the $15 million sum for the Marquette General Foundation determined? Who will select the members of this new board? Will membership on the foundation board be governed by term limit provisions? Will membership on the foundation board be limited to residents of areas in which units of government had previously granted MGH tax exempt status? How and by whom will the geographic boundaries for the area to be served by the new MGH Foundation be determined? Will foundation funds be distributed across the Upper Peninsula, or only in those areas previously granting MGH tax exempt status? How and by whom will the definition "health related purposes" be determined?

Second, the new hospital in Marquette will become a major part of the local tax base. As such, local units of government and school districts will need information that will help them anticipate future tax revenue. It is recognized that a final assessment cannot be done at this time. However, answers to the following questions would be very helpful.

What items listed as part of the $500 million total purchase price will become part of the assessed value of the new for-profit hospital? What is a current rough estimate as to the amount of tax revenue that will be generated for local units of government?

To what extent would passage of pending legislation calling for the elimination of the Michigan's personal property tax reduce the amount of anticipated tax revenue from noncapital equipment owned by the new hospital?

Third, Michigan Law requires that the Attorney General's office must protect charitable assets and review the sale of nonprofit organizations. This requirement does not affect the sale of for-profit hospitals.

With this in mind, what safeguards are built into the current sales agreement to ensure that if the hospital in Marquette is subsequently sold to a different for-profit organization that future owner will be bound by the promises that Duke LifePoint has made to the Marquette community? For example, will all subsequent for-profit owners of the hospital be required to continue to provide comparable indigent care and core services?

The Attorney General's Office has provided a preliminary response to a number of these questions.

Of most immediate significance, the Attorney General's Office reports that deliberations concerning MGH Foundation board membership criteria, areas to be served and rules governing the operations of the new foundation are continuing. Estimates of tax revenue to be generated by the new hospital will not be part of the Attorney General's review.

Duke LifePoint will provide indigent care and core services for the next 10 years and will not sell the hospital for 10 years. The Attorney General will confirm that the sum of $15 million allocated for the new MGH Foundation satisfies state standards.

In that many decisions concerning this sale are still being made, this would be an ideal time for local officials to contact the Attorney General's Office and offer their opinions on issues affecting the local community.

It might also be appropriate for local officials to begin to calculate the amount of tax revenue that will be generated by this new hospital.

Editor's note: Robert Kulisheck is a long-time resident of Marquette and a former city commissioner and mayor of Marquette. He is currently chairman of the Marquette City Charter Commission, a member of the Marquette County Board of Health and is president of Propylon Nonprofit Housing Corporation, an organization providing housing for 18 extremely low income, severely handicapped individuals.



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