Background:
In September 2016, after 23 years partnering with Lopez Clinic, Island Hospital gave notice they would terminate their contract in June, 2017, explaining that operating a remote clinic in the current healthcare environment had become too challenging. Immediately, members of the Catherine Washburn Medical Association, the non-profit volunteer board that supports our clinic, began working with Dr. Wilson, clinic staff and community members to find a new model of management that would meet our needs. It became immediately apparent that whether we found a new partner or went independent, keeping the clinic in operation would require on-going financial support from the Lopez community. After exploring options, the group felt that a Public Hospital District would be an excellent mechanism; it met their criteria of being financially sound, fiscally responsible, fair and equitable for our community. This is the same tool being used successfully to support many other rural, remote clinics around the country. A petition was put forward to put the measure on the ballot. While only about 200 signatures were needed, more than 500 individuals signed the petition. The two issues on that ballot are the proposed public hospital district and the election of commissioners to administer the district.
What happens if the Public Hospital District doesn’t pass, will the clinic close?
The clinic will not immediately close if the measure doesn’t pass, but it will be thrust into a tough financial position. Potential partners will no longer be interested in partnering, putting us in the position of having to go independent. Independence is a lengthy process that will have significant impacts.
In the short term, clinic services would be drastically reduced. For a period of time we would be able to serve urgent care patients only. Everyone else would need to go off island for their medical care until funding and business operations are in place to offer full services again.
Passing the hospital district assures that Lopez property owners will meet that financial need now, not delay until a financial crisis develops. The bottom line is this: Lopez Clinic must have additional funding. While we might limp along using our reserves for a period of time, the clinic will eventually close without our community’s financial support.
If the measure doesn’t pass, where will interim operating funds come from?
Since the clinic opened in 1972, islanders have been making donations to the Catherine Washburn Medical Association to maintain the building and fund clinic expansions. Right now our community, through the CWMA, has almost $3 million held in reserve for those purposes. While the funds were not intended to run the clinic, they could be used in case of an emergency. Our best estimate is that the reserves would only keep the clinic open for a few years. Because this approach would empty the reserve fund, it would leave the clinic financially vulnerable. We believe it is better to establish a public hospital district now, begin collecting funds in 2018, and protect our reserves for the purposes they were intended.
Why isn’t the tax rate included in the measure?
Like everyone on Lopez, we wish it were. The problem is, we don’t have exact figures for the additional income that will be needed to run the clinic. That number can’t be calculated until we know if we will have a new partner or will be operating independently. Once that is known, the commissioners will begin doing the financial work necessary to set a figure that meets our actual need. The commissioners will determine the tax rate by November of this year.
How much might the measure cost me?
San Juan County sets the range in RCW 7044.060. The maximum is 75 cents per thousand dollars of assessed value. For a property assessed at $450,000 the maximum tax would be $337.50 per year. Of course the tax rate may be considerably lower, depending on the clinic’s actual financial need.
Can the funds collected for the PHD be used for anything besides Lopez Clinic?
Yes, according to the RCWs establishing and governing all Washington state public hospital districts, funds could also be used to support other specific medical services in our community. That said, it is clearly the sole intent of the voters putting the measure on the ballot to use these funds to support Lopez Clinic at this time. To expand the use of these funds in the future, the public hospital district commissioners, who are directly responsible to Lopez voters, would be required to vote for those expenditures.
What happens to tax money if it is collected but not spent?
Any tax money that is collected but not spent remains as a fund balance in the account of the Public Hospital District. If money is left in budget lines but is unspent at the end of the budget cycle, it will remain in the PHD account and be carried over until the next year.
Is there a time limit for spending the money that is collected?
No, there is no time limit.
Is there a way to reduce the tax rate in future years?
This question relates to possible large one-time expenses in the first year which may not continue in future years. The commissioners are responsible for a new budget every year. In the first year, they set a base rate that determines the possible tax rate in subsequent years. The commissioners can reduce that rate if the need changes. If this occurs, they will have what is called “banked capacity” which allows them to raise taxes to the previous rate if that becomes necessary.