Broward Health Proposes Community Not-for-profit Status

John Commins, for HealthLeaders Media , September 27, 2010

If the North Broward Hospital District board approves the change, possibly by the end of December, Nask says the new entity could take control by July 1, 2011, the start of the fiscal year, to account for changes in reporting and accounting procedures. "If we flipped in the middle of the year, unless we did an audit, it would wreak havoc with our auditors," he says.

Nask says the health system will hold four "public workshops" over the next month to explain the issue and gauge support.

The change in organizational status is permitted under a Florida law passed in 1982 that was designed to permit the leasing of public hospitals to not-for-profit groups to allow greater flexibility to compete with for-profit hospitals.

The proposal has drawn considerable criticism. Although the due diligence process has been underway for more than one year, critics say they weren't aware of it until the board's announcement on Sept. 10.

William R. Scherer, a former general counsel at the health system for 17 years, called the proposal "a half-baked idea" that he believes is motivated by politics. "My experience at the district has been that every time there is a governor's race there is a great deal of angst about what is going to happen and what the governor's position is going to be and who the new board members are going to be," he says.

Scherer says Broward Health has "floated" the idea of changing its organizational status at least four times, and the move has always fizzled. It's not just a change in tax status, he says, it's a fundamental change in the way the health system operates, adding that Nask and the board don't appreciate the ramifications and complexities of the task.

"They jeopardize their tax revenues. They jeopardize their sovereign immunity. They jeopardize their bonding," he says. "They have hundreds of millions of dollars of bonds. How are they going to redo those? How are they going to transfer assets that are the collateral for those bonds? What are they going to do with the pension plans? How are they going to deal with the thousands of contracts they have? Are they going to rewrite all of those contracts?"

Nask says he doesn't think the switch would be difficult.

"I think it's effortless. We just flip the switch. The core board would be in place, so then it would be a matter of continuing to populate the board with other community leaders," he says. That board, he stressed, would be "populated by local community leaders. We are not bringing in people form out of the area who have no vested interest in how this healthcare system works in the community."

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