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May 29, 2015

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Clark County:

Commissioners consider property tax hike to ‘get everybody paying’ for financially challenged UMC

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Mona Shield Payne

Clark County commissioners listen to a speaker during a meeting at the Clark County Government Center in Las Vegas on Tuesday, March 19, 2013.

Map of University Medical Center of Southern Nevada

University Medical Center of Southern Nevada

1800 W Charleston Blvd, Las Vegas

More than a third of all patients treated at University Medical Center each year come from nine ZIP codes that surround the valley’s urban core and stretch into North Las Vegas.

Still, each year hundreds of thousands of patients from suburban Henderson or Summerlin or outlying towns such as Boulder City make their way to the valley’s only public hospital for treatment.

About 40 percent of UMC patients in 2012 came from unincorporated Clark County, with another 40 percent living in Las Vegas. The remainder includes residents from North Las Vegas, Henderson, Mesquite, Boulder City and Nellis Air Force Base.

Clark County commissioners say they’d like help paying for the operations of the financially challenged and county-owned UMC.

Getting local municipalities such as Las Vegas or Henderson, which face budget crunches of their own, to pony up for UMC is a political improbability, commissioners acknowledge. It’s led them to consider what commission chairman Steve Sisolak calls an “option of last resort”: a countywide increase in property tax rates.

UMC faces an operating deficit in fiscal year 2014 of $87 million — about half of which will be covered with federal funding. An additional $30 million will come in a subsidy from Clark County, on top of $100 million the county already provides to the hospital annually.

UMC has bled red ink for years, in part due to the high number of uninsured patients it sees. The situation only threatens to worsen, county officials fear, as the federal Affordable Care Act begins providing increased coverage to the currently uninsured, many of whom, given the option, presumably will choose hospitals other than UMC for care.

The loss of some newly insured patients plus a statewide expansion of Medicaid, which reimburses at rates that often don’t cover the cost of care for patients at UMC, put unique pressures on the hospital’s already-tenuous position.

Sick of being on the hook to cover any losses at a hospital that benefits the entire valley, commissioners requested an analysis of where UMC’s patients come from, broken down by ZIP code.

At first glance, the data, which covered the total number of patient visits from 2010 to 2012, showed what you might expect: The highest number of patients comes from the areas immediately surrounding the downtown hospital, overlapping with some of the poorest parts of the valley.

But Commissioner Chris Giunchigliani said she was surprised by the wide reach the hospital had into outlying areas such as Henderson, which sent 40,000 patients to UMC in 2012.

“Why aren’t cities helping to pay for this? It’s a county hospital, but their constituents are using it,” she said. “A countywide tax is a way you get everybody paying something. … It’s one way to bring in the cities, so to speak, that haven’t been helping to pay.”

The county currently levies a property tax rate of 44.7 cents per $100 of assessed valuation, which combines with property taxes levied by municipalities, the School District and other entities to make up a property owner’s tax bill.

The county has the authority to raise its property tax rate by 25 cents, with each cent increase generating an extra $5.1 million in revenue. But because of property tax caps enacted by the Legislature, the amount of revenue returned would decline significantly after the first 9 or 10 cents, making any increase beyond that point unlikely.

Giunchigliani said a dedicated revenue stream, in this case a portion of property taxes, would be the best way to shore up the ailing hospital, which also is in line for $78 million in capital improvements to stay competitive with newer, more modern hospitals.

Commissioners will discuss raising the property tax rate at their Tuesday meeting, although any increase would have to be approved at a later date.

“We have always done things on the cheap in Nevada, whether it’s hospitals or education or mental health, and it’s coming home to roost now,” Giunchigliani said.

“Sometimes you have to step up and say, ‘If we believe this is the right thing to do and the community thinks this is the right thing to do, then we have to do it the right way instead of having bake sales (to pay for UMC).”

Sisolak said he opposed any tax increase and instead favored rejiggering UMC’s governance structure to put it under the management of an independent board of medical and business experts instead of the county commission.

By providing the hospital more autonomy, Sisolak said he thought it would be better able to adapt to the rapidly changing medical industry, which would boost revenues and drive down expenses, lessening the need for a county subsidy.

“A hospital is a unique operation to run; it’s not like running a normal business,” Sisolak said. “You have such a wide breadth of responsibilities from employee and vendor contracts to the medical care side of things to negotiating contracts with insurance providers. … A board of experts could determine what the best course for the hospital is. I think what UMC needs is to become a hospital with pockets of excellence. They can’t be everything for everybody. They need to find areas where it would be a magnet for certain procedures.”

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