AG Reaches Agreement with St. Luke’s and Hospital Districts

BOISE (News Release) – Idaho Attorney General Lawrence Wasden has completed his investigation and reached agreement with St. Luke’s Health System and two hospital districts over St. Luke’s ownership and operation of hospitals in McCall and Mountain Home.

The investigation focused on St. Luke’s ownership and funding for the operation of the two districts’ hospitals, including McCall Memorial Hospital and Elmore Medical Center in Mountain Home. Several years ago, the districts transferred their hospitals to St. Luke’s. In both cases, the districts also agreed to remit tax revenues to help fund operations at St. Luke’s hospitals.

“The Idaho Constitution prohibits a government entity like a hospital district from donating assets or transmitting tax revenues to help support the operations of a private entity,” Wasden said. “That’s exactly what St. Luke’s agreements with these hospital districts did.”

The Attorney General first learned about these agreements with St. Luke’s several years ago. The McCall hospital district in 2010 and the Elmore Medical Center in 2013 each agreed to give their respective hospitals, including all real estate, to St. Luke’s.

In return, St. Luke’s promised to maintain and improve the hospitals on the condition the districts helped fund operations with annual property tax revenues. If the districts declined to remit tax money, they would lose their right to repurchase the hospitals back from St. Luke’s.

The agreements raised several questions under Idaho law.  The concerns included the legality of giving public assets to private entities, tax revenues benefiting private enterprises and whether the districts were incurring financial liabilities that exceeded their annual revenues.

The agreements also raised concerns of whether the districts were acting within and pursuant to their grants of authority, Wasden said.

“There is no doubt Idaho’s rural hospitals face unique challenges,” Wasden said. “My goal was to find a way that a private healthcare provider and a public hospital district could work cooperatively under the law and still deliver quality, affordable healthcare. I believe we’ve achieved that goal.”

To resolve the Attorney General’s concerns, St. Luke’s has agreed to transfer ownership of the hospitals’ real and personal property back to the districts.

St. Luke’s will instead lease the hospitals and pay operational costs. The districts may use tax dollars to fulfill funding requests from St. Luke’s, but the districts retain ownership of all purchased items.

The districts will also maintain ultimate control over the services provided by St. Luke’s and any changes it wants to make to the facilities. St. Luke’s has agreed to include capital campaigns to improve or expand the existing facilities and has an option to purchase the hospital facilities in the future.

“These matters could not have been resolved without the commitment and cooperation of the districts and St. Luke’s,” Wasden said. “I appreciate the parties worked with my office to find a resolution. It’s always a good day in my book when opposing sides can solve complex problems without having to litigate in court.”