Halifax Health Special Taxing District Impact Study 1.

Halifax HealthHalifax Health

Special Taxing District Special Taxing District

Impact StudyImpact Study

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Topics of DiscussionTopics of Discussion

2008 Property Tax2008 Property Tax Fact Fact Ad Valorem Tax RevenueAd Valorem Tax Revenue Halifax Health WasteHalifax Health Waste Access to & Cost of Health CareAccess to & Cost of Health Care Financial ReviewFinancial Review Board of Directors Fiduciary Board of Directors Fiduciary

ResponsibilityResponsibility Citizens ReferendumCitizens Referendum

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2008 Property Tax2008 Property Tax

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2008 Property Tax %Daytona Beach District 4

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Fact Fact

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6

FactFact

– Halifax Hospital Medical Center is a Halifax Hospital Medical Center is a Community owned health care Community owned health care center, owned by the residents of center, owned by the residents of the Halifax Special Taxing District. the Halifax Special Taxing District.

– The Halifax Special Taxing District is The Halifax Special Taxing District is governed by a seven (7) member governed by a seven (7) member Board of CommissionersBoard of Commissioners

Source of data: Florida House Bill HB 1457Source of data: Florida House Bill HB 1457

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Fact Fact

– Board of Commissioners shall be a Board of Commissioners shall be a resident of the “Taxing District” resident of the “Taxing District”

– Board of Commissioners are Board of Commissioners are political patronage appointees, political patronage appointees, appointed by the Governor & are appointed by the Governor & are accountable to “NO” one.accountable to “NO” one.

Source of data: Florida House Bill HB 1457Source of data: Florida House Bill HB 1457

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FactFact

– According to The Florida According to The Florida Hospital Association there are Hospital Association there are 226 acute care hospitals in 226 acute care hospitals in FloridaFlorida

Source of Data: Florida Hospital Association—Source of Data: Florida Hospital Association—fla.orgfla.org

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FactFact

– Of the 226 acute care Florida hospitals:Of the 226 acute care Florida hospitals: 34 are Special Districts Hospitals.34 are Special Districts Hospitals.

– 16 Ad Valorem Tax Authority16 Ad Valorem Tax Authority 12 Appointed Board of Directors12 Appointed Board of Directors 4 Elected Board of Directors4 Elected Board of Directors

– 18 Revenue Sources Varied.18 Revenue Sources Varied.

– 85% of all Florida Acute Care Hospitals are not " 85% of all Florida Acute Care Hospitals are not " Special District Hospitals" they are Privately held. Special District Hospitals" they are Privately held.

Source of data: MyFlorida.comSource of data: MyFlorida.com

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FactFact

– Of the 16 acute care hospitals with Ad Of the 16 acute care hospitals with Ad Valorem Source of Revenue in Florida, Valorem Source of Revenue in Florida, 3 are located in Volusia County.3 are located in Volusia County.

Halifax Hospital Medical CenterHalifax Hospital Medical Center SE Volusia / Bert Fish Medical CenterSE Volusia / Bert Fish Medical Center West Volusia Hospital AuthorityWest Volusia Hospital Authority

Source of data: Source of data: floridaspecialtaxingdistricts.orgfloridaspecialtaxingdistricts.org

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FactFact

Florida Memorial located in Florida Memorial located in Daytona Beach, is owned by Daytona Beach, is owned by Adventist Health Care, is a Not Adventist Health Care, is a Not For Profit, Acute Care Hospital & For Profit, Acute Care Hospital & receives no Ad Valorem tax receives no Ad Valorem tax revenues.revenues.

Source of Data: Source of Data: Hospitalcompares.hhs.govHospitalcompares.hhs.gov

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FactsFacts

In 2007 Halifax records show the In 2007 Halifax records show the Emergency Department Outpatient Emergency Department Outpatient Activity exceeded 120,000. National Activity exceeded 120,000. National statistics show 87% of the patients statistics show 87% of the patients in the Emergency room did not in the Emergency room did not require Emergency room services. require Emergency room services.

Source of Data: The Feasibility of a Managed Indigent Health Care Plan for Volusia County, Fl.; Source of Data: The Feasibility of a Managed Indigent Health Care Plan for Volusia County, Fl.; Prepared by:Prepared by:

Health Management Decisions. Inc. and Wittner Companies; October 1993 & Halifax 8/05/08 Health Management Decisions. Inc. and Wittner Companies; October 1993 & Halifax 8/05/08 FinancialsFinancials

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Ad Valorem Tax Ad Valorem Tax Revenue Revenue

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Ad Valorem Tax Ad Valorem Tax RevenueRevenue

Halifax Medical Center Halifax Medical Center approved Ad Valorem Taxing approved Ad Valorem Taxing District revenues for 2008-9 is District revenues for 2008-9 is $41.6 million. Halifax reports $41.6 million. Halifax reports these revenues are used to these revenues are used to provide Indigent Care. provide Indigent Care.

Source of data: Florida House Bill HB Source of data: Florida House Bill HB 14571457

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District Ad Valorem Tax District Ad Valorem Tax Revenues can be used for:Revenues can be used for:

Debt Service Payment on Notes & Debt Service Payment on Notes & BondsBonds

Expenses of OperationExpenses of Operation MaintenanceMaintenance Construction & RepairsConstruction & Repairs Source of data: Florida House Bill HB Source of data: Florida House Bill HB

14571457

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(Continued)(Continued)

Payment of indebtednessPayment of indebtedness District expensesDistrict expenses Downtown redevelopment District Downtown redevelopment District

feesfees Tax collector fees.Tax collector fees. Source of data: Florida House Bill HB Source of data: Florida House Bill HB

14571457

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Halifax Medical Center Taxing Halifax Medical Center Taxing District Ad Valorem revenue is District Ad Valorem revenue is not the only source of revenue not the only source of revenue to pay for Indigent /Emergency to pay for Indigent /Emergency Care. Care.

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In 1986 Congress enacted the In 1986 Congress enacted the Emergency Medical Treatment & Emergency Medical Treatment & Labor Act (EMTALA) and in 2007 Labor Act (EMTALA) and in 2007 Florida Legislature passed Florida Legislature passed Statute 395.1041 which ensures Statute 395.1041 which ensures public access to emergency public access to emergency services & care regardless of services & care regardless of ability to pay.ability to pay.

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Halifax Health Ad Halifax Health Ad Valorem Tax RevenueValorem Tax Revenue 2003 $23.6 Mil.2003 $23.6 Mil. 2004 $25.5 Mil.2004 $25.5 Mil. 2005 $37.6 Mil.2005 $37.6 Mil. 2006 $45.6 Mil.2006 $45.6 Mil. 2007 $52.7 Mil.2007 $52.7 Mil. 2008 $52.8 Mil.2008 $52.8 Mil. 2009 $41.6 Mil.2009 $41.6 Mil. Source of data: Halifax Source of data: Halifax

HealthHealth

0

10

20

30

40

50

60

2003 2005 2007 2009

East03-D Column 3

2020


From 2003 to 2008:From 2003 to 2008:– Halifax Health Ad Valorem Tax Halifax Health Ad Valorem Tax

Revenue increased 224%Revenue increased 224%– CPI increased 14.4% (2003 to CPI increased 14.4% (2003 to

2007)2007)

Source of data: Halifax 2006 Bonding Data & Source of data: Halifax 2006 Bonding Data & Halifax HealthHalifax Health

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2003-08 Ad Valorem Tax Revenue Systemic Flawed Model

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Volusia $131.00Volusia $131.00 Lee 6.00Lee 6.00 Pasco 11.00Pasco 11.00 Flagler 10.00Flagler 10.00 Brevard 10.00Brevard 10.00

Counties of Comparable Size- Counties of Comparable Size- 2006 Per Capita Property Tax 2006 Per Capita Property Tax

for Indigent Carefor Indigent Care

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2008--09 Special Hospital Taxing District

Gross Ad Valorem Tax per capita Appointed Boards:

– Baker County $31.90– Graceville Hospital

$52.25– Citrus County $91.31– Halifax Hospital

$184.80– Lake County $72.79– Lower Florida Keys 0– Madison County 0– North Broward $153.67– North Sumpter– South Broward $98.18– South Lake $79.45– Southeast Volusia

$274.35

Elected Board:– Hendry Country

$151.34– Indian River County

$103.78– North Lake County

$84.23– West Volusia

$79.29

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2008-09 Halifax Health Ad 2008-09 Halifax Health Ad Valorem Tax Revenue $41.6 Valorem Tax Revenue $41.6 Million.Million.

For 2008-9 Halifax millage For 2008-9 Halifax millage is 2.25 mills; $ 184.80 per is 2.25 mills; $ 184.80 per (special taxing district) (special taxing district) capita.capita.

Source of data: December2, 2007 News Journal; Halifax 2008-09 Source of data: December2, 2007 News Journal; Halifax 2008-09 Budget Budget

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Halifax WasteHalifax Waste

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Halifax Marketing expense are about Halifax Marketing expense are about twice what hospitals nationwide spend twice what hospitals nationwide spend on average. Approx. 1.1% of Gross on average. Approx. 1.1% of Gross Revenue.Revenue.– Halifax Spent about $1 million for TV Halifax Spent about $1 million for TV

advertisementsadvertisements– $275,000 in salary for a chief marketing $275,000 in salary for a chief marketing

officer, twice what similar hospitals spendofficer, twice what similar hospitals spend $40,000 signing bonus$40,000 signing bonus $127, 000 moving expense$127, 000 moving expense $101,666 severance$101,666 severance $60,000 Country Club Membership$60,000 Country Club Membership

– $45,000 Butterfly Logo$45,000 Butterfly Logo Source of data: The news Journal December 2, Source of data: The news Journal December 2,

20072007..2727


$15 plus million for 220 acres of land $15 plus million for 220 acres of land on LPGA Blvd. on LPGA Blvd. (TNJ 1/04/08)(TNJ 1/04/08)

Federal Medicare administrative costs Federal Medicare administrative costs are less than 2.0% of gross revenue.are less than 2.0% of gross revenue.

( Source of data: TNJ July 1, 2008)( Source of data: TNJ July 1, 2008)

In 2007 Halifax administrative cost In 2007 Halifax administrative cost exceeds 15% of Gross Revenue.exceeds 15% of Gross Revenue.

(2007 Deloitte Independent Audit Report)(2007 Deloitte Independent Audit Report)

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$350,051.00 Tower Ground Breaking $350,051.00 Tower Ground Breaking Ceremony. Ceremony. ( Halifax internal Memorandum dated: July 12, 2007)( Halifax internal Memorandum dated: July 12, 2007)

– Halifax Appears to be in violation of Florida Code Halifax Appears to be in violation of Florida Code of Ethics. Will File a Form 50 with Commission on of Ethics. Will File a Form 50 with Commission on Ethics.Ethics.

Due to Halifax Medicare errors Due to Halifax Medicare errors &“over-billing”; discovered as part of &“over-billing”; discovered as part of U.S. “RAC” Audit Program, Halifax U.S. “RAC” Audit Program, Halifax was required to refund Medicade was required to refund Medicade $3,867,455.10.$3,867,455.10.

(Halifax letter dated May 12 & June 13, 2008)(Halifax letter dated May 12 & June 13, 2008)

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Access to & Cost of Health Access to & Cost of Health CareCare

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Access to Health CareAccess to Health Care

For Humana Choice PPO & HMO and For Humana Choice PPO & HMO and Blue Cross Blue Shield Advantage Blue Cross Blue Shield Advantage Medicare Plans participants Medicare Plans participants (approximately 35, 000 plan (approximately 35, 000 plan members in the Halifax Taxing members in the Halifax Taxing District) Halifax is considered a District) Halifax is considered a “Out of Network” provider because “Out of Network” provider because Halifax & Humana & BC/BS can not Halifax & Humana & BC/BS can not agree to fee for services.agree to fee for services.

Source of data: Humana, BC/BS & Halifax Source of data: Humana, BC/BS & Halifax HealthHealth

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Cost of Health CareCost of Health Care

Florida Ormond Memorial is the “In Florida Ormond Memorial is the “In Network Provider” for these Network Provider” for these Medicare Plan Participants.Medicare Plan Participants.

With InsuranceWith Insurance A “Out of Network” A “Out of Network” stay at Halifax will cost the patient stay at Halifax will cost the patient $750.00 per day compared to $750.00 per day compared to Ormond Memorial “In Network” cost Ormond Memorial “In Network” cost of $500.00 regardless of length of of $500.00 regardless of length of stay.stay.

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MedicareMedicare (HUMANA & BC/BS) Plan (HUMANA & BC/BS) Plan Participants living in the Halifax Participants living in the Halifax Special Taxing District & Paying Ad Special Taxing District & Paying Ad Valorem Property Taxes, to support the Valorem Property Taxes, to support the Hospital they own, can not utilize Hospital they own, can not utilize Halifax Hospital with out paying “Out Halifax Hospital with out paying “Out of Network” charges.of Network” charges.

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Additionally cost of Hospital Additionally cost of Hospital services services ONLYONLY (Patient W/O (Patient W/O insurance) depend on family size, insurance) depend on family size, patient net worth & income level patient net worth & income level and vary significantly between and vary significantly between Halifax & Ormond Memorial.Halifax & Ormond Memorial.

Source of data: Halifax & Ormond Memorial Source of data: Halifax & Ormond Memorial Procedures.Procedures.

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HALIFAX HEALTHHALIFAX HEALTH

FINANCIAL REVIEWFINANCIAL REVIEW

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Halifax Health 2008 Uses of Halifax Health 2008 Uses of Tax Dollars.Tax Dollars.

2008 Gross Ad Valorem Property Tax 2008 Gross Ad Valorem Property Tax $52,720,269$52,720,269

Less:Less: Discounts & Uncollectible Tax Discounts & Uncollectible Tax

($1,845,216)($1,845,216) Tax Collection & Appraiser Comm. Tax Collection & Appraiser Comm.

($1,484,530)($1,484,530) Volusia County Medicare Assessment Volusia County Medicare Assessment

($2,079,000)($2,079,000) Redevelopment Taxes paid to Cities: Redevelopment Taxes paid to Cities:

($3,333,356)($3,333,356) TOTAL DEDUCTIONS: TOTAL DEDUCTIONS:

($8,742,102)($8,742,102) 2008 Net Ad Valorem Property Tax to Halifax: 2008 Net Ad Valorem Property Tax to Halifax:

$43,978,166$43,978,166 Sources of Data: Halifax HealthSources of Data: Halifax Health

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Halifax 2007 WasteHalifax 2007 Waste

Interest on LPGA /Williamson property: $1,000,000Interest on LPGA /Williamson property: $1,000,000 US Government RAC Audit: 3,867,455US Government RAC Audit: 3,867,455 TV Advertising Costs 2,000,000TV Advertising Costs 2,000,000 Chief Marketing Officer 563,000 Chief Marketing Officer 563,000 Butterfly Logo 45,000Butterfly Logo 45,000 Tower Project Groundbreaking 350,000Tower Project Groundbreaking 350,000 Excess Physicians Salaries (MGMA-95%) 2,061,796Excess Physicians Salaries (MGMA-95%) 2,061,796 Senior Executive Excess Benefit Plan 773,000Senior Executive Excess Benefit Plan 773,000 Annual Car allowance for 19 Employees 151,200Annual Car allowance for 19 Employees 151,200 TOTAL TOTAL $10,811,451$10,811,451

Source of Data: Halifax Health , MGMA< TNJSource of Data: Halifax Health , MGMA< TNJ

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Halifax 2007 Profit Halifax 2007 Profit ReconciliationReconciliation

Halifax Health 2006-7 Pre Tax Profit Halifax Health 2006-7 Pre Tax Profit $59,228,000$59,228,000

Less:Less:– 2006-7 Net Ad Valorem Property Tax 2006-7 Net Ad Valorem Property Tax

($43,978,166)($43,978,166) 2007 Pre Tax Profit W/O Ad Valorem Tax 2007 Pre Tax Profit W/O Ad Valorem Tax

$15,249,834$15,249,834

Source of data: Halifax Health Fiscal 2008-09 Preliminary Source of data: Halifax Health Fiscal 2008-09 Preliminary Operating BudgetOperating Budget

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2004 to 2007 Halifax Gains W/O 2004 to 2007 Halifax Gains W/O Ad Valorem Property Tax-Ad Valorem Property Tax-($)Millions ($)Millions Sources of data: 2008-9 Halifax Sources of data: 2008-9 Halifax preliminary budgetpreliminary budget

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Halifax 2004-07 Profit Halifax 2004-07 Profit ReconciliationReconciliation Halifax Cumulative Excess (Deficiency) Halifax Cumulative Excess (Deficiency)

of Revenue and Gains Over Expenses of Revenue and Gains Over Expenses and Losses including Ad Valorem and Losses including Ad Valorem Property Tax $192,180,000Property Tax $192,180,000

Halifax Cumulative Net Ad Valorem Halifax Cumulative Net Ad Valorem Revenue (tax) $132,841,000Revenue (tax) $132,841,000

Halifax Gains W/O Ad Valorem Tax Halifax Gains W/O Ad Valorem Tax Revenue $59,339,000Revenue $59,339,000

Sources of data: Halifax 2008-09 Budget Preliminary Operating BudgetSources of data: Halifax 2008-09 Budget Preliminary Operating Budget 4040

With Out Ad Valorem Taxes--Cumulative 4 Year Tax District Savings

$161,540,000

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Use of Funds !!!

• Reduced Property Taxes• City Infrastructure • After School / Summer Programs• Homeless Programs• Additional Police• Attracting New Businesses• Drug rehabilitation• ECT

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Halifax Board of Halifax Board of Directors Fiduciary Directors Fiduciary ResponsibilityResponsibility

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Fiduciary ResponsibilityFiduciary Responsibility

The Halifax Board of Directors has The Halifax Board of Directors has a fiduciary responsibility to the a fiduciary responsibility to the citizens of the taxing district they citizens of the taxing district they were appointed to represent.were appointed to represent.

“ “A fiduciary is someone who has A fiduciary is someone who has undertaken to act for and on undertaken to act for and on behalf of another in a particular behalf of another in a particular matter in circumstances which matter in circumstances which give rise to a relationship of trust give rise to a relationship of trust and confidence.”and confidence.”

Defination; Webster,s New Defination; Webster,s New Collegiate DictionaryCollegiate Dictionary

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The Governor Appointed The Governor Appointed Halifax Health Board of Halifax Health Board of Commissioners has failed the Commissioners has failed the citizens they were appointed citizens they were appointed to serve to serve , when they…, when they…

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Fiduciary Fiduciary Responsibility Responsibility ? ?

Consistently Approve Consistently Approve Administrative costs in excess Administrative costs in excess of 15% of gross revenue: 13% of 15% of gross revenue: 13% points higher than U.S. points higher than U.S. Medicare.Medicare.

Approve Increasing Ad Valorem Approve Increasing Ad Valorem tax revenues by 224% over five tax revenues by 224% over five years while CPI increased 14.4%years while CPI increased 14.4%

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Fiduciary Fiduciary Responsibility Responsibility ??

Approved $15 million purchase of Approved $15 million purchase of land on LPGA—Approx. $1 mill. land on LPGA—Approx. $1 mill. annual Interestannual Interest

Approved Excessive Employment Approved Excessive Employment Agreement for Physicians & Agreement for Physicians & Executives while reducing Nurses Executives while reducing Nurses Compensation.Compensation.

2007 Approved $773,383 for 3 2007 Approved $773,383 for 3 Senior Executive Retirement Benefit Senior Executive Retirement Benefit Plans for 12 Senior Executives. Plans for 12 Senior Executives.

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Approve Indigent care costs of Approve Indigent care costs of $131 per capita: 13 times $131 per capita: 13 times comparable counties. comparable counties.

Failed to Implement 1993 Volusia Failed to Implement 1993 Volusia County Indigent Care Study.County Indigent Care Study.

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Approved construction of $200 million Approved construction of $200 million “Tower Project” –creating the largest ER “Tower Project” –creating the largest ER in Florida without addressing 87% of in Florida without addressing 87% of the ER patients that could have been the ER patients that could have been treated in a less costly mannertreated in a less costly manner

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Deny 35,000 Volusia County Residents Deny 35,000 Volusia County Residents Medicare patients “in network” fees Medicare patients “in network” fees because Halifax can not agree on “fee because Halifax can not agree on “fee for Service” costs with Humana & Blue for Service” costs with Humana & Blue Cross/Blue Shield.Cross/Blue Shield.

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Faduciary Faduciary ResponsibilityResponsibility For 2008-09 approved a 2.25 mil. For 2008-09 approved a 2.25 mil.

Ad Valorem tax on all taxable Ad Valorem tax on all taxable property within the taxing district.property within the taxing district.

$41.6 Million: $184.40 per capita$41.6 Million: $184.40 per capita 2.5 Greater than West Volusia2.5 Greater than West Volusia Second highest in Florida Second highest in Florida

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Legislative / Citizens Action ???

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Legislative & Citizens Actions

Citizens/Taxpayers have no input or oversight over the Halifax Special Taxing District. – Governor Appointed Political Patronage Board of

Directors– Florida Statute 189.428 Special District;

Oversight, Review Process Excludes Health Special Districts.

– Florida Statutes 189.4051 & 189.408 “Referenda-Special Districts” applies to Special Districts with elected Board of Directors & excludes Governor appointed Board of Directors.

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Citizens InitiativesCitizens Initiatives

U.S Supreme & Florida Court U.S Supreme & Florida Court has ruled in numerous cases has ruled in numerous cases that “taxation must be that “taxation must be proportionate to proportionate to representation”representation”

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Legislative & Citizens Actions

2009 Florida Legislature to introduce / pass legislation to make all Florida Special District Boards with taxing authority elected.

Failing to make Halifax Special Taxing District Board elected pursue legal action to make taxation proportionate to representation.

Referendum to reduce Halifax Special Taxing District Ad Valorem Millage Rate form 4 mills to .25 mills.

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Halifax Health Special Taxing District Impact Study 1.

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