Effingham Hospital’s conversion to a non-profit corporation is on track for an October start, officials said Tuesday afternoon.
During a brief public hearing on the hospital’s move from a facility governed by a hospital authority to one run by a non-profit corporate board, hospital attorney Rusty Ross said the Internal Revenue Service has approved Effingham Hospital, Inc., as a 501c3.
“At this point, the lease is being developed to assign all the assets of the authority to the non-profit corporation for 40 years,” Ross said.
Ross said the lease of the hospital’s facility and operations will be to an entity controlled by the current hospital authority members.
“It is not a lease to an independent third party,” he said.
The start date is expected to be Oct. 1, and all employees of the hospital will become employees of the non-profit corporation. The hospital’s debt will remain with the hospital authority but the rent will be transferred will to the corporation.
Effingham County commissioners pay the hospital $3.6 million a year through property taxes for indigent health care. Ross said the new entity will continue to provide indigent care.
The benefits of the move to a non-profit, Ross said, include being able to go outside the county with operations and the ability to engage in transactions with physicians and other entities in joint ventures. “That will allow you to leverage your health care opportunities both inside and outside the county,” he said.
Doing so will allow Effingham Hospital to being offering services in other counties and tap into the burgeoning Pooler and west Chatham market.
“It’s in line with our transformational journey as we move forward with looking at different services and programs to increase our market share inside the county and outside the county,” said Fran Baker-Witt, the interim chief executive officer. “It’s in line with our organizational goals and the mission and the vision of the organization.”
State law prohibits hospitals operating under a hospital authority from providing other services outside their county, if the county has a population greater than 50,000.
“With the competition that is coming into Effingham County and the population just right over the county border,” Ross said, “it was decided the restructuring needed to occur so that the corporation could provide that competition and the resources to continue the operations of the hospital.”
The hospital is expected to offer its own oncology services and chemotherapy later this year.
“It’s a plus for health care in Effingham County,” hospital authority member Derrell Banks said of the restructuring.
The current hospital authority members will become the non-profit corporation’s board of directors, Ross said.
The first public hearing on the restructuring was held in 2009. But the hospital authority opted to go with refinancing and expanding the current hospital instead. The modernized, expanded hospital opened in 2012.
“Now it’s time to consider going forward with the restructuring,” Ross said. “The hospital authority and the hospital corporation have agreed to the restructuring.”
The one drawback to the move, Ross said, is the cost. He said it is a costly process, but the hospital intends to make up that money through future investments.
“You hopefully will have more tools in the tool box to fund the development and growth of this hospital system,” he said.