Carson-Tahoe Hospital's tax-exempt status has been approved by the Internal Revenue Service, a critical step in its transformation from a city-owned hospital to a private, nonprofit corporation.
Notified Monday of the approval, hospital officials can now acquire bonds needed to repay the $26 million the hospital owes Carson City.
"We've targeted early March for (redeeming) those city bonds, and once that's completed the hospital's assets can be transferred from the county to the nonprofit," said Carson-Tahoe trustee Pete Livermore.
If all goes according to plan, the first meeting of the private corporation's board could come as early as March 1, according to Carson-Tahoe's Chief Executive Officer Ed Epperson.
Internal Revenue Service approval for Carson-Tahoe Health Systems, the umbrella organization that will oversee any interests beyond the hospital, is still pending. Epperson said officials are not sure why that approval has not come through, but they expect no problems.
"We really are forming two corporations," he said. "Carson-Tahoe Health Systems is the parent corporation, the one whose board members are ratified by local citizens. It in turn establishes a hospital board, where 70 percent of the business is and always will be conducted."
Managed through a board of residents who often contribute some sort of expertise, the members must represent the public. Hospital officials expect to appoint about 60 members to the first board.
"Carson-Tahoe Health Systems will be responsible for appointing members to the hospital's board, any future subsidiary boards, overall budget approval and any new joint ventures or partnerships," Epperson said. "The Health Systems Board would also approve any capital partner."
A community nonprofit corporation gives the hospital the ability to assume debt without tax support. Once on its own, the hospital will have its own debt limits and caps. In addition to floating bonds, the new corporation could use capital partners in a balancing act aimed at providing new and better services while maintaining local control.
Officials expect to acquire $40 million through bonded indebtedness. The money over and above the $26 million needed to repay Carson City will be used for purchase of land for a proposed regional medical center.
The hospital's ability to assume this debt depends on its bond rating. That rating will be set by Standard and Poor's rating agency following the firm's onsite visit this week, and Epperson said hospital officials are prepared to go to the bond market as early as mid-February.
Carson-Tahoe Hospital officials are planning to build a new regional medical on 74 acres near Eagle Valley Children's Home in northwest Carson City, a proposition expected to come with a hefty price tag.
The new regional medical center is still in the planning stages, but HDR Consultants figures the cost at $120 million.
Hospital officials, together with architects Moon and Mayoris, are deciding on the size and features of the facility. Hospital officials are interviewing contractors and architects for the construction phase, according to Livermore. Hospital officials have set October 2004 as the target date for completion. Construction should take about 22 months.