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May 10, 2013

Knox hospital agreements nearly finalized

Would use ambulance tax, some of health department and library tax, for financing

KNOX COUNTY — The Knox County Hospital will receive a financial shot in the arm thanks to a plan that would shift some tax money from two special taxing districts and shift all tax money from the county’s ambulance tax to a newly-created hospital tax.

An agreement was reached Monday with the county’s Fiscal Court and the Knox County Board of Health. In addition, a potential agreement with the court and the Knox County Public Library earlier Monday is being taken under consideration.

County Judge-Executive J.M. Hall said Thursday he feels the library will reach an agreement as well.

Officials say it will keep the hospital open and get it back on the road to recovery.

Hall pointed out that the sharing of the tax money of the health department and library, and the shifting of the county’s current ambulance tax into a newly created hospital tax, was a process he called “revenue-neutral.”

“We needed about .08 percent tax revenue to make this work. That’s about .08 cents per $100. To get that without taxing the people of Knox County, we have an .05 percent ambulance tax in the county. We want to abolish the ambulance tax and shift that, making it a hospital tax. The library’s tax rate is .058 cents per $100. We asked them if they would reduce that by one-and-a-half percent, which would reduce the library’s tax to .043 cents per $100. The health department’s tax rate would be reduced a little as well. Their current rate is .040 cents per $100. With their new rate, it’ll be .025 cents per $100. If both the health department and the library give us one-and-a-half percent each, and the ambulance tax is five percent, we have our eight percent. That way, the county doesn’t pay any more tax,” Hall explained.

The agreement with the Knox County Fiscal Court, which owns the hospital, and the Board of Health was unanimously approved by the Board of Health during a special meeting Monday at 5 p.m. They approved giving the hospital one-and-a-half percent of the Health Department’s taxing district’s money for two years to help keep the hospital in business.

The health department’s director, Susan Liford, said the percent of the money going to the hospital was estimated at $300,000-$400,000 a year.

“The board felt like we needed to help the hospital, and they were very adamant they did not want to put the health department in jeopardy and have no one here lose their jobs. I think it’s the moral thing to do. And we need our hospital,” Liford said.

She added the two-year agreement would begin in January 2014, with no tax increase to county residents.

“At the end of the two-year period, the agreement would be evaluated. By then the hospital will know if they’ll be sustainable,” noted Liford.

A group led by Hall and Bob Mitchell, who serves on the hospital’s board, met earlier Monday with the library board to discuss helping the hospital.

Mitchell, a Knox Countian, served as a magistrate in the 1970’s, and most recently served as the long-time District Director for 5th District U.S. Congressman Hal Rogers until his retirement last year.

“We asked them to help us save the hospital without putting an extra tax on the county by letting the hospital have a share of the library’s taxing district money. After we talked to them, we went to the board of health and talked about saving the hospital by sharing some of the health department’s taxing district money, which they approved. The library board’s taking it under consideration. We’re waiting for the library’s decision, but we think they’ll come on board with us,” Hall said.

Should the agreements fall into place, Hall said the arrangement would allow the county to borrow USDA money at an interest rate of 2.3%-2.5%, which he said “would allow us to get our hospital running in the black, apply for grants and purchase new equipment and become profitable. He said in two years’ time they hope to have a hospital group, such as Applachian Regional Healthcare, Baptist Health Kentucky or KentuckyOne Health (which owns Saint Joseph-London) buy the Barbourville hospital, which Hall added employs nearly 300 people.

“When we went to the library and health department boards, we wanted them to be in a partnership with us and our community. It’s a community effort, and we’ll make it work,” Hall explained.

The Knox County Fiscal Court took over Knox County Hospital from the former owners on July 16, 2012. The fiscal court signed a contract with Alliant Management Corporation of Louisville to manage and operate the hospital, and named Gary C. Kendrick as CEO/Chief Executive. That was after the former owners, Pacer Management of Kentucky, Pacer Health Management Corportation of Kentucky and Cumberland-Pacer, filed for Chapter 11 bankruptcy on March 27, 2012.

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