Two competing health care systems face an uncertain future

Four years ago, in the fall of 2006, San Juan County was in the midst of a controversy that had been brewing for more than a decade.
Ironically, the dreams of many county residents to build a private hospital in Blanding could not advance without a political solution. It would require a motion of support by the San Juan County Commission before the federally-guaranteed loans would be advanced for the proposed hospital.
The window of opportunity to secure the motion of support was narrow. San Juan County Commissioner Manuel Morgan was a strong supporter of the project, but he had been defeated by Kenneth Maryboy three months earlier in a Democrat Party primary race and would leave office in January, 2007. While Morgan was mounting a write-in challenge to Maryboy, his chances of being re-elected were minimal.
Morgan was not only scheduled to leave office, but a concern of many county residents was that he had a conflict of interest and should not participate in a motion regarding a project he was closely tied to. Morgan served as chairman of the board of Utah Navajo Health Systems (UNHS), a main supporter of the project, and had been paid $55,000 in 2005 for “tribal liaison” services to UNHS. In addition, he was on the board of directors for the proposed hospital.
A tense and emotional public process culminated on October 9, 2006 in a motion of support by Morgan and a second by Commissioner Lynn Stevens. The motion passed 2-1, with Commissioner Bruce Adams opposing.
However, the San Juan Record story reported, “the setting of the motion was conciliatory rather than confrontational as Commissioners expressed a determination to help keep San Juan Hospital open.”
A statement from the Commission, the health care board and the mayors of Blanding and Monticello was released, which stated that the group was “committed to work together in preparing and implementing a plan which will assure that the current county hospital in Monticello will be able to remain open and provide expanded health services after the Blue Mountain Hospital becomes operational.”
It is now four years later, and two hospitals are operating in San Juan County. High quality health care has never been more available to the residents of the sprawling county.
Clinics are open in Navajo Mountain, Monument Valley, Montezuma Creek, Blanding, Monticello, La Sal and Spanish Valley. More doctors are practicing in San Juan County than ever before and health care opportunities have never been better.
Two open hospitals, access to dialysis services and the impressive advance in technology-delivered medical services are all proof that it is “the best of times” for health care in San Juan County.
However, it may not be far from the “worst of times”. The cost of providing these services is significant and both hospitals face ongoing challenges.
Morgan’s October, 2006 motion effectively moved the issue out of the public eye and onto the construction site. A ground-breaking ceremony for the new hospital was held within a week of the motion and construction moved ahead on the $22 million project.
According to 2007 tax documents filed with the Internal Revenue Service, within one year of casting the deciding vote that allowed the project to move ahead, Manual Morgan’s company, Morgan and Associates, had billed Blue Mountain Hospital $426,735 for “planning/design services”. The statements show that Morgan and Associates had a payable note from Blue Mountain Hospital for $194,355.
The new facility, with eight patient beds, a three-bed birthing facility and San Juan County’s first dialysis program, opened in July, 2009 and has been providing services for 14 months.
The City of Blanding is listed in the tax documents as the major lender in the project, with a $14,555,000 loan for hospital construction. Payments are due on the loan each month for the next 25 years at 5.34 percent interest. Payments for such a loan are approximately $90,000 every month. Blanding served as the “conduit” on the loan, with payments to a private bank.
In addition, Utah Navajo Health Systems is listed in the IRS documents for a $2,054,000 loan to the hospital at zero percent interest. Servicing millions of dollars in debt in a slow economy is a daunting challenge for anyone.
Because the tax documents are for the fiscal year ending September 30, 2007, the information is three years old. Blue Mountain Hospital has yet to file tax documents for the 2008 and 2009 tax years and the 2007 report is the latest information available from the IRS.
In recent weeks, Blue Mountain Hospital CEO Lorin MacKay has been replaced after serving for approximately two years. Donna Singer currently serves as the CEO of both Blue Mountain Hospital and UNHS.
San Juan Hospital also faces significant challenges. Year to date losses in 2010 are more than $500,000. However, because depreciation accounts for nearly $300,000 of the year-to-date loss, the cash flow loss is closer to $200,000.
Hospital administrators are hopeful that a new business model – which includes a new operating room suite, community outreach efforts, and tightened operations – will help the hospital recover some of the losses before the end of the year.
A further complication is the property tax that supports the hospital and health care district. County voters approved the creation of the health care district and the property tax that supports it. The most recent election was in 1990 and set the current tax rate of .001. The property tax generates approximately $700,000 a year for the district.
Many county residents question a taxpayer-supported hospital if a private hospital offers similar services. Others counter that Blue Mountain Hospital may not be able to service its debt. In addition, with eight beds compared to 23 at San Juan Hospital, Blue Mountain Hospital has less than 35 percent of the capacity of San Juan Hospital.
Many state that Blue Mountain Hospital alone simply cannot meet the countywide demand for health care.
“An extraordinarily high quality of health care is now available to the residents of San Juan County,” said Steve Simpson, a member of the San Juan Health Service District board of trustees. “But we have to be careful that we sustain and build our entire health system or we run the risk of losing both hospitals.”