MUSCATINE, Iowa — A vote Tuesday could help Muscatine’s financially ailing hospital down a road to recovery, say directors on the Unity Healthcare Board.

Muscatine County voters will decide whether to transfer ownership of the Unity Hospital building and grounds from the elected Muscatine General Hospital Board of Trustees to Unity Healthcare, an independent nonprofit corporation in Muscatine.

“It’s about the future and having healthcare accessible in the community,” said Charles Vesey, who serves on the Unity Board.

Unity Healthcare —formed in 1999 through a merger of Muscatine General Hospital, community health and the physicians clinic — owns the hospital business and equipment and leases the building and grounds for $1 per year.

The lease includes an option for Unity Healthcare to purchase the property for $1 in 2024. Approval from a majority of Muscatine County voters would allow the sale this year to Unity.

“Fifteen years from now we would be doing this anyway,” Vesey said.

But it is “absolutely essential” that the sale happens now, said Dr. Douglas Dawson, a sleep medicine and ear, nose and throat physician who serves on the Unity Board.

Unity Healthcare must own all of the hospital’s assets to join Rock Island, Ill.-based Trinity Regional Health System as an affiliate.

One year of strategic planning that ended in 2008 determined affiliation with a larger organization was the best option for Unity to overcome challenges to expanding medical specialties and enhancing technology needed to be competitive with eight hospitals within a one-hour drive.

As a mid-sized “tweener” hospital, Unity is too small to benefit from federal reimbursement programs, but lacks resources of larger organizations.

Trinity Regional Health System, which also has hospitals in Bettendorf and Moline, Ill., is part of Iowa Health System. The Des Moines-based company operates seven large and 14                

rural hospitals, and 71 physicians clinics in Iowa, Illinois and Nebraska.

Unity hired Trinity one year ago to help it manage billing and debt, provide interim leadership and improve operations.

“They have knowledge and experience we don’t have … that it’s hard to come up with at small hospitals,” Vesey said.

Trinity and Iowa Health System would also absorb Unity’s “crushing debt load” of approximately $18 million, Dawson said.

But “it’s not a sale,” Vesey said, because Unity’s board will continue to choose doctors, determine services and provide long-term planning.

Unity Healthcare would continue to exist, but as a subsidiary of Iowa Health System instead of an independent corporation, said Attorney David Meloy of Muscatine.

Title to the hospital and its property would remain with the Unity Board, Meloy said.

The Muscatine General Hospital Board would have the option to repurchase the hospital if Trinity ended the affiliation in the future.

Even if the county had to borrow to buy back the property, the cost may not be greater than the alleviated debt, Vesey said.

“We wouldn’t necessarily be worse off,” he said.

Without the affiliation, Dawson said Unity will not have the borrowing capacity to fund needed improvements.

“It’s difficult to get the (business) growth if you don’t have the funds to reinvest,” Vesey said. Alone, Unity faces a “slow slide downhill.”

Unity has money now to pay its bills, Dawson said, but does not have a revenue “cushion” required by its creditors to continue annual bond payments.

Meloy said bond holders are waiting to see if Unity can affiliate before determining a course of action, which could include asking for full payment of the bonds, forcing foreclosure or installing its own hospital management.

 “You would really lose the local say,” Vesey said. “You’d have a hospital run by the bankers.”

Dawson said the affiliation is “the best chance of maintaining local quality health care.”

Trinity and Iowa Health Systems “match what we want to do,” he said.

The Unity Board pursued affiliation with Trinity and Iowa Health System because of their shared charitable missions and system of local control.

Unity would add members from Trinity to its board of local doctors and community members. Representatives from Unity would also sit on Trinity’s board, which would have a say over large budget items.

“There’d be a presence both ways,” Vesey said. “A lot of local decisions would be made.”

Dawson said Trinity leaders see the affiliation as a positive long-term business opportunity, but they have also “clearly told us that they’re not going to pursue this (affiliation) if this (referendum) fails.”

Vesey said the list of other potential organizations is short, and “any partner we were affiliating with would view that as lack of support in the community and be hesitant to proceed.”

Details

Muscatine County voters will be asked Tuesday, May 5, to approve a referendum submitted by the Muscatine General Hospital Board of Trustees which states:

Shall the Board of the Hospital Trustees of Muscatine County, State of Iowa, be authorized to transfer to Unity HealthCare, an Iowa nonprofit corporation, the assets currently leased to Unity HealthCare under an operating lease (with option to purchase) dates December 30, 1998, in accordance with the terms of authorization approved at the meeting on March 24, 2009, of the Board of Hospital Trustees?

Polling locations

Polls will be open from 7 a.m. - 8 p.m., in the following locations:

Muscatine:

Precincts 1 and 2 — Muscatine Community Schools Administration Building, 2900 Mulberry Ave.

Precincts 3 and 4 — Clark House, 117 W. Third St.

Precincts 5 and 6 — Muscatine Community Schools Administration Building, 2900 Mulberry Ave.

Precincts 7 and 8 — Franklin School, 210 Taylor St.

Precincts 9 and 10 — Madison School, 1820 First Ave.

Bloomington and Lake townships — Church of Christ, 3603 Mulberry Ave.

Fruitland Township/Fruitland — Fruitland Community Center, 104 Sand Run Road

Fulton Township/Stockton — Stockton City Hall, 318 Commerce St.

Goshen Township/Atalissa — Atalissa City Hall,122 Third St.

Montpelier Township/Montpelier — Montpelier Fire Station, 1961 Zachary Ave.

Orono Township/Conesville — Conesville City Hall, 102 E. Third St.

Pike Township/Nichols — Nichols City Hall, 429 Ijem Ave.

Sweetland Township — New Era fellowship hall, 3455 New Era Road

Wapsi Township/West Liberty — Muscatine County Fairgrounds activity center, 101 N. Clay St.

Wilton and Moscow townships/ Wilton and Durant — Wilton Community Room, 104 W. Fourth St.

76 and Cedar townships — 76 Township Hall