HOSPITAL BOARD AUTHORIZES LEASE OF MONTROSE MEMORIAL HOSPITAL

TO 501 (c)(3) COLORADO NONPROFIT ORGANIZATION

Securing Colorado nonprofit status best positions hospital for challenges posed by healthcare reform and Amendments 60 & 61

MONTROSE, Colo. (October 19, 2010) – The board of trustees of Montrose Memorial Hospital (MMH) has voted to authorize the lease of the hospital to a community-based, 501(c)(3) Colorado nonprofit corporation. The move, which changes the hospital’s status from a government entity to a Colorado nonprofit organization, will allow MMH to best respond to challenges created by federal and state healthcare reform and the potential passage of two state initiatives.

“This change strategically positions the hospital for continued growth and success in today’s increasingly complex operating environment,” said J. Stephen Glasmann, president of the MMH board. “Most importantly, it ensures that Montrose Memorial Hospital will remain a community asset. Decisions will continue to be made by a local board of directors, profits will be reinvested in the hospital, and MMH will continue to provide care to those who need it regardless of their ability to pay.”

Under the new operating structure, Montrose Board of Trustees will lease MMH to a newly created 501(c)(3) Colorado nonprofit corporation. The arrangement will secure the hospital’s tax-exempt status while allowing it to pursue additional sources of funding, including charitable grants and private donations, that are not currently available to MMH as a government entity.

MMH was originally incorporated as a 501(c)(3) charitable organization before its IRS classification became subject to review in the last several years because of its governmental status. Currently, all MMH expenditures are funded solely through hospital revenues. Only the hospital’s satellite clinics receive a portion of their funding from the county.

The change also will ensure that MMH is not affected by the provisions outlined in Amendments 60 and 61. If passed, these measures would require government entities to pay property taxes and prohibit them from issuing long-term bonds to finance purchases. Amendment 61 also would limit the hospital’s ability to refinance outstanding bonds to reduce payments to a manageable level.

Initial estimates indicate that MMH could be forced to pay more than $750,000 in annual property taxes, diverting valuable resources that could be invested in new medical equipment, facilities, services and staff.

“If passed, these amendments would create a significant financial hardship for public hospitals such as MMH,” said Glasmann. “By adding new tax burdens and limiting the hospital’s ability to borrow money, MMH would be forced to deplete its cash reserves – jeopardizing its financial stability and undermining its ability to recruit and retain top-quality medical professionals. Taking this step now allows us to protect the hospital’s solid financial standing and preserve the health of one of our community’s most vital assets.”

“By placing hospital operations in the hands of an experienced local board, this lease agreement will preserve MMH’s ability to make decisions that best serve the community and ensure that its assets are used to address local healthcare needs,” said Glasmann.

Board of Trustees

Montrose Memorial Hospital