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St. Luke's to give back 2 Idaho hospitals under AG settlement

Boise, Idaho-based St. Luke's Health System has reached an agreement with the Idaho Attorney General to transfer ownership of two hospitals back to the districts that gave the facilities to St. Luke's several years ago.

St. Luke's acquired hospitals from special taxing districts in McCall and Elmore County in 2010 and 2013. St. Luke's said it would maintain and improve McCall (Idaho) Medical Center and Elmore Medical Center in Mountain Home, Idaho, if the districts helped fund operations with annual property tax revenues. If the districts did not uphold their end of the agreements, they would lose the right to repurchase the hospitals back from St. Luke's.

Idaho Attorney General Lawrence Wasden learned of the agreements between the districts and St. Luke's several years ago and conducted an investigation into the deals. The main focus of the investigation was the funding provision of the agreements between St. Luke's and the districts.

"The Idaho Constitution prohibits a government entity like a hospital district from donating assets or transmitting tax revenues to help support the operation of a private entity," said Mr. Wasden. "That's exactly what St. Luke's agreements with these hospital districts did."

Although Mr. Wasden concluded the agreements were a violation of Idaho law, he said his goal was to find a way that St. Luke's and the public hospital districts could work together to ensure the future stability of the two rural hospitals.

Under an agreement with the attorney general, St. Luke's will transfer ownership of the hospitals' real and personal property back to the districts and then lease the facilities and pay operational costs. The districts will retain control and ownership, giving them authority to decide which services are provided at the hospitals.

There will still be financial ties between the parties, as the districts are able to fulfill St. Luke's funding requests. However, the districts will retain ownership of items purchased for the hospitals. The agreement gives St. Luke's the option to purchase the hospitals in the future.

More articles on healthcare industry transactions:

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