Sale of regional medical center will translate into a tax loss

While the pending purchase of Bluefield Regional Medical Center is being seen as a positive change, local leaders are also expecting the City of Bluefield to be hit hard by the loss of tax revenue the hospital brings in.(Staff photo by Eric DiNovo)

bluefield — City and county leaders generally see the pending purchase of Bluefield Regional Medical Center (BRMC) by Princeton Community Hospital (PCH) as a positive change, but the City of Bluefield will be hit hard with the loss of tax revenue and is in the process of planning for a smaller budget.

“We do anticipate that this transaction will have an impact on the city’s budget,” Bluefield Mayor Ron Martin said. “In West Virginia, municipalities are funded in large part through a tax on businesses in the municipality, commonly called a ‘business and occupation tax’ or B&O.”

Martin said these taxes are not paid by tax-exempt nonprofits, like PCH, but are paid by for-profit companies such as Tennessee-based Community Health Systems and its subsidiary, BRMC.

“We expect that, as BRMC transitions from for-profit to nonprofit ownership, we will lose the B&O revenue we currently receive from BRMC,” he said, not yet specifying how much that will be. “We are not sure exactly when that will take place, but probably within the current fiscal year.”

Martin said city administration is “analyzing the budget to determine what adjustments have to be made so that we can absorb this loss of revenue while preserving essential city services.”

The city is required by law to have a balanced budget, he added. “Unlike the federal government, we do not have the luxury of deficit spending and must make sure our spending does not exceed our income.”

Martin is optimistic that expected growth in the city will eventually cover any losses resulting from the transition.

“We expect that, over the long term, this impact to our budget will be offset, at least partially, by job growth,” he said. “We announced earlier this year that Intuit, together with its partner Alorica, will be bringing 200 to 500 jobs to our downtown.”

Although he said it’s too early to see any B&O revenue from the project or to know what the direct impact of the jobs will be, the city does see it “as a turning point in the economic life of the city, and we look forward to more growth as other companies like Intuit see our potential, and projects like the Commercialization Station come on line.”

Martin and several city leaders recently met with PCH CEO Jeffrey Lilley and other PCH officials about the transition, with an “extremely positive” result.

“Mr. Lilley and the PCH officials understand the value of BRMC to this community,” Martin said. “As we stated when we first learned of the pending sale, we believe this represents the best outcome for the region.”

Martin said the city has been aware that BRMC’s current parent company, Community Health Systems, “has been struggling for some time and has, in recent years, sold a number of hospitals.”

“We are pleased that BRMC is being sold to Princeton Community as opposed to a buyer from out of the area,” he said. “We believe PCH will honor its commitment to hire most BRMC employees, and we are of course happy that these jobs will be preserved.”

It also makes sense to have both local hospitals under the same management, he added.

“This will enable health care to be delivered to the region’s patients in a coordinated, rather than a competitive, manner, so that essential services will be provided but not duplicated,” Martin said.

County commissioners also see the sale as an overall positive move.

“Any time you join communities together I think it’s a good move as close as we are,” said Commission President Gene Buckner. “If they (Bluefield) can deal with the financial problems it will be good for the county.”

Buckner said he believes the same quality medical care will be delivered and both hospitals have a good reputation.

Commissioner Bill Archer said the county also stands to lose some revenue from the sale, less than $100,000, and that will be difficult.

“But having a community hospital there in Bluefield I think is really great,” he said, adding that it means BRMC will continue to be able to provide health care services to the community.

Archer said he has used both hospitals and has been impressed with the quality of care.

“They both have excellent physicians and staff people in professional fields,” he said. “They are excellent people who have devoted their lives to caring for patients. I don’t think that is going to change.”

Archer said he is “thrilled” BRMC will remain a viable hospital.

Commissioner Greg Puckett said that “having multiple services available and streamlined processes in getting those services” is important for everyone.

It’s also a step toward bringing the two cities closer together, unifying the county.

“We encourage everyone to look for unification in all aspects of our county,” he said.

Puckett said the unification of the hospitals follows the two chambers’ merging, another positive move.

“As we move forward in a united front, our county can only get stronger,” he said.

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