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Jax Daily Record Wednesday, Nov. 23, 201112:00 PM EST

Lee Memorial: Lower 'sick tax' to it, several others

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by: Jim Saunders The News Service of Florida

Looking for help in financing a major children’s hospital project, Lee Memorial Health System on Monday proposed giving some public hospitals a break in the state’s "sick tax."

Keith Arnold, a lobbyist for the Lee County system, pitched the idea to a state commission studying possible changes in public hospitals.

The proposal targets a tax on patient care and would be narrowly tailored to public hospitals — like Lee Memorial — that don’t have taxing power and want to undertake construction projects.

Arnold said Lee Memorial pays nearly $13 million a year in the tax, which is collected on inpatient and outpatient care.

If Lee Memorial could receive a reduction, it would use the freed-up money to help pay off bonds on a planned $226 million children’s hospital project.

Arnold, a former lawmaker, told the Florida Commission on Review of Taxpayer Funded Hospital Districts that the tax dollars Lee Memorial pays to the state could be better used in the community. He said Lee Memorial has already received $45 million in contributions or pledges for the project.

“This is a piece of the puzzle for us,’’ he said.

The proposal focuses on the state’s Public Medical Assistance Trust Fund, which is widely known as the “sick tax’’ and helps fund health programs.

The state uses money that hospitals pay through the tax to help draw down Medicaid matching funds from the federal government.

The Commission on Review of Taxpayer Funded Hospital Districts, appointed earlier this year by Gov. Rick Scott, is expected to present recommendations by Jan. 1 to the governor and Legislature.

Most members Monday seemed receptive to Arnold’s idea, though they said critical details would need to be worked out in the Legislature.

House Health Care Appropriations Chairman Matt Hudson, a Naples Republican who serves on the commission, said he liked the idea that the tax reduction would only apply to public hospitals that don’t have taxing authority and that it would be used for construction projects. He said it should at least be an “idea on the table.’’

Commission member Brad Dinkins objected to the possibility that the state would have to use general revenue to make up lost sick-tax dollars. He said that would amount to a tax increase.

“We’re trying to level the playing field,’’ Dinkins said. “This is not leveling the playing field.’’

Arnold said Lee Memorial would like to see general revenue used to make sure other hospitals do not receive a funding cut. He rejected the idea that any general revenue redirection would represent a tax increase.

“We don’t want a tax increase,’’ he told the commission. “I think the only question before you is how existing taxes are distributed.’’

Lee Memorial is the largest of several health systems throughout the state that are public hospitals but don’t have taxing power.

One of the issues that the commission has grappled with is the varying ways that public hospitals are structured and funded, with some major systems able to levy property taxes.

Arnold said Lee Memorial operates a children’s hospital but that the project would be a large expansion that would allow it to offer more services.

As an example, it would allow Lee to provide trauma services to seriously injured children who now have to be flown to St. Petersburg or Miami for treatment.

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