Lee Health considering transition from public to private nonprofit status

by | Mar 14, 2024

Lee Health is considering becoming a private nonprofit to improve its finances amid an assessment report that cautions against “systematic, operational, strategic, political and financial challenges.”

Lee Health, one of Florida’s largest healthcare networks, is considering a change from operating as a publicly-funded nonprofit to a privately-funded nonprofit.

In deliberating the transition, Lee Health consulted Kaufman Hall, a healthcare advisory firm, to undergo assessments. If the evaluation finds that the system would financially benefit by moving to a privatized governing structure, discussions with the Lee County Commission will follow, according to the health system. Presently, the citizens of Lee County own and operate Lee Health through a publicly elected Board of Directors.

According to Lee Health’s, who received the evaluation results last week, the report acknowledges that Lee Health would “continue to face systematic, operational, strategic, political and financial challenges, along with regional and local competitive pressures,” regardless of which structural model the company moves forward with.

“Recognizing the growing pressure publicly owned health systems face, the Florida legislature set forth clear guidelines for this process, including a requirement that an independent firm complete a comprehensive assessment before any decisions are made,” Lee Health said in a prepared statement. “The assessment is solely focused on gathering information that will help determine the optimal path for Lee Health.”

Under the contemplated shift, the governing board’s composition would change, with appointed members rather than publicly elected officials. Operating as a public nonprofit, Lee Health currently receives no direct tax support.

Last year, the Florida Legislature ratified House Bill 227 which, among other provisions, introduced a pathway for potential conversion to a non-profit entity. Per the measure, in order for Lee Health to initiate a transition, it must submit a detailed plan on how the system board will transfer assets and liabilities and how debts are to be resolved.

The legislation also prohibits a current member of the Lee County Board of County Commissioners from serving on the board of the succeeding nonprofit entity but allows for a current or former member of the system board to serve on the board of the succeeding non-profit entity.

“The Florida legislature recognizes the growing pressures facing public health systems,” said President and CEO of Lee Health Larry Antonucci.“The forthcoming evaluation will help us determine the best path to protect our financial health, independence, and community-led structure in the long-term.”

Lee Health also cited Florida’s partial repeal of its Certificate of Need program in 2019, which it claims made it easier for most health systems to expand their services. Subsequent to the repeal, 65 new hospitals were announced to be built in Florida between 2020 and 2022, while Lee Health contends it has been largely excluded from concurrent expansion efforts because its enabling legislation enacts limitations.

“Significant work must be done to consider and weigh all implications of returning to a private nonprofit status,” said the network “We must conduct appropriate due diligence to gather the facts and analyze the impacts of such a decision.”

In its first 50 years of operation, Lee Health was a private nonprofit health system before operating as an independent special healthcare district in 1968, created by the Florida Legislature and governed by an elected Board of Directors.

Legislation that was floated — but died — in the Capitol this year would have required all 26 of the state’s independent hospital districts to conduct a financial evaluation by the end of the calendar year to assess the feasibility and benefits of becoming private nonprofit entities.

The measure, sponsored by Rep. Randy Fine, would have required that each independent hospital district undergo a financial evaluation by December 31, 2024 to detail the district’s assets and liabilities to help guide decisions on potential conversions or sales.

“Each independent hospital district shall cause to be conducted an evaluation of the benefits to the residents of the district of converting the independent hospital district to a nonprofit entity or transacting a sale to a for-profit entity,” reads the bill.


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