Board Functions Explained

There are several differences in function between the Montezuma County Hospital District (MCHD) and Southwest Health System, Inc. (SHS). The reasons why and the community benefits to having both are explained below.


Montezuma County Hospital District
The Montezuma County Hospital District was formed in 1975 enabling it to collect tax dollars for construction of the current hospital and to provide quality health care for our community.

The Hospital District is a political subdivision of the State of Colorado governed by Statute and operating under Constitutional constraints. In 1995 the Hospital Administration and the Montezuma County Hospital District Board of Directors investigated the formation of a non-governmental hospital entity that could operate the hospital in a much less restricted environment and could be both competitive and diverse. The Board of Directors recognized limitations they operated under with regards to then-current hospital industry changes and our actual service area that encompassed much more that just Montezuma County. Legal counsel was sought, and an investigation of other Governmental Hospitals that had privatized, such as Colorado State Hospital and Poudre Valley Hospital District, took place.

Some of the issues discussed and strongly considered by the MCHD Board were:

1. The inability to operate out-of-state

2. The inability to put public funds at risk with a private entity

3. Procurement: the requirement to bid services over $25,000

4. Sunshine Law

5. Dillon's Rule

6. Term limits of Board of Directors

7. Competition for patients from private hospitals, surgery centers, etc.

8. The inability to enter into co-op agreements with various surrounding communities to provide medical support for their local medical clinics which would help the Hospital increase its market share

9. The inability to enter into long-term lease agreements with physicians for the purpose of building a Physicians Office Building

They also weighed the advantages of their governmental status:

1. Taxes/mill levy

2. Governmental Immunity

3. Right of Eminent Domain

4. Antitrust Immunity

The Board of Directors weighed the advantages and disadvantages and discussed their options. They could stay as they were, set up a multi-corporate structure or convert to a non-governmental hospital. After many months of work and discussions with legal counsel the MCHD Board decided to establish a not-for-profit corporation completely separate from the Hospital District. They would lease the hospital facility and nursing home, and their daily operations to a newly formed corporation that would become known as Southwest Health System, Inc.


Southwest Health System, Inc.
Southwest Health System, Inc. was established in 1996 as a 501(c)(3) not-for-profit corporation. The Board of Directors is appointed in December of each year at the annual meeting. The issues that remain the same and continue to add value to the Hospital through the formation of Southwest Health System, Inc. are, in part, as follows:

1. As a non-governmental entity, SHS can operate in other states such as Utah, New Mexico and Arizona which are in our service area but outside the Hospital District boundaries

2. SHS has the ability to enter into agreements to provide service with private businesses and individuals

3. SHS can act quickly to secure goods and services outside the requirement to obtain competitive bids

4. As a private corporation it does not operate under the Sunshine Law

5. As a private corporation it need not be concerned with its activities regarding the Dillon Rule

6. SHS allows a more flexible operating model for health care providers

7. Recruitment of physicians can be accomplished in a private setting since board members can meet with potential candidates without the need to call a special meeting of the board

8. Strategies to increase market share can be discussed privately in order to gain a competitive edge


Community Benefits of Both Boards
The hospital and community continue to benefit by having both the Hospital District and Southwest Health System involved in providing quality health care and assistance. MCHD provides financial oversight of the hospital through the 1996 operating lease with SHS, while SHS provides quality health care to our community on a daily basis.

Additional benefits are:

1. Provide funding for necessary expansion projects at the lowest possible cost

2. Operate the hospital as a private enterprise, in a very competitive environment, without the limitations of a Governmental Hospital

3. Use taxes collected by MCHD to purchase medical equipment at the hospital which would benefit the community

4. SHS can move rapidly to develop strategies to increase market share which might involve agreements to provide health services with a private business or physician group

5. MCHD as a Governmental agency and SHS as a not-for-profit corporation have access to various grants and funding not available to both. This increases the chances of finding funds for health care

6. Tax revenues collected by MCHD are available to help other medical endeavors

7. Shared oversight of quality health care for our community

These are a handful of current reasons both Boards play a major role in providing quality healthcare for Montezuma County and the entire service area of our Hospital. The future of rural hospitals depends on their ability to be both flexible and forward thinking in their approach to health care. For these reason and with the knowledge that health care will be forever changing, it is important that both MCHD and SHS work together towards providing quality health care for our community.