HANCOCK - Portage Health and its predecessors have been located in Hancock since the late 19th century, but now that the health care system has become a for-profit entity, it will mean an increase in revenue for the city.
In March, it was announced Portage Health had partnered with Nashville, Tenn.-based LifePoint Hospitals, which will become the majority owner of the system. LifePoint partners with 57 hospital systems in 20 states. There will be no name change once the partnership is finalized.
At the public ceremony announcing the partnership in March, Jim Bogan, Portage Health president and CEO, said a nine-member board of directors to be created after the partnership is finalized will consist of five appointed by Portage Health and three appointed by LifePoint. Portage Health will select one more member for LifePoint. Governance of the new entity will be split evenly, which Bogan said is important for the community.
Kurt Hauglie/Daily Mining Gazette
When the partnership between Portage Health and Nashville, Tenn.-based LifePoint Hospitals is complete, the Hancock health care system will become for-profit, meaning more tax revenue will go to the City of Hancock.
"We have preserved local autonomy," he said at the March announcement.
During the annual report to the community about the status of Portage Health in January, Bogan said hospital officials were looking for a partner to help them face the challenges of the coming changes in health care presented by the Affordable Care Act.
Glenn Anderson, Hancock city manager, said Tuesday Portage Health started out as a facility run by the Sisters of Saint Francis in 1896. In 1899, it became Saint Joseph Hospital located on Water Street.
Later, a larger building was constructed on Michigan Street near the original building. That later became Portage View Hospital.
A new facility was constructed on Campus Drive, which became Portage Health.
Anderson said until the merger with LifePoint Hospitals, Portage Health was a nonprofit facility with two exceptions.
The hospital's for-profit pharmacy, the Apothecary, is taxed. Any equipment leased from third-party vendors is considered personal property and is taxed.
"That's been on the tax rolls for years," Anderson said.
Anderson said the personal property valuation from Portage Health is about $100,000 per year, and the Apothecary is valued at $13,395 per year. The two entities bring the city thousands of dollars in tax per year.
Before the arrangement between Portage Health and LifePoint Hospitals can be completed, Anderson said the valuation of the system needs to be determined.
"There will be several appraisals done to support that," he said.
Anderson said he expects the valuation of the system will be in the millions of dollars, which he expects will eventually bring the city hundreds of thousands of dollars per year.
However, Anderson said not all tax from the hospital will go to Hancock. The state of Michigan will receive the largest portion at approximately 39 percent for public education.
"The K-12 system in the state will gain," he said.
The debt for the Hancock Public Schools will get 18 percent; 14 percent will go to Houghton County; and the Copper Country Intermediate School District will get 3.8 percent.
The city of Hancock will get 25 percent, most of which Anderson said will go to the general fund. Small amounts will also go to the city fire millage and city roads.
Although it won't be known exactly how much tax from Portage Health will come to city after it becomes a for-profit entity until after the appraisals are completed, Anderson said he expects it could be as much as hundreds of thousands of dollars per year.
"It's going to be a significant difference," he said. "It's obviously a benefit to the city taking a property and putting it on the tax rolls."