Kootenai Health board OKs conversion

COEUR d'ALENE — The Kootenai Health board of trustees on Tuesday approved moving forward with a transition from the district hospital structure to a nonprofit status.

The vote was 6-1, with Steve Matheson providing the sole dissenting vote.

Katie Brodie, Kootenai Health board of trustees chair, said the new structure will give Kootenai Health the advantages of a modern, contemporary organizational structure.

“I am pleased with the outcome of today’s vote,” she said in a press release. “This board has engaged in a thorough evaluation of the benefits and challenges of converting to a 501(c)(3). We were well prepared to make this decision."

CEO Jon Ness said Kootenai Health is one of only 22 district hospitals of a similar size left in the United States.

As Kootenai Health tries to keep pace with the community's growth, the nonprofit model will put it on an even playing field with other hospitals of its size and scope, he said.

"The board’s decision today positions us well for continuing to meet the health care needs of northern Idaho," Ness said.

Once the transition is complete, which could be in May, the existing board will remain intact. Future board members will be appointed rather than elected.

Ness said they do not anticipate that patients, physicians or employees will notice a difference.

“Hospital structure will have no impact on the patient-provider relationship," he said. "Patient care at Kootenai Health is always a decision between the care provider and patient.”

The transition will mean Kootenai Health will no longer be a governmental entity and will not have the right to assess taxes on the community, something it has not done since 1995, or exercise its right of eminent domain.

It also means Kootenai Health will not be bound by open meeting and public disclosure requirements, which are a disadvantage in a competitive market like the one it is in, trustee Robert Colvin previously said.

“I think the not-for-profit model is the only one that fits this community going forward,” he said.

Matheson, who is also the Kootenai County treasurer, voted no. He previously said he thought the transition was being rushed, had concerns there was political motivation and believed the issue should go to a public vote.

A white paper that outlined the benefits, drawbacks and considerations for the transition was recently released by Kootenai Health. It said the nonprofit model provided certain benefits, such as enhanced access to capital and diversified investment opportunities.

In the 2022 legislative session, the Idaho Senate and House of Representatives approved Idaho House Bill 603, which provides district hospitals the opportunity to transition to a nonprofit 501(c)(3) model.

The law, which took effect July 1, has been available to county hospitals since 1986.

Tuesday's vote follows a vote Monday by the Kootenai Health Foundation’s board of directors, which unanimously supported the change.

Cara Nielsen, president of the Kootenai Health Foundation, said the foundation and its board were pleased to play a role in helping Kootenai Health.

“We are excited for our two organizations to take the next steps toward a new structure that will best serve our community," she said.

Ness said they were grateful for the foundation's support.

“The Foundation has a long history of supporting Kootenai Health and we are extremely pleased with this ongoing collaboration," he said.